New statistics from the Office for National Statistics (ONS) show that in April 2021, pay growth was 6.6 percentage points greater for people who switched jobs than for those who stayed put, however, for those who remained in certain sectors, they enjoyed higher than average earnings.
People who moved to a different industry, changed occupation, or relocated at the same time, boosted their pay even more. But, job changers aged 65 years and over actually saw lower earnings growth than the year before.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, explains: “The grass is slightly greener on the other side of the fence, but the ground may be less stable.”
Sarah continued: “Switching jobs will boost your pay by an average of 6.6%, and switching industries, occupations or regions at the same time can have an even more dramatic effect. But before you jump the fence, you need to know what you’re giving up.”
The most recent jobs figures showed a record of 994,000 job-to-job moves between January and March this year, triggered by resignations rather than people being let go.
Part of this is the annual merry-go-round, as people decide to make a new start for the new year, however, part is also down to pay.
With inflation running high, and some employers still holding tight to the purse strings, plenty of people are realising that they can boost their pay by changing jobs.
Sarah looks at both sides of the job switching fence.
Benefits of moving
Moving jobs tends to boost pay, but in some sectors the benefit of switching is even greater.
Those within arts, entertainment and recreation who moved saw average pay growth of 21%, and those within the information and communications sector saw it grow 20% - for stayers in both industries, pay grew 2%. If your job hunt takes you into a new industry, it can have an even bigger impact.
Median earnings growth was 2.1 percentage points higher for workers who changed jobs by moving into different industries than for those who changed jobs but remained in the same industry.
The industry you move from and to is key here - with those moving out of accommodation and food seeing earnings growth of almost 26%.
While pay usually gets a boost from job moves, hourly earnings are actually an average of 17% higher among those who stay put. This owes a great deal to the fact that younger people tend to move jobs more - in the year to April around 14% of those aged 16-24 changed jobs, compared to 5% of those aged 35-49. It means that those who stay tend to be older, more experienced and more senior, on average.
However, more senior employees also have more to gain from a move - with average earning growth of just over 16%. This group also had the lowest earnings growth for those who stayed put (at 2.5%), which might encourage them to consider whether it might be time for a move after all.
What you give up
While your pay may rise when you change employers, it’s important not to lose sight of what you might be giving up, because while you get some rights from day one of a new job, for others you need to have worked there for anything up to two years.
When you start a new role, you may be on a probationary period, and your employer can impose specific rules. Often it will include not having to give as much notice of dismissal, and in some cases, there may be restricted rights to holidays. After you have been working there for a month you automatically gain the right to get at least a week’s notice.
If you are starting a family, some of your rights will depend on you working there for 26 weeks by the end of the 15th week before the due date.
If you move within this time, you lose your statutory right to maternity and paternity pay, shared parental leave and paternity leave.
After you have worked somewhere for a year you gain the right to take a total of 18 weeks’ unpaid parental leave for each child under the age of 18. However, other rights don’t kick in until you have been employed for two years, including the right to go to an employment tribunal if you have been unfairly dismissed, and your right to redundancy pay.
It’s also essential to look beyond pay, and consider the whole package, including any insurance cover, holiday and the pension.
Workplace pensions
Helen Morrissey, senior pensions and retirement analyst at Hargreaves Lansdown, said: “The concept of a job for life is well and truly gone and the average worker will change jobs multiple times during their career. This can potentially have a huge impact on pension saving if you do not keep up your levels of contributions.
“For instance, you may have a job where pension contributions are above the auto-enrolment minimum, say 12%. If you then left that job the next role might only come with an 8% contribution, and if you don’t take action to increase your contribution back up to this level, then you will likely see a significant shortfall by the time you hit retirement. As we move jobs more often care needs to be taken that contribution levels are maintained wherever possible.”
Helen continued: “In addition, regular job moves increase the likelihood that you will lose track of pensions from previous employers. You may misplace paperwork or stop receiving documents because you moved house and didn’t update your details, or your provider might change name making it harder to track down.
“It is important to keep hold of paperwork and make sure your contact details are updated. If you are struggling to track down a lost pension then the government’s Pension Tracing Service can assist you at Find pension contact details - GOV.UK ( www.gov.uk ).”
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