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.
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 is calling for an expanded Lifelong Learning Entitlement, which 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. This would enable workers and businesses to adapt to labour market change and our economy to grow.