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United Kingdom

28 May 2018

UK: the intergenerational commission reveals that the UK is no longer delivering for youngsters

The Resolution Foundation, a thinktank, has convened an Intergenerational Commission that brings together leading experts from the worlds of work, academia and public policy. The idea was to explore the questions of intergenerational fairness that are currently on the agenda. In order to improve understanding of these issues, the Foundation aimed to devise a means of repairing the social contract between generations. The Commission has published several important reports which are analysed here.

The Intergenerational Commission, launched in the summer of 2016 by the Resolution Foundation, explored questions of intergenerational fairness and examined the experiences and prospects of different generations in the UK. In the final report, published in May 2018, the Commission, which includes TUC General Secretary Frances O’Grady among its members, provides a comprehensive analysis of the intergenerational challenges the country faces and sets out a policy programme to tackle them. In the section on jobs and pay, the Commission writes that cohort-on-cohort pay progress has stalled, with the oldest cohort of millennials recording earnings at age 30 only slightly higher than the cohort born 15 years before them. The decline for younger cohorts developed relatively independent from the financial crisis. According to the report, a shift towards lower-paying and less secure jobs among young people, alongside a slowing in the rate of human capital improvement was key to this longer-term trend. 

Some of the underlying reports provide important evidence for the conclusions. In the fifth report,  published in Spring 2017, an attempt was made to understand the finding that millennials who have entered work so far have made no earnings progress on generation X before them. It does this by exploring the population and jobs market changes that underpin these faltering cohort-on-cohort earnings improvements, and the mechanisms via which year-on-year increases in cohorts’ pay have slowed down. It shows that increases in low-paid self-employment and ‘atypical’ work mean young adults today are shouldering more risk than their predecessors. This increase in risk is one reason younger workers themselves are taking fewer risks by way of job-to-job moves, which depresses their pay.

The fourteenth report of in total twenty two thematic reports, explored the extent to which the UK’s generational living standards challenge was replicated in other high-income economies, focusing on trends in household income and experiences in the labour and housing markets. The outcome is quite remarkable. The authors assumed that if prospects for young people had deteriorated in a very similar way across advanced economies this might lead to the conclusion that the only important drivers had been global trends in demography and economic growth. The findings, however, showed that, despite a shared slowdown, significant differences in generational outcomes were in evidence between countries. The UK stands out internationally in terms of the extent to which large generational progress was a feature of the 20th century, but this is something that is no longer being delivered for younger generations. The ‘having it’ then ‘losing it’ generational story has only taken place in a small number of other countries, and it is only the UK in which it is clearly evident in relation to both incomes and housing.

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