Wage growth in the UK is being impacted by slow movement in the jobs market, analysis from the Office of National Statistics (ONS) has suggested, with experts warning social mobility risks going backwards as a result.
ONS statistics showed just 10.9 per cent of workers changed their employer in both 2017 and 2018 – higher than the post-recession low of 5.7 per cent but still sluggish enough to impact wages despite record levels of employment.
The low levels of job-switching indicate people are not aware of the choices available to them or may consider it too risky to change employer, the ONS suggested.
Concerns were also raised over social mobility. Changing employer is the best way to secure a pay rise, but it benefits higher-skilled employees more than those at the bottom of the pay scale, the data revealed.
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According to the findings, those who job-hopped benefited from higher wage growth compared to those who stayed put. However, the benefits were more keenly felt by higher-skilled individuals, who saw a greater proportionate uplift in earnings compared to those with lower skill levels.
The ONS data showed what it defined as low-skilled workers’ median hourly earnings increased 0.2 per cent in 2018 when they moved jobs, compared to 3.3 per cent for lower-middle skilled workers. Upper-middle skilled workers saw an average 7 per cent pay increase for moving, with upper skilled workers receiving 6 per cent.
Analysis from the ONS attributed smaller pay growth at the lower skill levels to the fact a greater proportion of these workers were being paid close to the national living wage (NLW). Low-skilled workers who stayed with their employer received an average pay increase of 4.4 per cent, in line with the standard raise in the NLW – which went from £7.50 to £7.83 in 2018.
Regional differences were also marked. Earnings growth for job changers in London outpaced all other regions, followed by Yorkshire and the Humber and the north east. Changers in the east of England were likely to see the smallest wage growth by moving jobs.
The findings coincide with the latest report from the Social Mobility Commission (SMC), which found the ability to switch between social class in the UK had stagnated.
Claire McCartney, diversity and inclusion adviser at the CIPD, said employers concerned with promoting social mobility had to think about how they could improve the quality of work they offered.
She said: “Employers should also look at training and development opportunities to help those in lower paid, lower skilled roles to progress. This might include providing mentoring and confidence building programmes, as well as accredited training, which will be recognised and valued if they move to other employers."
According to the Press Association, the SMC’s State of the Nation 2018-19 report found the number of people from better-off, “professional” backgrounds who went on to professional jobs had risen from 59 per cent in 2014 to 60 per cent in 2018. Just 34 per cent of those from working-class backgrounds were in professional roles last year, only slightly higher than the 2014 score of 32 per cent.
It found that even when those from working-class backgrounds did enter professional roles, they earned on average 17 per cent less than their counterparts. For working-class women, the gap widened to 35 per cent.
Dame Martina Milburn, chair of the SMC, said: “Being born privileged means you are likely to remain privileged. But being born disadvantaged means you may have to overcome a series of barriers to ensure you and your children are not stuck in the same trap.
“At a time when our country needs to be highly productive and able to carve out a new role in a shifting political and economic landscape, we must find a way to maximise the talent of all our citizens, especially those that start the furthest behind,” she continued.
Speaking to BBC Radio Four’s Today Programme, Milburn called for a "significant increase" in funding for all 16 to 19-year-olds in education and a "student premium" for the disadvantaged, an extension to the current 30 hours of free childcare and for the government to pay the voluntary living wage to all its staff, including contractors.