Research recommending that 25 year olds should be given £10,000 'citizens inheritance' made several headlines and divided public opinion last month. Published by the Resolution Foundation the report 'A new generational contract' is the product of growing societal concerns that the established intergenerational contract is increasingly unsustainable and nearing breaking point.
The concept of the intergenerational contract is essentially that different generations will all provide support to one another at some point in their lives. It stems from the writings of an 18th century French philosopher, who wrote about the existence of an unwritten "contract" between citizens and the government to look after each other. A very simplistic, family example of the intergenerational contract is that a parent will bring up their child and in turn, that child will at some point care for their parent in old age with the expectation that their own children will do the same for them. Business applications might include a company director taking the time out to mentor a more junior employee, and in return, that junior employee having the confidence and motivation to bring in innovative new thinking and suggestions to the business.
The reason that we conform to the unwritten terms of the intergenerational contract? Because we feel that we ought to, because we think it's worth it and most importantly, that it's in everyone's best interests. The concern is that whereas historically in the UK, the upcoming generation has always enjoyed a better life than the one before it, the general consensus seems to be that in many aspects, millennials (those born between 1981-2000) are actually now getting a worse deal than their parents had. This is particularly the case when economic factors fall to be considered. If a generation feels that they are getting a raw deal, there is a risk that the contract could break down.
The implications on businesses and employment if this happens are obvious. If millennials face poor pay growth and limited job security, there is a risk that the most educated generation to date will drop out of the traditional world of work all together. Alarmingly, a recent survey by First Direct Bank has found that 50% of Britons are unhappy in their job and a quarter of those surveyed were planning a career change. A recent study suggests that businesses are already struggling to recruit at a junior level. High levels of vacancies at a junior level will not only impact succession planning but stunt growth and innovation. A business which fails to grow and keep up with technological advances will struggle to recruit young talent in the first place, and the outlook for businesses just gets more and more bleak.
So far so doom and gloom – but what's the answer? With the best will in the world, businesses cannot possibly hope to "fix" the financial issues that many millennials are facing, and many are saying that the £10,000 citizens inheritance is unlikely to do this either.
Tom Hadley, director of the Recruitment & Employment Confederation (REC), is keen to highlight that this actually isn’t all about money – "this is about more than just pay, it is about providing progression opportunities and a positive workplace culture". The fastest growing occupations for those in their late 20s are some of the lowest paid, such as those in the caring and leisure industries. Mr Hadley may therefore have a point. If you scroll down any Instagram feed you will find thousands of images of a generation who seem to be more concerned about living in the moment rather than saving for their future selves. There are those who argue that millennials behave in this way because of a sense of entitlement and a lack of insight. However, if a millennial feels that the prospect of buying their own home or being in a position to support a family is ridiculously far out of reach, the motivation for going to university, working hard and maximising savings is arguably reduced. Anyone who has any experience of managing people will tell you that goals need to be achievable for them to be meaningful. Whilst figures published in May by REC indicate pay growth did increase in April this year, it seems likely that in the absence of dramatic pay increases, millennials are most likely to stick with a business that is sympathetic to the fact that things have changed, and use this fact to get the most out of their employees. Queue lunch time yoga sessions and a fancy Instagram-able Friday afternoon drinks trolley…
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