Jon Boys, Senior Labour Market Economist at the CIPD, analyses the loyalty of young people to their employers and explores whether they’re less loyal than other age groups
Young people are reported to job hop more, but is this disloyalty or simply just young people finding their way in the world?
Anyone who’s spent time in recruitment will have observed two things about younger employees:
- They generally haven’t been working for the organisation for very long.
- They are more likely to leave for another organisation than older employees.
The first reason is tautological. To be young is to have low tenure. One simply doesn’t have the years of life under one’s belt to have accrued a long time with one employer. If we look at UK tenure by age (see graph below), we can see that over half of those aged 50-plus have been with their employer for more than 10 years, and a quarter have been with them more than 20. But every 50-year-old with 20 years’ tenure was once a 30-year-old new starter. Tenure is a function of age.
What about turnover? Now this is where things get interesting. Turnover is high for the youngest age groups with a significant proportion having left after one year – usually to study. Turnover is also high for the oldest age groups, except in this case they are no longer working due to retirement. The upshot is that turnover is high for both younger and older workers and low for those in middle age. Younger workers are, however, more likely than older workers to leave an employer to join another employer. For further reading on turnover and why it matters, read our blog post on staff turnover.
Is loyalty of younger employees really a problem?
So is ‘flight risk’ among younger employees a problem? Perhaps not. Most people would agree it’s unusual to find the right job match early on in your career. High turnover in younger age groups is the labour market’s way of sorting people into the jobs they are most efficient in. It is these job-to-job moves that come with the biggest pay bumps and allow knowledge to spread throughout the economy. It’s hard to put an exact percentage on it, but some turnover is expected and healthy and this number will differ by age and industry.
For older workers, especially those with longer tenures, it makes less sense to job-hop. These workers have a lot of firm-specific human capital (knowledge of the organisation and how it works). They may also have accrued benefits that make moving more costly. Young people move around jobs more often and this is true of all generations, not just the current cohort. Although, interestingly, research by the Resolution Foundation found that millennials were less likely to job hop than their Gen X predecessors.
Our report on job insecurity showed that young people are most likely to be in work that is “not permanent in some way”, for example, a fixed-term contract. This suggests that employers benefit from the flexibility this provides, which may offset the costs of increased churn for younger workers.
In conclusion, it’s difficult to argue that young people are less loyal to their employers. Low tenure among young people and the increased use of temporary employment contracts suggests that a lack of loyalty works both ways. Young people today are as loyal to their employers as young people of previous generations, and may be even more so.