06 February 2013

Workers more loyal than ever (and other surprises about job tenure and mobility)

Three of the most written-about themes in the Australian labour market over the past few years have been the skills shortage (ie we can’t find enough of the right staff), the booming mining and resources sector (ie sucking workers out of other sectors) and the impact of Gen Y in the workforce (ie what a bunch of job-hopping, demanding, brash know-it-alls they are).

The amount of noise that these three issues create, and the media willingly reports, creates some misleading impressions in this country about the actual state of play in the workforce.

The reality is somewhat different.

The recently released report Labour Market Turnover and Mobility by Patrick D’Arcy, Linus Gustafsson, Christine Lewis and Trent Wiltshire (Reserve Bank of Australia, Bulletin, December, 2012) provides some excellent hard data about job tenure and work mobility that refutes a couple of workforce myths. Specifically: 
  • Contrary to popular belief and despite a rise in the share of the workforce who are part-time or casual workers, the share of workers with long tenures has also increased over the past twenty years. The proportion of workers who have been with the same employer for 20 or more years has increased from 7.5% of workers in 1992 to around 10% in 2012.
  • The average tenure of employment for an Australian worker is 7 years
  • More than 40% of workers have been in their current job more than 5 years
  • 25% of workers have been in their current job for more than 10 years
  • Mining is the 17th (out of 19) largest employing sector in Australia. Its workforce of around 250,00 is way behind Health Care, Retail Trade and Construction, all sectors employing over 1 million people 
Here’s some additional data, from an analysis of the 12 month period from March 2011 until February 2012, that I found most interesting (mostly summarised from an economic briefing by Deloitte Access Economics, 15 January 2013): 
  • Approximately 80% of workers had remained in the same job over the previous 12 months. The three factors most influential in job movement are a worker's age, their occupation and their employment status (ie whether full-time, part-time or casual).
  • Generally high skill/high wage sectors have lower rates of job turnover. Professional services, financial and insurance services, health care, and public administration all showed turnover much less than the 20% average. The mining sector is currently an exception to this trend.

    Unsurprisingly labour mobility was highest in the accommodation and food services sector with around 35% of workers in that industry who were new to their current employer in the past 12 months. The mining sector was second with around 30% of workers in the industry with their current employer for less than 12 months.
  • The largest contribution to employment growth in Queensland has come from interstate migration, while WA has struggled to attract Australians west. Its workforce growth has come predominantly from within the State and from overseas.
  • Data from the 2011 Census suggests that around 1.5% of employed persons commute interstate.
  • The phenomenon of fly-in/fly-out (FIFO) and drive-in/drive-out (DIDO) has become firmly established in recent years. Between 2006 and 2011 the number of workers commuting interstate to WA more than doubled to 13,600.
  • Recent ABS data shows that there are around 50,000 FIFO/DIDO workers currently employed in mining or mining-related construction projects. In the Pilbara and Bowen Basin regions alone, 30% to 40% of all 25-54 year olds are FIFO/DIDO workers – that's an increase of around 50% since 2006. 
Even more interesting was an in-depth analysis of reasons for people leaving jobs (‘Job Separations’ in ABS language)

Type of job separation
Number (000’s)
Share of all separations
-      Retrenchments*
-      Temporary jobs ending#
-      Job sorting+
-      Lifestyle and personal reasons^

*   Reasons include retrenched or employer went out of business
#  Reasons include job was temporary or seasonal
+  Reasons include to obtain a better job or wanted a change, unsatisfactory work conditions, to start own or new business, and closed or sold business for economic reasons
^  Reasons include family reasons, left holiday job to return to studies, own ill health or injury, closed or sold own business for non-economic reasons and retirement

Over two and a half million job separations occurred during the twelve months between March 2011 and February 2012 which is just under 21% of the total Australian labour force. Just over two thirds of workers left their jobs voluntarily and just under one third left their jobs involuntarily.

As many workers would be counted more than once in the job separation data it would be reasonable to conclude that the annual turnover in the whole Australian labour market is somewhere between fifteen and eighteen per cent.

ABS data indicates that half the people moving between jobs move to another industry and half remain within their current industry.

The data would tend to suggest that in a rapidly changing job market, loyal employees are increasingly loyal and that many more people leave their jobs as a result of their own choice, rather than their employer’s choice.

What makes for a good media headline often doesn’t represent the reality. It’s as true for employment marketplace as it is for the gossip pages.

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