Young adults worst hit by recession
Published 14/06/2013 | 00:13
Young adults have seen their income slashed most by the recession while pensioners continue to receive more and more, researchers have revealed.
The Institute for Fiscal Studies said that among people in their 20s median income fell 12% between 2007/08 and 2011/12 allowing for inflation. That was the biggest slump for any age group, reflecting the fast-rising joblessness among young people, the think-tank said.
But over the same period there was no halt to a historic rise in the median income of the over-60s - which went up around 2%-3%. The findings will fuel further the fraught political debate over the protections currently afforded to OAPs from austerity measures.
IFS senior research economist David Phillips said urgent political action is required as young people have not only suffered worst from the recession but are "now at risk of falling further behind".
The IFS said the widening gap is part of a long trend - with median pensioner income almost doubling since 1979, compared with 50% for families with children and just a third for working-age people without children.
It is also reflected in the numbers of pensioners in relative poverty, with rates rates falling a quarter, IFS analysis of the latest Government figures showed.
While in the 1960s and 1970s OAPs were up to eight times more likely than others to be poor, 40 years later they are now no more likely than anyone else to be - and even less so when lower housing costs are factored in. That is partly explained by the fact benefit rates rose considerably faster than wages over the period, it said.
In another reverse of a historic trend, childless, working-age adults are also now as likely to be poor as anyone else - something the IFS pinned on weak earnings growth increasing the numbers of in-work poor.
Mr Phillips said: "The face of poverty has become much younger during recent decades. This is in many ways a triumph of social policy. But these figures also confirm that it is young people who have suffered most as a result of the recent recession and who are now at risk of falling further behind. It is important that policymakers and politicians understand these profound changes to patterns of low incomes and respond accordingly."
The conclusions are contained in the Living Standards, Poverty And Inequality In The UK report, funded by the Joseph Rowntree Foundation and based on the Government's Households Below Average Income data published earlier this week.