The pandemic has widened the wealth gap between the generations as the value of property prices and global equities has continued to appreciate, new research has argued.
Think tank The Resolution Foundation said total UK household wealth rose by about £900billion between February 2020 and May this year, with the majority of gains going to those over 55 years old.
Those in their early twenties did see the greatest proportional rise in their wealth, but in absolute terms, they were far less likely to benefit from rising property prices as few of them own homes and their wealth is mainly tied up in savings.
The organisation’s report estimates that there was no growth in the median wealth of Britons aged between 20 and 24 over the 14-month period compared to increases of £9,000 for 45 to 49-year-olds and £17,000 for those 65 and older.
It noted that young first-time buyers today have to deal with a much more expensive housing market relative to their parents’ and grandparents’ generation, and must fork out ever larger amounts for deposits and mortgages.
This was already a major problem before the pandemic, and has served to stifle home ownership rates and the buildup of wealth among youngsters.
‘It would not be a surprise if today’s young people look bitterly at the lower house prices their parents and grandparents paid, while those from older generations look jealously at the low interest rates that first-time buyers now enjoy,’ the report remarked.
Younger people were also at a greater chance of being furloughed, having their pay cut or being laid off in 2020 because they disproportionately worked in professions hit by the pandemic, such as hospitality, retail and leisure.
In February 2021, when the UK was in its third national lockdown, over a third of younger employees were on furlough compared to 18 per cent for the over-65s and 15 per cent for those aged 60 to 64.
Yet as restrictions on the UK economy began to loosen, young workers experienced a more substantial rebound in the employment market than pensioners, and by the end of August, older employees were at higher risk of being furloughed.
Kathleen Henehan, a senior research and policy analyst at the Resolution Foundation, said: ‘Young workers bore the brunt of the initial Covid-19 labour market shock, but their employment rate has bounced back as the economy has reopened.’
Despite this, the research paper warned that young adults appear as likely to be working in low-paid and insecure jobs today than they were before the pandemic.
It further cautioned that the pandemic’s disruption to children’s education and the drop in young people starting apprenticeships could worsen social inequalities in the future, especially for those from poorer backgrounds.
Alex Beer of the Nuffield Foundation, which funded the research, said it showed the fragility of living standards in the UK and an increasing wealth gap between generations in an economy now being ‘buffeted’ by supply chain and labour market disruption.
But the report’s authors also said employment programmes should be better tailored for older Britons, whom it notes are more prone to waiting longer to gain a new job after being let go and earn considerably less than in their previous job.
To boost their employment rates, they recommend employees getting the right to flexible working from their first day on the job and a ‘right to return’ after taking a period away from work if they have had health issues or caring responsibilities.
As the law stands, employees must have served six months in a job before requesting the right to flexible working and can only make a single request each year, which the employer can turn down.
The UK Government is currently consulting on a proposal to allow workers to ask on day one for flexible working arrangements and for employers to consider alternatives should they be unable to approve a request.
But Frances O’Grady, the general secretary of the Trades Union Congress (TUC), has claimed the proposals are ‘just tinkering around the edges’ and will still give employers the choice to reject all demands for flexible working.Internet Explorer Channel Network