Young people's earning power 'scarred' by older workers staying longer in same job

The earnings prospects of younger people are being scarred permanently because older workers are staying longer in the same job, according to new research.

Younger workers are also being hit by a generational divide in which their jobs are more insecure than those of older people, the Resolution Foundation think tank found.

Its report, “A Steady Job?”, said that the rate at which people move between jobs has dropped sharply since the 2007 financial crisis, creating a promotion blockage. Despite the creation of 2m jobs since 2010, mobility has not returned to pre-crash levels.

Although this was due partly to welcome trends such as more women returning to work after having children and more older people being in jobs, the foundation said the blockage was a cause for concern because people who change jobs typically move faster up the earnings ladder. It found that typical earnings of a 30 year-old born in 1983 were about £2,800 lower than one born five years earlier.

The proportion of young workers in “insecure” work has increased sharply. This is defined as part-timers in post for less than five years, full-timers in post for less than two years or earning less than half the average full-time wage and those on “mini-jobs” working less than 16 hours a week.

Insecurity has risen because a sizeable minority of people are on zero hours contracts; in more insecure self-employment or doing part-time or temporary work when they want to work longer hours. The number of these jobs remains well above pre-recession levels, suggesting a more permanent shift towards insecurity for many workers.

The foundation urged George Osborne to ensure that “secure work” plays a key role as he pursues the Government’s goal of full employment, saying that this would attract more people into the labour market.

Laura Gardiner, a senior policy analyst at the foundation, said: “The UK has a good record on getting more people into work over the last 20 years, though some have argued that this has come at the expense of rising job insecurity. In fact the overall share of insecure work has remained remarkably stable, even since the crash. However, the recent rise of precarious forms of employment such as zero hours contracts has brought deeper insecurity for a sizeable minority of workers, particularly young people.”

Paul Gregg, Professor of Economics and Social Policy at the University of Bath and an associate at the foundation, said: “The amount of time people spend in the same job has risen steadily, particularly among women and older workers. This shift has been supported by a combination of financial incentives, support with childcare and employment legislation.

“But we’ve also seen people moving between jobs less frequently. This can create a promotion blockage, which in turn hinders young people’s career progression and can permanently scar their earnings. Job security is crucial to the pursuit of full employment as it will make work more attractive to those facing the biggest barriers to work. But we should also be mindful about the falling rate of job moves, which are a vital way for young workers to build their careers.”

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In a separate report, the TUC said that official statistics do not give the full picture of those seeking work and understate the number of women job-hunters.

In the past three years, the headline unemployment figure fell by more than 800,000, from 2,633,000 to 1,827,000. However, over the same period, the number of other economically inactive people who want work hardly moved, from 2,371,000 to 2,298,000. During this time, the number of economically inactive women seeking work increased slightly, from 1,363,000 to 1,379,000.