‘Generation precariat’ as cost of living crisis hits Gen Z
Young people face a challenging future as rising costs of living, debt and taxes impact their economic security and mental health, new research has found.
The Cost of Independence:young people’s economic security, from the Royal Society for Arts, Manufactures and Commerce (RSA) has been tracking young people’s financial situation and how it affects their mental and physical health and hopes for the future.
Using a representative sample of more than 1000 16-24-year-olds, the RSA’s researchers find that almost half (47%) of young people are unable or just about managing to make ends meet each month, or have an income that varies significantly paycheck to paycheck.
Young people are more likely to fall into this ‘financially precarious’ group as they get older, with 57% of 22-24-year-olds in a precarious financial situation, compared to 38% of 16-18-year-olds and 48% of 19-21-year-olds.
This goes hand in hand with changes to young people’s financial situation as they get older: they take a hit to their savings and are more likely to take on debt. 39% of 16-18-year-olds have access to savings, but this falls to 34% among 18-21-year-olds and 25% for those aged 22 to 24. By the time they turn 22, 75% of young people will be in some form of debt.
The study reveals the effect of economic hardship and uncertainty, with those living with financial precarity far more likely to be concerned about their mental and physical health, as well as a wide range of other areas of their lives.
Percentage of young people who are worried about aspects of their lives by financial situation
It also finds that uncertainty about the future is felt among young people across the economic spectrum:
Just 41% of young people believe others like them will ever be able to buy their own home, and only 51% think they will ever earn enough to support a family.
41% think young people like them will not be able to live independently without support from family or friends.
And 51% think young people like them will not be able to retire and live comfortably when the time comes.
Percentage of young people that believe others like them would be able to have different types of financial security in the future
In-work poverty and precarity are growing issues in the UK. The study finds that work is failing to protect young people’s economic security, with 56% of young people in work experiencing financial precarity. Young people are more likely to work in the gig economy and on zero-hour contracts – of those in work, 1 in 5 told the RSA that their income that varies from month to month, and because of this they sometimes have trouble meeting their basic living costs.
The government has increasingly made vocational training and apprenticeship schemes a priority in recent years, but the RSA’s research shows that this group is also among the least financially secure.
Percentage of young people who report being financially comfortable by current activity
The researchers note that the government’s ‘living’ wage doesn’t apply to under 23s, and apprentices can earn less than £5 an hour.
23 and over
National Living Wage
National Minimum Wage
(from April 2022)
As part of the project, the researchers worked with a group of Young Advisors, aged 16-25 years old, who shared their perspective on how young people are impacted by these issues.
Revati, 20 years old, said: “With the value of a pound ever-changing (especially post-Brexit), young people are increasingly stuck choosing between surviving and living.
“The resources and mechanisms designed to create security are becoming increasingly inaccessible to young people”.
Scarlett, 20 years old, said: “Difficulty finding well-paid work along with soaring house prices also means our generation will struggle to purchase a property in the future. For many of us, we aren't able to invest financially in our futures in the way we would like to”.
Owen, 23 years old, said: “Some young people are concerned about their immediate future in the very short term, and some are worried they will not be able to take a step onto the housing ladder or plan their financial futures. However, […] nearly all young people are concerned about some form of their future economic security.”
Precious, 17 years old, said: “A lot of the time wages do not align with living expenses, making it harder for young people to save or even have disposable income, as all their money goes to necessities”.
The RSA’s researchers warn that rising inflation, and changes to the National Insurance and student loan system mean that more young people will be left in the lurch. The government is considering lowering the repayment threshold on student loans to £22,000, and National Insurance contributions are set to increase 13.5% in April 2022.
The study comes as part of an ongoing programme of research carried out by the RSA as part of the Health Foundation’s Young People’s Future Health Inquiry, with further instalments to follow.”
Fran Landreth-Strong, RSA researcher and lead author of the report, said:
“Young people across the UK face a toxic cocktail of inadequate work and safety nets, high levels of debt, and a rising cost of living. As they get older, many lose the support networks they once had and for too many young people, economic security has to be sacrificed in the name of independence.
“Our research shows that this results in a worrying number of young people facing financial precarity, with significant impact on their mental and physical health and their confidence about the future. Without proper action, we risk creating a ‘generation precariat’, unable to invest in their futures and move confidently into adulthood."
Martina Kane, policy and engagement manager, Health Foundation's Healthy Lives team:
“The current generation of young people living in the UK are facing difficult challenges: from navigating the world of poor-quality employment to living precariously in the private rental sector. These all have an impact on their long term health. Whilst the solution to economic insecurity is complex, taking action will help provide young people with stable foundations for a healthier adult life.
“The Health Foundation is pleased to support the RSA’s research as part of its Young people’s future health inquiry. We are delighted to see young people at the heart of this work, making sure that their voices are heard by policymakers.”
For a copy of the report, including full data tables, or to speak to participants, please contact [email protected], 07795 660 353.
The survey was carried out with YouthSight. It was completed by 1178 16–24-year-olds across England, Northern Ireland, Scotland and Wales.
The survey sample was then weighted to ensure a representative split of males and females, ages (broken down into the following ranges: 16-18, 19-21 and 22-24), and region (broken down into the following groupings: North, South, Midlands, Nations). The survey ran from 17-24 September and was reopened from 5-6 October in order to ensure a representative sample was reached.
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