Surveys show new jobs mean higher pay, so experts weigh in on what HR can do to keep young workers from leaving
By the end of this year, almost of Gen Z workers in Canada plan to go back to the job board to look for new jobs, and for many, it has to do with money and benefits, according to a recent survey.
Almost half (46 per cent) plan to look for a job before the year ends, with 41 per cent believing that changing employers offers greater earning potential, according to the Robert Half survey of more than 300 Gen Z professionals.
And they might be on to something.
Canadian job changers saw base pay grow 5.6 per cent year-over-year, compared to job stayers, whose pay only grew 3.0 per cent. Once overtime and bonuses are included, that gap widens, with job changers pay growing 9.6 per cent compared to 4.4 per cent, according to an ADP report looking at the payroll of 1.6 million Canadian workers.
Among job stayers, workers aged 25 to 34 saw the largest base pay increase, at 3.6 per cent.
That shouldn't come as a surprise to employers, says Matissa Hollister, assistant professor in organizational behaviour at McGill University.
"If employers are focused on hiring externally, it shouldn't be a surprise that their workers are seeing that their main opportunity to get ahead is to take one of those external hiring positions.”
Is job hopping really a Gen Z thing?
However, Hollister says that the trend of younger workers switching to employers isn't new.
"There are classic studies from the 1980s — or even the 1970s — that looked at this, and it's fairly common for young workers to change employers. That analysis even finds that it often involves salary increases," she says.
"So, it's always a challenge with these sorts of things to know: is this really a Gen Z thing, or is this just the way that younger workers operate, no matter what?"
Hollister, who has published papers looking at how frequently people change jobs, says if anything, today's research shows a bigger shift happening, with fewer workers staying with one employer for 10 or 20 years.
"It's an increase in people moving in a period where we think that they should have stable jobs, which is in their 30s, 40s, 50s, and not as much in their 20s," she says.
Why workers look outside
While the current economic state might play into why workers leave for more money, Glenda Oldenburg, senior director of work and rewards at WTW, says much of it also comes down to whether workers feel like they're paid for what they're worth.
"It really comes down to the employee's perception of whether they're being paid appropriately for the value they bring to the organization," she says.
The dissatisfaction often grows when managers or employers can't explain the pay properly, says Oldenburg: "Employees are less likely to leave when they understand pay.”
How employers can keep up
According to WTW, Canadian salary increase budgets are averaging about 3.5 per cent for 2027. Before the recent inflation, it was roughly 2 to 2.5 per cent, says Oldenburg.
With lower salary increases and Canadian employers losing an average of $30,680 per employee to turnover, according to Express Employment Professionals, how can employers keep retaining talent?
Hollister say the key is to go back to internal opportunities.
"Frankly, there is evidence from some of my other work that employers are not offering a lot of job security," she says.
"The opportunities for internal promotion are not always readily evident, because organizations have really moved away from what we used to call internal labour markets — the idea of both offering job security and clear opportunities for upward mobility.”
Hollister says that doesn't mean employers taking an old school approach for fixed promotions or fixed ladders but giving employees the opportunity to follow unconventional paths, to try new things and grow.
"It's basically offering them the opportunity to move and change and test within the organization — rather than only offering people one option, and then they're going to resort to moving somewhere else if you don't have that," she says.
Internal promotion can also pay off in the long run. Hollister points to a 2011 study by the University of Pennsylvania's Wharton School that found external hires tend to get lower performance evaluations in their first two years compared to internal workers who are promoted into similar jobs, even though they're paid about 18 to 20 per cent more.
However, the study also found that external hires who stay past those first two years tend to be promoted faster.
Is pay transparency a factor?
As for whether greater pay transparency laws in Canada have played into job hopping, Oldenburg believes they haven't played much of a part.
"I don't think the legislation has made the situation worse," she says. "I think younger people are looking for opportunities to earn more, and if they feel they can't get that within their current organization… that's when they might make a move."
"If they're not comfortable having that conversation with their current employer, they may simply leave without one," she says.
It all goes back to fairness and consistency, says Oldenburg.
"The biggest thing is that employees at any age and stage, but perhaps more at the junior levels, need to feel heard, to feel they're being treated fairly, and to feel they have opportunities."
