UK’s old getting rich while the young are getting poorer
Inter-generational unfairness is at its peak, as pensioners are revealed to be getting richer, whilst the young are working harder but earning less money.
Credit: Rising Damp – Flickr
Two reports were released this week that combined reveal a pretty bleak picture for young people in the UK.
New PM, Theresa May, has acknowledged the nation's growing divide between a “more prosperous older generation and a struggling younger generation” – but how does she stand on other student issues?
One report from the Institute of Fiscal Studies (IFS) showed pensioners are now the least likely to experience income poverty in the UK, whilst the younger generation financially struggles.
This comes in the same week that a different report revealed that young people are set to be the first generation to earn less than their parents.
A think-tank called The Resolution Foundation did a little experiment where they followed the same growth pattern that Generation X (those born between 1966 and 1980) experienced back when they were working in their 20s.
The result of the experiment was that if the same pattern is applied to millenials (those born between 1980 and 2000) young people are revealed to be earning £8,000 less than their predecessors.
How are pensioners getting richer?
Since the UK began recovering from the financial crisis, pensioners have experienced strong growth in benefits.
The over 60s have prospered over the last seven years because:
- The state pension has risen – pension is determined by whichever is the highest out of three ‘triple lock’ figures – 2.5%, earnings or inflation.
- More people over 60 are still working (meaning less are relying on state pension).
- UK pensioners are entitled to certain privileges such as free bus passes, TV licence exemption (for over 75s), free prescriptions, no-means-tested winter fuel payments and a Christmas bonus.
Why are the young struggling?
More people are working than ever before, and there has been an overall 2% increase in wages across all age groups between 2008 and 2014.
However, whilst over 60s have been lucky enough to enjoy an 11% increase in income, the 22-30 age group has experienced a fall in earnings of 7% (30-59 have experienced no change).
Of course, there are so many factors that can be attributed to this fall in earnings for young people. Over the last few months, we’ve reported that graduate salaries haven't increased since 2008 and that 23% of graduates are taking on jobs that they're overqualified for because they’re scared of being unemployed after uni.
In our annual Student Money Survey, we found this year that young people’s salary expectations were below average for graduates – particularly where female graduates were concerned.
Whilst male students we asked said they’d expect to be earning on average £23,000 in their first job after uni, females averaged at £19,500 – a £3.5k shortfall!
However, it's worth mentioning that the current national UK average graduate salary has been reported as everything between £29,000 to £25,000 – it's difficult to give an accurate figure due to the disparities in salary across different fields. Here's a guide to help you decipher roughly what you can expect to be earning in your field.
Whilst we're on the topic of inter-generational unfairness, find out how the government (all of whom benefitted from free higher education) has just defended their decision to increase student loan repayments retrospectively.
There are loads more shocking insights about how students feel about their financial situation in our new Student Money Survey. Have a peak at the results here!