Baby boomers have suffered a larger drop in earnings because of coronavirus pay cuts than younger workers, and are just as likely to have been furloughed, a study has found.
Research by the Financial Conduct Authority (FCA), the UK’s financial watchdog, found baby boomers – defined as those born between 1946 and 1965 – saw on average a 23 per cent decrease in earnings because of the coronavirus crisis.
This compared to a 19 per cent drop in earnings among millennials – born between 1981 and 2000 – and a 17 per cent reduction for generation X, defined as being born between 1966 and 1980.
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However, although older workers’ earnings fell more sharply, they were still less likely to be in financial difficulties than their younger counterparts as they tended to have higher incomes to start with and more savings.
The research surveyed 8,000 UK adults aged 18-75 in March about their financial experiences during the outbreak, and acknowledged the coronavirus pandemic was “delivering a particularly severe financial blow to younger earners”. Many of this cohort worked in sectors most severely affected, were just starting out in their careers and faced the worst effects of loss of work and poor future employment prospects, it said.
But older workers who were not yet retired were also being disproportionately affected, it stated. “In overall terms… it is the older and younger generations, and particularly millennials, who have experienced the strongest effects of the crisis so far in relation to work and earnings,” the report said.
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Baby boomers were just as likely as millennials to have experienced an impact on their jobs because of coronavirus, whether through being furloughed, losing hours or pay or losing a job. Almost a third of baby boomers (32 per cent) were furloughed, 10 per cent lost hours and pay and 7 per cent lost their jobs. For millennials, these figures were 29 per cent, 5 per cent and 10 per cent respectively.
Just 3 per cent of generation Z – those born since 2000 – reported losing their jobs, meaning baby boomers were twice as likely as this youngest cohort to find themselves out of work because of the pandemic. This, the report said, might be because older workers were more likely to have fixed weekly hours, whereas younger workers were more likely to work flexibly as part of the gig economy, or because older workers were already semi-retired.
“Few of us will emerge from this crisis untouched, whether in terms of health or finances. But it is equally clear that the effects differ by generation,” the report’s authors wrote.
“While it is too soon to say what the full impact of Covid-19 will be, it seems likely that the crisis will add further gravity and complexity to [existing] challenge, with the clear potential for the pandemic to exacerbate the patterns of difference between generations that have emerged over the past 30 years.”
The report’s concerns about the older workforce were echoed by a study last week from jobs board Rest Less, which found the average number of hours worked by the over-65s in employment fell from 20.2 between January and March this year, to 16.1 between March and May – a drop of 20.3 per cent, according to Rest Less.
Stuart Lewis, founder of Rest Less, called on the government to introduce a programme similar to the furlough scheme specifically aimed at protecting older workers. “All age groups have seen a drop in the average number of hours worked in the last three months, but data shows that the over-65s are the most impacted group, likely because of the number of people in this age group who have had to shield or self-isolate,” he said.