19% fall in wages since 1997 while costs go up, and older generation now earns 2.6 times more, says thinktank
Young people in Britain have been worst hit by the cost of living crisis, suffering the biggest drop in real wages and spending a bigger proportion on life’s essentials than any other age group, according to a report published Monday.
The pay gap between younger and older workers has risen by more than half since 1997, the Intergenerational Foundation thinktank said, with those in their 50s now earning 2.6 times more than workers aged 18-21, compared with 1.7 times in 1997.
Some 45% of all money spent by 20-something households goes on essentials such as housing costs, fuel, power, food and transport – a bigger proportion than for any other age group.
As a result of this “double squeeze” the cost of living crisis is most acute among young people, limiting their spending power.
Angus Hanton, IF co-founder said: “This double squeeze on wages and living costs provides yet further evidence that younger generations are lagging behind older generations both in terms of relative pay and the cost of living. The young are the new poor and policy-makers must do more to protect them.”
The analysis came as the British Chambers of Commerce called on George Osborne to focus on youth unemployment, trading and enterprise in next month’s budget, after pointing to a jobless rate among young people of 917,000.
“This means that young people are nearly three times as likely to be unemployed compared with the rest of the UK population,” the BCC said.
Ed Miliband has identified Britain’s cost of living crisis as a key battleground in the 2015 general election, and has promised to freeze energy prices until 2017.
The IF report says that while real wages were generally improving for all age groups until the beginning of the downturn in 2007, with older workers enjoying a more rapid rise, all age groups suffered a fall in real wages thereafter, with the largest impact being felt by younger workers.
Median gross weekly wages have fallen by more than 19% in real terms since 1997 among workers aged 18-21, compared with a 2% rise among 22- to 29-year-olds and a 25% rise in earnings for the over-50s over the same period. The cost of renting and powering a home now accounts for 24% of all the money spent by 20-something households, up from 15% a decade ago.
“There is clearly a desperate need for policy-makers to do more to address the cost of living crisis affecting young workers, especially the rising cost of housing and the declining value of wages,” the IF said.
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