Young Australians haven’t had a pay rise for TWO DECADES – and it’s set to get worse with youths needing help from their grandparents to survive
- Productivity Commission found young people had no pay rise from 2001 to 2018
- Income levels were expected to plunge as the coronavirus crisis has worsened
- Government report said elderly would have to leave all inheritance to grandkids
Younger Australians have missed out on pay rises for the past two decades and the coronavirus pandemic is set to make a bad situation worse, a government report feared.
The Productivity Commission predicted the elderly would have to leave their inheritance to their grandchildren, instead of their Generation X children, to stop their youthful descents from living in poverty.
Those aged 15 to 24 in 2018 effectively had the same level of after-tax income as people their age had in 2001.
Their incomes have increased by just four per cent in almost 20 years – a level well below the compound rate of inflation making this effectively a pay cut.
Younger Australians (Brisbane youths pictured) have missed out on pay rises for the past two decades and the coronavirus pandemic is set to make a bad situation worse, a government report feared. The Productivity Commission predicted the elderly would have to leave their inheritance to their grandchildren, instead of their Generation X children, to stop their youthful descents from living in poverty
By comparison baby boomers, or those aged 65 and older, saw their income levels surge by 86 per cent.
The Productivity Commission, an arm of Treasury, feared the COVID-19 recession would see young people suffer pay cuts.
‘It is likely that this negative income growth has been compounded by the effects of the current COVID-19 crisis,’ it said.
‘Young people’s labour income has been hardest hit by high unemployment, and many young people are seeing their savings depleted.’
Younger people would be unlikely to afford a property or to build up their wealth unless the elderly gave their inheritance to their grandchildren.
‘In light of the current decline in young people’s incomes, families could eventually adjust by targeting bequests towards their younger members,’ it said.
Those aged 15 to 24 in 2018 effectively had the same level of after-tax income as people their age had in 2001. Their incomes have increased by just four per cent in almost 20 years – a level well below the compound rate of inflation. Pictured is a Sydney barista
‘For instance, it may become standard to leave bequests to grandchildren rather than children.’
Unemployment during June amid COVID-19
Australia’s unemployment rate climbed from a 19-year high of 7.1 per cent in May to 7.4 per cent in June – the highest since November 1998
Number without work climbed from 923,000 to a record-high 992,300
Close to a million people unemployed for the first time ever – surpassing 960,200 record set in December 1992
Unemployment increased even though 210,800 more people were employed as COVID-19 shutdowns eased
That was because the participation rate increased from 62.7 per cent to 64 per cent as more people looked for work
Source: Australian Bureau of Statistics labour force data for June
Youths without parents rich enough to help them would be particularly vulnerable.
‘Low-income parents and parents who are themselves hit by an income shock may not be in a position to help,’ it said.
Young people have been battling weak wages growth since the Global Financial Crisis with those aged 15 to 34 suffering a pay cut, adjusted for inflation, between 2008 and 2018.
Productivity Commissioner Catherine de Fontenay said: ‘Young people have experienced a “lost decade” of income growth.
‘This means they entered the COVID-19 crisis already on lower wages and usually with limited savings.’
Australians under 35 have suffered from ‘slow wage rate growth’ regardless of the education levels.
Those without university degrees who continued to work, as unemployment rose, were also at risk of being displaced by higher-educated people who pushed ‘less-educated ones ‘off the ladder’.’
Since the last recession in 1991, full-time jobs have been increasingly replaced by part-time work, making it harder for younger people to save.
A delay in retirement also saw more younger university graduates competing ‘for jobs that require more education’.
Australian’s jobless rate climbed to a 22-year high of 7.4 per cent in May.
Youth unemployment was more than double that at 16.4 per cent.
Close to one million, or 992,300, people were out of work for the first time ever.