Career changers

See why career changers are an attractive source to recruit from

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Introduction

We find career changers are an attractive source to recruit new talent from. They bring with them skills and experience which lead to better outcomes within their new sector as well as greater stability in terms of retention within the sector.

In this report we analyse new entrants into select sectors measuring outcomes such as retention, income and self-employment. We divide new entrants into groups based on what they were doing in the year leading up to starting work and compare outcomes between these groups. For example, secondary school leavers are new entrants who recently left high school and career changers are those who had established careers in other sectors.

Methodology

The data in this report is sourced from the Integrated Data Infrastructure (IDI) maintained by Statistics NZ. Read more about the IDI here, and read the disclaimer here.

The primary datatable used within the IDI is IR tax records. From the business registry we can define all employers within a sector based on their ANZSIC06 classification. These employers are linked through to IR tax records where we can see income on a monthly resolution for employees and yearly resolution for employers. This allows us to see which months employees work within a sector, thus their starting month, tenure, and income while working within the sector. We are also able to track progression into self-employment by tracking whether the source of their income changes from ‘wages and salaries’ to any employer code.

Our population of new entrants is taken those first starting work in a sector between the years of 2007 to 2011. Outcomes are tracked until the end of 2017. We aggregate multiple years of new entrants together to allow us to analyse small groups which would otherwise have small sample size. From our population of new entrants we define their source by searching each new entrant was doing in the year leading up to starting work. For example, if they were enrolled in high school through ministry of education records they would be classified as a secondary school leaver. Outcomes are summarised as total counts, or averages within these groups.

Read more details about the methodology behind the analyses in this report here.

Sources of new entrants

We find that almost half of new entrants across the sectors we follow are career changers. Despite their significance, career changers have historically been neglected in terms of attracting new talent into a workforce. Within the article Where do new entrants arrive from? we dig deeper into this, and find career changers are more likely to have transitioned into higher income roles, whereas secondary school leavers, tertiary graduates and beneficiaries make a larger contribution to low income roles.

A demographic breakdown of new entrants can be found here, where we find half of new entrants are over the age of 25. We investigate the prior working industry of new entrants within this article, finding that the wider related industry, eg. agriculture for dairy farming, is the largest single industry source of new entrants, however this is only a fraction of all new entrants.

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Source: Statistics NZ IDI
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Methodology

New entrants are defined as new employees, or employers first starting work within a sector in a given year. New entrants are gathered from the years 2007 to 2011 and outcomes are tracked until 2017. New entrants are grouped into categories based upon what they were doing in the year leading up to starting work. Categories are ranked in the following hierarchy:

  1. Secondary leaver (enrolled within one year of starting work)
  2. Tertiary graduate (enrolled within one year of starting work)
  3. Career changer (at least one year of work experience within any other sector)
  4. Immigrant (first arrived in New Zealand within one year)
  5. Beneficiary (history of beneficiary income)
  6. Returning Kiwi (return date to New Zealand within one year)
  7. Others and unknowns

Such that a new entrant recently enrolled in tertiary education with more than one year of work experience is classified as a tertiary graduate as opposed to a career changer.

Within IRD data there is no available information on the number of hours worked, only income at a monthly level. Because of this, we only consider an employee to be employed in a given month if they earn more than the equivalent of 0.5 FTE (80 hours) on the minimum wage. In other words, for 2007 the minimum wage was $11.25, thus only months with income over $900 count as employed.{/sliders}

Retention

From our population of new entrants the first outcome measure we track is We track how 

We break down new entrants' tenure profiles into four categories: those who stay less than a year within a sector, those who stay between one and two years, those who stay between three and four years, and those who remain working for five or more years within a sector. We find that in terms of tenure profiles, career changers are on par with returning Kiwis and secondary school leavers as being the most stable. We find an exception to this in the construction industry where secondary school leavers have the highest tenure profile.

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Methodology

Tenure is calculated from our cohort of new entrants (those starting work any point over 2007 and 2011) as the number of years earning income in IRD tax records from employers associated with that sector up until 2017.

New entrant definition

A new entrant is classified as an individual who first starts working (earning income in IRD records) within a given sector (defined through employer ANZSIC 2006 codes). We take new entrants in the sectors we follow between the years of 2007 and 2011, and categorise them into source groups using the following hierarchy:

  1. Secondary leaver (enrolled within one year of starting work)
  2. Tertiary graduate (enrolled within one year of starting work)
  3. Career changer (at least one year of work experience within any other sector)
  4. Immigrant (first arrived in New Zealand within one year)
  5. Beneficiary (history of beneficiary income)
  6. Returning Kiwi (return date to New Zealand within one year)
  7. Others and unknowns

Such that a new entrant recently enrolled in tertiary education with more than one year of work experience is classified as a tertiary graduate, as opposed to a career changer.

Within IRD data there is no available information on the number of hours worked, only income at a monthly level. Because of this, we only consider an employee to be employed in a given month if they earn more than the equivalent of 0.5 FTE (80 hours) on the minimum wage. Thus for 2007 (minimum wage of $11.25) only months with income over $900 count as employed.{/sliders}

In the following articles we track how other characteristics correlate with retention:

  • In How demographics correlate with retention, we find that retention is highest among new entrants aged 35-40, and interestingly that there is little retention difference between a 55-60 year old career changer to one aged 20-25.
  • In How qualifications correlate with retention, we find that there is little difference between the retention of new entrants who have completed different levels of qualifications prior to starting work. That being said, there were slightly higher retention levels for those holding university level education for those in the agriculture sector, and higher retention for those holding level 4-6 qualifications for those in the construction industry. New entrants who held qualifications relevant to the industry of the sector they move into also showed higher retention rates.
  • In How work history correlates with retention, we find that a stable working history alongside work experience in the wider industry correlates strongly with retention.
  • In How qualifications correlate with retention, we find that within the dairy farming and sheep and beef sectors, new entrants with a history of living in rural addresses showed significantly higher retention.

Income progression

We track the income progression of new entrants that go on to remain within the sector for at least five years. On average, all experienced a higher growth income after starting within the new sector than in the years leading up to moving into the new sector. Career changers start on average as the highest earners in the first year of transition into the new sector. However, over time, depending on the sector other groups of new entrants catch up, and sometimes overtake career changers as the highest earners.

   

Progression into self-employment

The final measure of success we track for new entrants is their progression into self-employment. We do this by taking all new entrants who stay within a sector for at least five years, and each year after starting in their new sector, track whether they are earning wages and salaries, or business income within the sector.

We find that career changers and returning Kiwis show the quickest progression into self-employment, with many entering the sector starting off self-employed. Secondary school leavers and immigrants show the slowest progression into self-employment, often taking a few years before any become self-employed.

Conclusion

In conclusion, we find that despite their historical neglect in terms of policy and interventions, career changers are the most significant source of new talent entering the sectors we follow. They bring with them many desirable traits in terms of skills and experience from other sectors, which leads them to be the highest earners within the sectors we follow for much of their careers. They are also a group that shows one of the the quickest progressions into self-employment.

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