Opinion | Evolving job market dynamics

This article is based on the conversations I have had with students, alums, employers, HR trainers, consultants and educators about the current job market landscape and the increasingly common trend of job hopping. As an educator who has led the placement cell of a business school for seven consecutive years, I have noticed shifts in the Nepali job market dynamics.

Job-hopping behaviour of younger employees, especially Generation Z, born between 1997 and 2012, and millennials, born between 1981 and 1996, is a particular concern for employers. A Gallup study found that Millennials are most likely to switch jobs, with 6 millennials out of 10 open to new opportunities, reflecting their low engagement in the workforce. This is also evident in Nepal, especially in sectors like IT, startups, banking, corporate and development. In today’s gig economy, career paths for younger generations significantly differ from those of earlier generations. However, due to the lack of official data and empirical research on job hopping in the country, this piece takes an exploratory approach to understanding the phenomenon.

Why do people job-hop?

There are various reasons why people change jobs, such as insufficient compensation, lack of career opportunities, limited growth potential, low job satisfaction and dissatisfaction with workplace culture and toxic environment. Common complaints include issues with supervisors’ communication styles, lack of mentorship and development, boredom, uninspiring work environment, misalignment with company values, rigid dress codes and ineffective communication channels like social media.

Younger generations prefer their supervisors and seniors to use communication channels and platforms that align with their preferences, such as voice messages and images, to convey messages instead of lengthy written content. The younger generation values appealing modern job titles like “lead” and avoids workplace cultures that use traditional hierarchical titles such as “officer” or “assistant,” even for entry-level positions.

These generations believe that job-hopping can accelerate career growth. They prioritise work-life balance, favouring flexible hours and remote work opportunities over higher pay. Non-financial benefits, such as two-day weekends and a relaxed office culture, are also attractive to them. Platforms like LinkedIn allow them to share career expectations, which enhances their negotiating power easily. Additionally, headhunting is prevalent, and being approached by recruiters often encourages employees to switch jobs, as it makes them feel valued and offers opportunities for better compensation or promotions. In startups and smaller firms, job security and career stagnation further drive job hopping.

Nepali youths may also switch jobs to fit in with social circles, as it is sometimes seen as a trend. Long-term jobs are less appealing to these gig workers, who prefer project-based assignments and dislike hierarchical structures. They seek recognition and value performance metrics over traditional benefits like pensions. As a result, their commitment to long-term employment is often limited. In Nepal, alongside the rise of employees switching jobs domestically, experienced workers in specific sectors prefer to move abroad for better opportunities.

Consequences of job hopping

From my frequent interactions with younger professionals, it is clear that competitive salaries are a major factor driving job switches, often without considering long-term impact. This can hinder deep skill development, as constantly seeking diverse experiences may result in inconsistent expertise.

Employers often perceive frequent job changes as signs of instability, which can harm an employee’s reputation. While job hopping can lead to diverse skills, it may not always result in meaningful growth, and those switching for higher positions might experience only superficial progress. Job hopping is resulting in rising employee turnover, which is affecting productivity, increasing recruitment costs and leading to the loss of institutional knowledge.

Is job hopping really bad?

Many Nepali employers are making concerted efforts to retain top talent by engaging employees through innovative programmes like employee development initiatives. The Employee First, Customer Second (EFCS) approach prioritises employee well-being over customer satisfaction, believing that their happiness can result in better customer service. Organisations offer study opportunities and programmes like in-house Toastmasters, which are fully funded for employees.

Although job hopping may seem negative, it does not necessarily harm the economy. Recent research shows that the relationship between how long someone has worked (tenure) and their productivity forms a curve. Analysis of the workforce’s tenure suggested that the positive impact of tenure on productivity becomes smaller over time. Hence, longer tenure does not always result in performance enhancement.

The concept of Pareto optimality, or Pareto efficiency, is relevant in the labour market, particularly regarding job hopping, where both employees and employers can benefit. When a situation is Pareto optimal, one party cannot improve their situation without negatively impacting someone else. This principle applies to the relationship between employers and employees, especially when job changes benefit both. For employees, job changes often lead to better opportunities, such as improved pay, work-life balance, career growth, or job satisfaction. An employee may find a new position that aligns closely with their values, skills, or career goals, enhancing their situation without harming their previous employer.

Employers also gain from job hopping. When an employee leaves, it allows the employer to seek candidates who may be a better fit for the role. For example, if a former employee is disengaged, their departure can lead to hiring someone more aligned with the company’s objectives, resulting in a more productive and engaged workforce. This can enhance the labour market’s efficiency by matching individuals to roles that suit their skills and motivations. As both parties find better alignments—employers with more capable workers and employees with more fitting roles—the dynamic can lead to a Pareto optimal outcome, optimising human resources without disadvantage.

However, not every job change achieves Pareto efficiency. Even in cases where a job move proves advantageous for the employee, employers may bear expenses associated with the recruitment, employment and training of new staff members. This could result in a short-term disadvantage for the company. An employee may occasionally depart with important institutional knowledge that the employer finds difficult to replace, which could put the employer in a worse situation. Nepali employers need to carefully assess the advantages and disadvantages of this growing trend and be better prepared to manage it effectively.