Stark disparities in earnings based on geography and ethnicity indicate that over the past 50 years it has become more difficult for children born into less well-off households to climb the UK’s social ladder.
An Institute for Fiscal Studies (IFS) report, Intergenerational Mobility in the UK, found those growing up in the north of England and the Midlands and individuals from minority ethnic backgrounds are finding it more difficult than others to make more income than their parents.
Children from poorer households have been finding it harder than 40 years ago to move into higher income brackets, which has only been made worse by years of sluggish growth in average real earnings, the report stated.
“It may be harder now than at any point in over half a century to move up if you are born in a position of disadvantage,” said David Sturrock, a senior research economist at the IFS.
Social mobility
Santander removes 2:1 degree requirement from graduate scheme
KPMG research shows class the biggest barrier to progression
Inheritance was becoming more important in determining lifetime income, the study stated. A growth in inheritances for children with wealthy parents was named to likely drive a further decline in social mobility for the 1980s generation compared with previous decades.
Income data was analysed for those born in the 1960s, 70s and 80s, and highlighted how parental income had become a much stronger predictor of the earnings people born from the 1970s onwards could expect by the age of 28.
There were marked regional differences for earnings mobility, with children born in and around the capital to likely earn more than their parents compared with those from northern cities such as Leeds, Manchester, Hull, Newcastle and Middlesbrough.
Sheila Flavell, chief operating officer of recruiting and training body FDM Group, said that apprentices could be the way forward for those with less advantaged backgrounds. He said: “Organisations must continue to step up and implement a clear and effective diversity agenda, offering more opportunities to entry for individuals from under-represented groups to widen the talent pool as they could be key to unlocking innovation.
“Apprenticeships can be great ways to excel individuals from disadvantaged backgrounds while also contributing toward bridging the pervasive skills gap in the UK. By providing high-quality career opportunities to a more diverse range of individuals, we can create more inclusive workplace ecosystems that reflects the true diversity of our society.”
Free school meals
The report also found that males who grew up on free school meals in the highest areas for social mobility – around London – were paid £8,700 more at the age of 28 than if they grew up in the north of England. The difference for females was £8,100.
Those with parents residing in the capital also stood to inherit around twice as much as those in north-east England and Yorkshire and the Humber, reflecting the surge in property values in London in recent decades compared with weaker growth elsewhere.
The differences between ethnic groups were also striking, with a stark contrast of up to £8,000 in the earnings of young males from a black Caribbean background who grew up on free school meals compared with individuals from an Indian background.
Males from Pakistani, black Caribbean and black African backgrounds who grew up on free school meals also end up earning less than white males who had been in the same position.
The findings come as Rishi Sunak faces pressure from the right of his party to abolish inheritance tax as part of the Conservatives’ manifesto for the next general election.
Wealth tax
Rachel Reeves, the shadow chancellor, has also ruled out Labour imposing a wealth tax if it wins the next election as the party doubles down on efforts to demonstrate economic competence.
Earlier this year a report from KPMG found that social class and nepotism had a major role in accessing work experience.
The report found only 40% of young people from a low socio-economic background had gained exposure to the workplace, compared with 47% of young people on average across all socio-economic groups.
Latest HR job opportunities on Personnel Today
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
Browse more human resources jobs
