It’s been a decade since the financial crisis but the impact continues to be “substantial” – especially for those people born in the 1980s.
There is a lot of discussion around the impact of the recession on young people but those now aged 30 – 39 are actually worst hit, missing out on £2,100 a year as a result of a 7.2% slump in wages compared with a 10 years ago, according to new analysis by the Institute for Fiscal Studies for the BBC.
That’s the cost of a new car, a swanky holiday, or could add up to become a sizeable chunk of deposit for a mortgage.
“In the recession and immediate aftermath those leaving education suffered more in terms of their employment prospects and how much they were earning than older workers,” Jonathan Cribb, the report author, told HuffPost UK.
At the time of the financial crisis in 2008, the average wage was £24,100 but in 2017 it was just £23,300. Meanwhile, the cost of living continues to increase, squeezing consumers and meaning they are worse off in real terms.
Cribb said there was also indication that people during the recession switched jobs less, possibly as a result of avoiding risking job insecurity. This in turn could suggest that people were less likely to push for pay rises and promotions.
The average person in the UK meanwhile is £800 a year worse off than they were before the recession, with people in their 20s experience 5% lower wages and those in their 60s who are still in work experiencing a drop of just 0.7%.
Professor John Hills from the London School of Economics, another expert, told HuffPost UK the effects of the recession were still being felt today particularly in the wealth difference between age groups.
He said that people aged 60 today were a lot better well off than someone aged 30 because they had earned comparatively more and were able to buy property and other assets far more cheaply.
The gap is now “far greater” than it was, he said, with a wealth gap of £364,000 between older and younger people that was “pretty well impossible” to fix.
“As far as the impact of the recession is concerned, it was a big mistake to be born in the 1980s. What’s rather alarming about this research today is that the relative fall behind seems to be lasting into people’s 30s,” he told HuffPost UK.
As a result, people born in the 80s were increasingly needing to rely on their parents and grandparents to get on the housing ladder – creating a bit of a “lottery” in terms of whether they could afford to help.
“It matters more and more who your parents and grandparents are as to whether you will be able to build assets through your life,” he said. “What younger people can now save simply isn’t enough.”
