A recent report by the Trade Union Congress (TUC) has highlighted a significant generational pay gap between workers above and below 30 years of age. In response, there have been heightened calls for employers and lawmakers to address this issue and help younger workers secure more stable and prosperous opportunities.
According to the report, younger workers are paid on average £2.81 per hour less than their older counterparts, a disparity which could be largely attributed to the existing national minimum wage (NMW) structure. NMW seeks to create a guaranteed wage for all workers, however, its format legally permits employers to pay younger workers less according to defined age brackets. Existing rates enable employers to pay workers aged 25 and over £7.83 an hour whilst those aged between 18-20 are entitled to a minimum of £5.90 per hour.
In addition, many older employees are paid more due to skills acquired through their inevitably greater amount of experience in their chosen field, something which their younger have simply not had enough working years to accrue. Although apprenticeships offer younger workers the opportunity to learn these valuable skills the recent decline in apprenticeship take up suggests increased efforts will be needed to narrow the existing pay gap.
The nature of the work which individuals participate in may be another reason for the generational pay gap. Younger individuals have been known to favour the freedom offered by flexible work as opposed to more traditional and reliable ‘9-5’ employment. Indeed, statistics on the ever-growing gig-economy reveal that 64% of Deliveroo couriers are aged 25 and younger. In contrast, older workers tend to shy away from these roles given the lack of guaranteed work and job security, with this difference in attitude certain to further exasperate the existing pay disparity.
A multifaceted approach will be required to combat the existing generational pay gap. Those who currently pay staff according to NMW rates could look to implement a blanket hourly rate based purely on skill rather than age. To ensure equal employment opportunities are afforded to all, job adverts should be free from discriminatory language which may deter younger applicants and hiring decisions should be based entirely on ability and merit. Offering training opportunities to existing younger employees will also help address any existing knowledge gaps between workers of different ages and subsequently provide younger staff with the tools required to unlock higher salaries.
Effectively addressing the generational pay gap will help ensure businesses remain a diverse and attractive proposition for potential employees.
*Suzanne Tanser is Pay and Reward Manager at HR, Health & Safety, Tax and Reward specialists Croner.