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07/06/2018 - Growing gulf between pay of younger and older people, says TUC

mind-the-gapAccording to TUC research, the generational pay gap – the gap between the average earnings of 21-30 year-olds and 31-64 year-olds working an average 40-hour week - has increased in real terms from £3,140 in 1998 to £5,884 in 2017.

That’s a total increase of £2,744 over the last two decades.

The recent report from the TUC (a federation of Unions) shows that the average young worker is only £42 a week better off than young workers were 20 years ago.

By contrast, the average older worker is £95 a week better off – more than double the rate of younger workers.

The pay gap between under-30s and over-30s is now 21.9% (£2.81 an hour), compared to 14.5% in 1998 (£1.51 an hour in 2017 prices)
This generational pay gap isn’t the fault of young workers but is down to several factors beyond their control.

So while the rise in the cost of living has outstripped wages for most people, young workers have been hit by a triple whammy of insecure work, low pay and limited opportunities to progress.

This is partly the result of the continuing wage stagnation and poor growth that has affected many UK workers.

Yet because young workers entered the labour market at a particularly volatile moment after the 2007/08 financial crash, the impacts on their pay are worse.

As a result, their wage gains are smaller than the young workers of twenty years ago.

The overrepresentation of today’s young workers in certain industries has also worsened the generational pay gap.

Jobs growth has been generally slower for younger workers than for older workers in the past two decades, but the growth that has taken place has been heavily concentrated in five industries: education; health and social care; hotels and hospitality; real estate, renting and business activities; and wholesale and retail.

Many of these industries are low paid – four out of five have seen the lowest real terms increase of median hourly pay over the past two decades – yet they employ over three-fifths of the 21-30 year-olds who are currently in work.

Meanwhile, last year’s labour market figures show that over one-third of younger workers are in caring, sales or elementary roles compared with just over a quarter of older workers. These jobs are often poorly paid, with zero-hours contracts, agency contracts and temporary work increasingly common.

There are also very few opportunities for young workers to access the skills and training they need in work.

One third of employers admit that they don’t offer any training to their staff – more in some of the industries where young workers are found.

The TUC spoke to nearly 1500 young workers as part of this research, and 17 per cent had not been offered any training in their current job. This rises to 34 per cent for those on part-time contracts, and 37 per cent for workers on zero-hours contracts.

Additionally, less than one-third felt that their current job makes the most of their skills, experiences and qualifications. This drops to a mere 16 per cent for part-time workers.

Being stuck in low paid jobs without opportunities to progress has a significant impact on young workers.

Over the last year alone, 41 per cent were forced to ask their family or friends for financial help due to a shortage of money.

20 per cent had skipped a main meal, nearly one quarter had pawned or sold something, and 22 per cent went without heating in cold weather because they couldn’t afford to pay the bills.

There are long-term impacts too. Over one-fifth put off starting a family, and over a quarter had put off changing careers due to financial worries.

“For a lot of young people their experience is that the world of work is by its nature insecure. That not being paid properly is normal and they are supposed to be just grateful,” said Frances O’Grady, general secretary of the TUC.

“The decline in collective bargaining has had huge impact ... but the whole point of trade unions is we are about raising expectations and saying you deserve to have a job that gives you enough to live on. We are failing young people if they don’t see us as a route to achieving that.”

“We’re creating a lost generation of younger workers. Too many young people are stuck in low-paid, insecure jobs, with little opportunity to get on in life,”

“But unions need to reach out to the young workers in workplaces where there isn’t a union."