Pensioners got richer during recession, while young were hardest hit

The findings will increase the pressure on the Government to ensure a 'fair recovery' in which young adults can 'catch up'

Political Editor

A stark generation gap on jobs and earnings has opened up in recent years as “twenty somethings” were hit hardest by the recession but pensioners were protected from it.

In a report published today, the Institute for Fiscal Studies (IFS) said that the income of young adults had fallen by much more than any other age group, and their employment rate had dropped while the proportion of older adults in work remained steady. 

Although employment rates among young adults fell in previous recessions, the crucial difference this time was that in-work rates for other age groups were remarkably stable and that young adults were “the most acutely affected by some distance” by the very sharp falls in pay, said the IFS.

Meanwhile, the incomes of pensioners continued to grow and overtook those of working-age households in 2009–10 for the first time since records began in 1961. By 2012-13, pensioner incomes were 5 per cent higher, after being 5 per cent lower when the recession began.

The findings will increase the pressure on the Government to ensure a “fair recovery” in which young adults can “catch up”. Some Coalition ministers are worried about a backlash from younger voters at next year’s general election.

George Osborne, the Chancellor, wooed the “grey vote” in his March Budget with a shake-up of pensions and this group is much more likely to vote than young adults.  The latest ComRes survey for The Independent shows that only one in four 18-24 year-olds and 41 per cent of 25-34 year-olds are “absolutely certain to vote” next year.  In contrast, 52  per cent of 55-64 year-olds and 66 per cent of those aged 65 and over are “absolutely certain to vote.”

Video: Vince Cable on employment figures

According to the IFS,  between the 2007-8 and 2013-14 financial years, the mid-point on the household income scale of 22-30 year-olds fell by 13 per cent, while for 31-59 year-olds it dropped by only 7 per cent and for those aged 60 and over it remained steady.

The squeeze on the “twenty somethings” would have been even worse if more than a quarter of them did not still live with their parents – a proportion which has risen by 7 per cent since 2005-06. Those living at home saw their household income drop by 8 per cent; without their parents’ incomes, the fall would have been 17 per cent.

The employment rate for 22 to 30-year-olds fell by four percentage points, while remaining unchanged for 31 to 59-year-olds.  Among those in work, real median pay (before tax) fell by 15 per cent among 22-30 year-olds, and by 6 per cent for 31- to 59-year-olds.

“Young adults have borne the brunt of the recession,” said Jonathan Cribb, a research economist at the IFS and an author of the report. “Pay, employment and incomes have all been hit hardest for those in their twenties. A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects”.

Chris Goulden, head of poverty research at the Joseph Rowntree Foundation, which funded the study, said: “Over the past year young people aged between 22 –30 in particular have fared the worst, seeing the sharpest rise of those now living in poverty. This is in contrast to pensioners, who the IFS say face relatively favourable conditions. The progress in reducing pensioner poverty shows what can be done with sustained effort - a principle that must apply across all age groups.”

The incomes of pensioners have continued to grow, and overtook those of working-age households in 2009/10 The incomes of pensioners have continued to grow, and overtook those of working-age households in 2009/10 (Getty)

The IFS said that home ownership among 25 year-olds has halved in 20 years: 21 per cent of those born in the mid-1980s owned a home at this age, compared with 34 per cent of those born in the mid-1970s cohort and 45 per cent in the mid-1960s.

For  the population as a whole, the recession had different impacts across the UK.  Comparing 2007–08 to 2009–10 with 2010–11 to 2012–13, real falls in median income range from 8 per cent in Northern Ireland to 2 per cent in the East Midlands. After housing costs, London saw the joint-biggest fall (with Northern Ireland). The IFS found  no clear relationship across the country between pre-crisis income levels and income changes since the recession, saying there was no clear North-South divide.

Catherine McKinnell, a shadow Treasury minister, said: “While David Cameron denies there is a cost-of-living crisis these figures show people have seen a substantial fall in their income since 2010.  It is worrying that the IFS expects child poverty – which fell when Labour was in government – to rise under the Tories.”

But an aide to Mr Osborne said: “This shows just how hard Labour's Great Recession hit young people and why it’s vital we keep working through our long term economic plan which is cutting the deficit, creating jobs and equipping  people with the skills they need for the future".

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Digital Campaign Manager

£35000 - £40000 per annum: Recruitment Genius: The role incorporates a mix of ...

SThree: Recruitment Consultant

competitive + incentives + uncapped comms: SThree: Did you know? 98% of our di...

SThree: Trainee Recruitment Consultant

competitive: SThree: Did you know? 98% of our directors started with SThree as...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Are you passionate about sa...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen