High unemployment leads to big drop in young people's income

Fri, 14/06/2013 - 11:05 -- nick

High unemployment and low wages have lead to a big drop in income for young people in the UK.

A report by the Institute for Fiscal Studies (IFS) has found that shrinking benefits, unemployment which peaked at over 1 million and wages which have been rising at a slower rate than inflation have all meant that those aged under-25 have seen an average drop of 12% in their incomes since 2007.

This was the biggest decrease faced by any age group over the course of the economic downturn.

Improvements in the state pension and the fact that most have retired from work, and have therefore not suffered wage falls, means the over-60s are the only group to have seen income improve over this period.

David Phillips, a senior research economist at the IFS, said "The face of poverty has become much younger during recent decades.

"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 government has applied a 'triple-lock' to pensions, guaranteeing that they will rise by at least the rate of inflation each year.

In contrast, working-age benefits will increase by only 1% each year over the next three years, below the rate of inflation, risking increasing poverty in workless people even further.

The report, funded by anti-poverty charity the Joseph Rowntree Foundation, was published a day after Department for Work and Pensions figures showed that child poverty had increased in the UK over the government's term, with one out of every six children now living in a low-income household.

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