Advances in technology, including Artificial Intelligence, alongside longer working lives will see more people needing to change jobs and careers. But new research by Learning and Work Institute (L&W) has found that fewer people are switching sectors than before the global financial crisis. In part this is because doing so can come with a financial penalty, which is largest for those moving out of sectors like construction and retail.
The research finds that career changers working full-time face an average pay cut of £3,731 (14%) per year. This initial drop in income is likely to be difficult for many people to manage given financial commitments for home and family, even though people changing job see pay subsequently grow 2.9 times faster than those staying in the same job.
Of the 7.4 million people who started a new job in 2022-23, 1.7 million switched sectors. According to L&W’s research, job moves are one third higher in retail and double in hospitality compared to the UK average with lots of moves between these sectors. People with lower qualifications are 30% more likely to switch sectors than higher qualified people and young people are three times more likely to switch sectors than older people, meaning career change is particularly significant among workers with lower earnings.
If training is needed in order to move sectors, career changers could face a potential retraining bill of up to £40,000: to take a one-year full-time course, the average worker would lose £30,000 in lost wages plus course fees on top of the subsequent drop in their earnings.
Longer working lives means 50-year careers will increasingly be the norm for people, so there will be a rising need for people to update their skills and change jobs and careers multiple times. We need to provide more support for people to adapt to these changes.
L&W previously called for a Lifelong Learning Entitlement to support people learning and retraining. The Government is now introducing a Lifelong Learning Entitlement, but it’s focused on tuition fee and maintenance loans at higher education level. L&W is calling for this to be widened significantly, so people get more support for while retraining including when studying below higher education level.
The expanded Lifelong Learning Entitlement would aim to raise the awareness of opportunities for career change, create more flexible and tailored learning and increase the financial support available for those wanting to retrain. That would include greater availability of Career MOTs to give advice to people on the options available, more flexible training options including expanding apprenticeships for career changers, and providing financial help through maintenance loans and Universal Credit for people while retraining. This would enable workers and businesses to adapt to labour market change and our economy to grow.