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Stagnant job market forces workers to stay put

Workers in the UK are now less likely to look for a new job, even though most are being forced to endure below-inflation pay increases.

New figures from the Office for National Statistics (ONS) has found a sharp drop in labour mobility – the number of people who resign to take up positions elsewhere – in the second quarter of 2011.

Between April and June this year, 674,000 workers left their main jobs, a 42 per cent fall on the peak level of almost 1.2 million during one three-month period in 1998.

Of this 674,000, the majority – 382,000, or 57 per cent – chose to leave voluntarily, while the remaining 292,000 were sacked or made redundant.

Reasons for leaving

The ONS added that women were more likely to leave their jobs for family reasons, while younger workers were more likely to change employer than their older colleagues.

This was partly due to the fact that the under-25s were more often to be found in temporary or seasonal employment.

Grass no longer greener?

One reason for a fall in the number of workers seeking alternative employment is that earning prospects at rival companies are currently seen as limited.

Statistics published by human resources firm Mercer this week showed that, in general, pay rises offered by UK employers were lagging well behind inflation at around 3 per cent – compared to year-on-year price rises of 5 per cent or more.

Spokesman Mark Quinn said: “Salary increases in the UK are not keeping pace with the rising cost of living, and employees are finding it difficult.

"But the economic situation is still volatile so organisations are being cautious with their fixed costs, such as salaries.

“While restraint is painful for everyone in the short-term, it is also prudent, and if it ensures the survival of the company it is in the longer-term interests of employer and employee.”

Mercer’s analysis suggested most parts of the economy would continue to see pay rises of around 3 per cent in 2012, but banking and finance and the energy sector were forecast to benefit from larger hikes next year.

Effect of the slowdown

The ONS said a slump in economic growth was to blame for the current lack of labour mobility.

Its report said: “When job opportunities are limited there are fewer opportunities to move, people are often reluctant to change jobs and some people will become unemployed as businesses shed some of their workforce."

Over the 15 years the ONS’s Reasons For Leaving Last Job report has been published, workers were generally more likely to leave their jobs by their own choice rather than being laid off or fired.

However, at the end of the recent recession in 2008-9, total voluntary and involuntary exits reached the same level.

Hardest-hit sectors

The rate of redundancies more than doubled in the downturn, with just 0.4 per cent of the workforce affected in the second three-month period of 2008 but 0.9 per cent hit between April and June a year later as the recession ended.

The sectors of the economy which were most significantly affected included construction, manufacturing, and banking and finance.

With male employees making up a greater proportion of these sectors’ workforces, men saw a faster increase in their rate of redundancy than women.