The new research, based on weekly payroll data from Australian businesses, found that a person who switched their job received, on average, a 9 percentage point jump in their wage compared to a worker who remained in their existing position.
For someone on the median wage, that equates to a $5700-a-year pay increase. Younger workers, those aged between 21 and 34, enjoyed an even bigger gain of about $7500 a year.
The institute’s senior research economist, Aaron Wong, said in a jobs market as tight as Australia’s, there should be much more movement by workers seeking better-paying positions.
“If people aren’t switching to better jobs in a record-setting labour market, it suggests that there are fundamental issues”, he said.
“Policy changes to encourage firms to compete more actively for the best workers and make it easier for workers to move between employers would increase workers’ gains from switching and make it easier for top-performing firms to match with the most suitable workers.”
The research suggested the large gain for younger workers was likely because they moved to more productive firms that were able to offer higher wages.
It found people switching jobs in capital cities got a bigger pay boost ($6300) from moving than those in a regional area ($4300).
Chief executive of e61 Michael Brennan says non-compete clauses may be hurting wage levels.Credit: Alex Ellinghausen
The institute’s chief executive, former Productivity Commission chairman Michael Brennan, said the research suggested workplace laws such as non-compete clauses may be acting as a barrier.
Rules governing the licences for various occupations could also be stopping people from moving interstate for better-paid work, the institute found, while house prices and the stamp duties on those properties may be further factors in making it difficult for people to shift roles.
Last week, the Reserve Bank noted the proportion of people switching jobs had fallen back to its pre-COVID level, which was already at its lowest point in at least 30 years. In 1990, more than 17 per cent of people switched jobs, but it is now around 8.5 per cent.
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Figures due to be released by the Australian Bureau of Statistics on Thursday are expected to show a small lift in the nation’s jobless rate to 4 per cent, up from 3.5 per cent in the middle of the year.
Before the release, Treasury Secretary Stephen Kennedy told a Senate hearing that he was increasingly confident unemployment would remain around 4 per cent without putting upward pressure on inflation.
He said there was no evidence of a wage-price spiral, noting younger people had benefited from the incredibly strong jobs market after the Covid pandemic.
“With the right policy choices, there remains a rare opportunity to sustain the economy closer to full employment than has been the case for many decades. Such an outcome would be life-changing for many disadvantaged Australians,” he said.
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Source Agencies
