Personal finance expert warns that changing jobs to overcome cost of living crisis can backfire in the long run

New statistics from the Office for National Statistics (ONS) show that in April 2021, wage growth was 6.6 percentage points higher for people who changed jobs than for those who stayed, however for those who stayed on certain sectors, enjoyed more than the average income.

People who moved to a different industry, changed occupations, or moved at the same time increased their salary even more. However, those age 65 and older who switched jobs actually saw lower earnings growth than a year earlier.

Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown, explains: “The grass is a bit greener on the other side of the fence, but the ground can be less stable.”

Sarah continued: “Changing jobs will increase your salary by an average of 6.6%, and changing industries, occupations or regions at the same time can have an even more dramatic effect. But before you jump the fence, you have to know what you’re giving up.”

The most recent employment figures showed a record 994,000 moves from one job to another between January and March this year, caused by resignations rather than firings.

Part of this is the annual merry-go-round as people decide to start fresh for the new year, however, part of it is also paid for.

With inflation skyrocketing and some employers still holding on to the money strings, many people are realizing they can raise their pay by changing jobs.

Sarah looks at both sides of the job change fence.

Benefits of moving

Changing jobs tends to raise wages, but in some industries the benefit of changing is even greater.

Those within the arts, entertainment and recreation who moved saw average salary growth of 21%, and those within the information and communications sector saw it grow by 20%; for those who stayed in both industries, pay increased 2%. If your job search takes you into a new industry, you can make an even bigger impact.

Median earnings growth was 2.1 percentage points higher for workers who changed jobs by moving to different industries than for those who changed jobs but stayed in the same industry.

The industry you move into is key here: Those who move room and board experience nearly 26% earnings growth.

While salary typically gets a boost from job changes, hourly earnings are actually an average of 17% higher among those who stay. This is largely due to the fact that young people tend to change jobs more: in the year to April, around 14% of those aged 16-24 changed jobs, compared to 5% of those aged 16-24. who were between 35 and 49 years old. It means that those who stay tend to be older, more experienced and longer-serving, on average.

However, more experienced employees also have more to gain from a move, with average earnings growth of just over 16%. This group also had the lowest earnings growth for those who stayed (2.5%), which might encourage them to consider whether it might be time to move on after all.

what you surrender to

While your salary may increase when you change employers, it’s important not to lose sight of what you might be giving up, because while some you get rights from day one of a new job, for others you must have worked there for anything up to two years. .

When you start a new role, you may be on a trial period and your employer may impose specific rules. Often, this will include not having to give as much notice of termination and, in some cases, there may be restricted vacation rights. After you have been working there for a month, you automatically get the right to receive at least a week’s notice.

If you are raising a family, some of your rights will depend on you working there for 26 weeks by the end of the 15th week before your due date.

If you move within this time, you lose your legal right to maternity and paternity pay, shared parental leave and paternity leave.

After you have worked somewhere for a year, you get the right to take 18 weeks unpaid parental leave for each child under the age of 18. However, other rights do not take effect until you have been employed for two years. including the right to go to labor court if he has been unfairly dismissed, and his right to severance pay.

It is also essential to look beyond salary and consider the complete package, including insurance coverage, vacations and pension.

work pensions

Helen Morrissey, senior pension and retirement analyst at Hargreaves Lansdown, said: “The concept of a job for life is gone and the average worker will change jobs several times during their career. This can potentially have a big impact on pension savings if you don’t maintain your contribution levels.

“For example, you may have a job where pension contributions are above the automatic enrollment minimum, say 12%. If you later left that job, your next role may only have an 8% contribution, and if you don’t take steps to increase your contribution to this level, you’ll likely see a significant shortfall by the time you reach retirement. . As we change jobs more frequently, care must be taken that contribution levels are maintained wherever possible.”

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Helen continued: “Also, regular job changes increase the likelihood that you will lose account of pensions from previous employers. You may lose paperwork or stop receiving documents because you moved house and didn’t update your details, or your provider may change their name, making it harder to locate you.

“It’s important to check your paperwork and make sure your contact details are up to date. If you are having difficulty tracing a lost pension, the Government Pension Tracing Service can help you at Find pension contact details: GOV.UK (”.

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