A year in review for intergenerational fairness

2021, it seems, will end the same way as it started, with COVID-19 putting the nation on hold, but it is the young who have suffered the most as intergenerational unfairness deepens, writes Liz Emerson, IF Co-founder, in this end-of-year review.


From Delta to Omicron, COVID-19 has delivered a rollercoaster of a year as the nation has been locked down and worked from home, opened up and returned to the office, and now returned to working from home again. 

We face yet another Christmas wondering how best to shield our older relatives while also concerned for our children, our younger friends and young relatives, many yet to receive their booster jabs.

Welfare protections

The difference during this wave is that the government has tapered off the protections that helped workers and businesses during the previous waves. It has also withdrawn the Universal Credit uplift: this affects younger people more since under 25s receive less in Universal Credit, and younger generations are more likely to need to claim it through unemployment, underemployment or high housing costs. 

Older generations have generally been better financially insulated during the pandemic thanks to being more likely to own their own homes as well as in receipt of regular income from, for example, state, workplace, and/or self-invested pensions.

The Living Wage is still not enough

The rise in the Living Wage this year, while welcome, will still not go far enough to help those, largely younger people, working in the gig economy or in low wage jobs, to make ends meet during a period of high inflation. 

Another COVID-19 wave means lower customer numbers, cancellations of orders/reservations, high overheads, and therefore another threat of lost hours or job losses, but this time with no option to furlough staff. While the anticipated tsunami of redundancies did not appear after the end of furlough, this wave, with limited financial support, could see more organisations go to the wall.

Intergenerationally fair pay

IF continues to call for all workers to be paid the same rate, irrespective of their age, if undertaking the same work. That an 18-year-old should have to stack shelves for £6.83/hr while a colleague, who is over 23 years of age, can earn £9.50/hr for doing exactly the same work, remains particularly unfair. 

Meanwhile, the Apprentice Rate will still be below £5/hour in 2021/2022, which is hardly an incentive to young people to go out and get trained “on-the-job”.

National insurance hike hits young

The rise in employee National Insurance Contributions (NICs) from 12% to 13.25%, announced in the recent Budget, will again hit the young the hardest. That announcement, combined with the freezing of both NICs and income tax thresholds, will again drag lower-earning, and largely younger workers, into repayment sooner using “fiscal drag” in order to increase the government’s tax-take. 

Younger workers who went to university and earn just above the current threshold of repayment now face marginal tax rates of 42.25% for the next 30 years, at the time of life when they should be saving up for their own homes and/or families.

Pensions and taxes

We welcome the announcement that colleagues over State Pension Age (SPA) will have to contribute more towards their own old ages, but 1.25% in NICs still lets older workers off the other 12% NICs that their younger colleagues have to pay. For a decade, IF has been arguing that older workers have not been contributing enough to cover the cost of supporting their own increasing longevity. 

While the pandemic has caused a tragic loss of life among largely older generations, the increase in longevity trend is likely to continue once we are through the other side of the pandemic, and hard decisions need to be made, especially in light of the fact that we have borrowed hundreds of billions of pounds.

COVID-19 debt

It is now a certainty that the £500 billion COVID-19 bill will also increase thanks to the Omicron wave. That is equivalent to around £18,000 for each UK household. 

Rather than thanking the young for their part in the intergenerational solidarity that was needed to protect their older relatives, the policy announcements outlined in this blog suggest that the government intends for the young to be the packhorses bearing the burden of COVID-19 debt, rather than taxing the abundant, and growing, housing wealth that has continued to grow throughout the pandemic.

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Photo by Engina Akyurt on Unsplash