Despite Australia being a wealthy country where each previous generation has enjoyed a better standard of living than the one before, young people today face a growing gap in generational equality and will likely be the first generation to have a poorer standard of living then their parents. Incomes continued to increase after 2008 and the global financial crisis for those over 34 but young people’s incomes have gone backwards. This was primarily caused by slow growth in hourly wages and fewer hours of work being available, which disproportionately impacted young people who are overrepresented in casual and contract employment.
Since 2008, the number of people wanting work has increased faster than the number of jobs available and so young people, especially those looking to enter the workforce, have suffered most. The Australian Productivity Commission’s 2020 report on wages detailed that young people entered the pandemic with significantly lower wages and limited savings, are moving up from low-paid positions slower than previous generations, and typically occupy industries hardest hit during the pandemic. While wage growth and job security for young people has been non-existent, the cost of living in Australia has risen by at least 23.4 per cent overall over the last ten years with the cost of electricity rising by 100.9 per cent, gas and other fuel prices rising by 75.6 per cent, water and sewerage charges rising by 66.8 per cent and property rates and charges rising by 63.6 per cent from 2009 to 2019. Lower wages and higher living costs see young people struggle to afford essentials and forced to make decisions about what essentials they will miss out on.
Young people in Australia are half as likely to be financially secure compared to other age groups with at least a quarter of young people having experienced financial difficulties in the last two years. Young people are as financially vulnerable as the overall population, but they are more vulnerable to sudden drops in their income and are not as financially secure as other age groups. Financial insecurity experienced by young people impacts other opportunities like housing and employment while also directly impacting the ability to afford essentials.
Almost half of young people report saving part of their income very often and most young people are strategic in their money management but not all have the same opportunities to save or invest. Housing remains a key issue for the cost of living with a shortage of affordable rental properties and rising rental costs impacting young people as private rentals are the most common tenure type for those under 25-years-old. Households of young people (where the breadwinner is 15-24 years old) spent 25.4 per cent of their income on housing with the pandemic further exacerbating housing issues. During COVID-19, 44 per cent of young renters failed to pay their rent on time, 21 per cent attempted to negotiate a reduction or deferral of rent payments with only 53.3 per cent of those successfully renegotiating their rental agreement compared to 82.5% of 25-34-years-olds.
With living costs rising and wages stagnating, it is vital that decision makers attempting to tackle the economy, wage growth, and costs of living prioritise young people and actively involve them in the decision-making process. Targeted solutions co-designed with young people for structural problems within the labour market and significant gaps in support and services are needed to ensure young people have an adequate standard of living that is secure and affordable.
