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Would you move for work?
“Workforce mobility” is essential in Australia’s modern economy. It’s vital to get people with the right skills to where they are needed. Moving for a job is a huge commitment and a decision most people don’t make lightly.
Have you ever relocated to accept a job? What would (or did) it take for you to pack up and move? More money? Better career prospects? The promise of on-the-job training?
In a recent study, researchers at Deakin and Monash Universities explored what is involved (including financial and other factors) in the decision to move to get a job. They looked at how willing people in New South Wales and South Australia (which have relatively high unemployment in some areas) are to move to places such as Emerald (Queensland) or Karratha (Western Australia), which had relatively high demand for labour in 2012.
You probably won’t find the major findings that surprising:
• Some people are more willing to move for work than others.
• People looking for work (whether they were already employed or unemployed) were much more willing to move.
• Wage incentives were required before some people would accept a job in a remote location.
• Some people didn’t need a wage incentive to move.
People were more willing to move for:
• Longer-term work rather than fixed-term contracts.
• Jobs where training was provided.
• Fly-in/fly-out contracts based out of a major city rather than permanent relocation to a remote area.
Turning motivations into dollars
Exactly how much money does it take to tip the scales in favour of moving for work? In this study, researchers gave a dollar value to a range of factors that affect peoples’ decision to move for work. It’s a great way to understand the relative importance of each factor in the decision making process.
If you’re considering moving for work, this information (apart from being pretty interesting on its own) can be used to understand the major drawbacks involved and make a more informed decision and empower you in your negotiations with employers. If you’re an employer, understanding the barriers holding people back from accepting jobs is the first step in overcoming those issues so you can win the best talent.
Remember, all of these people are considering moving from an area of high unemployment in New South Wales or South Australia to a remote location in Queensland or Western Australia for a job in mining. The dollar values indicate how much people need to be offered (or will give up) due to a particular attribute (all other factors being equal). A positive number is the extra pay “incentive” generally required to get someone to accept the job and move. A negative number is the amount people were willing to give up and still accept the job.
|Job includes training||-$6,902|
|Age (per year)||$1,046|
|Born in Australia||$14,876|
|Currently studying (part time students only)||-$25,736|
|Have been to destination||-$18,595|
|Know people living at destination||-$43,884|
|Frequency of social contact (ie extroverted)||-$5,401|
Employment status has a major impact on the likelihood someone will accept a job that requires moving. An unemployed person is 17% more likely to accept a job versus someone who does have a job and isn’t looking for work.
Surprisingly, employed people looking to change jobs are actually more likely (21% probability) to accept a job than unemployed people! Someone who is currently employed does expect to earn $5,119 more in a new job, suggesting it’s more costly to recruit people who already have a job.
FIFO vs Moving to a Remote Area
People are willing to trade a significant amount of their salary – $10,504 a year – in order to relocate to a major city like Perth or Brisbane and work Fly-In Fly-Out (FIFO) rather than permanently move to a remote area. This option is likely attractive for a number of reasons, including better climate and greater access to amenities like schools, health providers, housing and entertainment.
In reality, choosing FIFO over permanent relocation has other benefits which help to offset the $10,504 those people were willing to give up. People working FIFO jobs are normally provided food and accommodation by their employer when they are working on site. The food alone saves a FIFO worker around $5,000 a year (assuming they’re on site 200 days a year and average $25 a day in food costs). FIFO workers based out of Perth or Brisbane may also benefit from lower costs for accommodation, entertainment and other lifestyle expenses compared to someone living in remote areas.
Temporary vs Permanent
Job security is obviously a major factor in people’s decision making process. A temporary contract requires an annual premium of $11,236 compared to an ongoing contract – for instance, a 6 month contract would require additional compensation of $5,618. This premium offsets additional costs and risks for the worker; the potential for a period of unemployment between jobs and the possible cost of relocating when the contract ends.
Individuals are willing to trade off $6,902 in annual wages for a contract that includes training. The expectation is their short term sacrifice will pay off in the long term, with higher wages in the future.
Age is a major factor in the decision to accept a job offer. Each additional year in age attracts a wage premium of $1,046! Older people are simply less likely to accept job offers. One theory is moving for work is an investment where the costs are borne initially and the returns are accumulated over time. As a person gets older, there is less time to accumulate the benefits so the return on investment is decreased.
Older people tend to have invested more ‘social capital’ in an area, meaning they’ve developed a network of friends and acquaintances. This network can offer a lot of group and economic benefits – things like lending goods, offering a “helping hand” and referring business and work opportunities. Losing this network can therefore be a significant cost for older people.
The study found men were 15% more likely to accept a job than a woman, and women require a $29004 higher wage premium than men too! Context plays an important part in this finding – these jobs are in an industry with traditionally male-dominated employment practices, so are probably less attractive to female job candidates as a result.
Single people are far more likely to be willing to move for work than married people. In fact, someone with a married or defacto status required a $19,206 wage premium!
Families typically have higher moving costs – not just financial, but also social. All members of the family unit have to quit their jobs, and break their family and social networks. Having dependents like children is actually a much less important factor, which suggests the partner being able to find work in their new home town is the real concern for families.
Australian household budgets are typically built around 2 incomes, so the availability of jobs for the partner is important. For employers in remote locations, this means you could increase your attractiveness by providing jobs to both people in a couple, or working with local communities to find job opportunities for partners.
This study didn’t find education to be a significant factor in the decision to move to a remote location for work. However, people currently studying part-time (full time students were excluded) were far more likely to accept a job offer and willing to forgo $25,736 in wages compared to non-students.
Home Owners vs Renters
Owning a house, especially if still paying off the mortgage, is a major disincentive for people considering moving for work. People who own their own home (or have a mortgage) require a $25,552 higher wage premium vs renters. The housing related costs of moving are likely a major turnoff, such as having to rent again or selling and buying a new place in the new location.
Friends & Family
This study found having family at the location is not a significant factor in the decision to move, unlike other similar studies. Having friends at the destination IS a major factor – it means the person moving has access to a network when they arrive which plays a major role in the transfer of ‘social capital’ and learning about the new area. In fact, this is such a major factor, people who do not know anyone at the destination require a $43,884 higher wage premium compared to those who have friends there!
People who have frequent social contact with others outside the home are also more likely to accept a job than others, suggesting more extroverted people are risk takers and more willing to move for work.
Overseas-born people more willing to relocate for jobs than those who are Australian-born. This translated into a $14,876 wage premium for people in Australia to move to one of these remote locations for work. Again, people born overseas typically have a lower investment in ‘social capital’ than someone born in Australia, so the opportunity cost of moving for work is lower.
Distance had no effect – distance to destination varied between 1444km and 5147km, but didn’t seem to affect the decision to move. If you’re moving to a remote area, a few thousand kilometres here or there apparently isn’t that big a deal!
The Extremes: Least vs Most Willing to Move
Based on these results, here are some speculative profiles for the people “most willing” and “least willing” to move.
Most willing to move: an extroverted young man born overseas, single, with no major commitments and lots of friends at the destination, looking to receive training as part of his job.
Least willing to move: an introverted older Australian-born woman with no friends at the destination, married or in a long term relationship, and paying off a mortgage.
Have you moved for work? Do you know someone who breaks all these rules? Tell us about it!