New report throws light on the generational wage gap » SMEInsider

New report throws light on the generational wage gap

Older workers earned less during their first two decades of employment, but younger workers have been hit hardest by the recession, a new report has found.

Inflation-adjusted figures released by the Office for National Statistics show that employees who were aged 21 in 1995 were earning 40% more by the time they were 39 than those who turned 21 in 1975. Overall, in real terms, average pay for full time workers has almost doubled since 1975.

Overall, pay inequalities are also on the decline, according to the report. Since the introduction of the National Minimum Wage, it finds, wage growth amongst the lowest earners has been strong, both for full-time and part-time employees, whilst hourly wage gaps have narrowed slightly across all parts of the UK since 1998. Pay disparities between male and female workers under 30 have also begun to even out.

However, regional disparities are still stark: more than 12% of people earning less than £6.56 per hour live in the North East, whilst a third of the country’s highest earners are in London. In London, too, the highest earning 10% rake in almost 15 times as much as the lowest earning 10%. After London and the South East, Scotland enjoys the highest median wage.

Since 2009, pay in real terms has dropped for workers of all ages, but whilst 59 year olds (workers who turned 21 in 1975) have seen a 5% drop, the class of ’95 (now aged 39) have had their wages fall by nearly 8% on average. Bleaker still is the outlook for those who turned 21 in 2009, who have seen their age group’s wages drop by over 11%. Unless things begin to pick up soon, they have little to look forward to in terms of income over the next decade; overall, those in their 20s and early 30s have suffered the most dramatic decrease in income since 2009, with an average decrease of nearly 12%.