Why you should care about Generation Y’s pay gap

In 2017 I wrote the article below – and here we are in 2020, staring down the barrel of another recession. Suddenly a lot of this is highly relevant again.

You may have seen in the news recently that Generation Y are earning less than previous generations, at a similar stage in their careers. I’ve read a few articles – one example is here.

Theories abound as to why – and given this is about millennials, you can assume some of them are pretty impolite about the people in question.

But I want to suggest that there are a couple of key reasons that need considering here: and that actually this is a symptom of a much broader shift in employment and hiring. If companies want to have access to talent and the skills they need (and I assume they do), then this is going to need work, and it’s going to need it now.

What Gen Y earn will have a significant impact on hiring and technical innovation for the next 20+ years in the UK

So first, why are Gen Y earning less? Well obviously it’s complex. A lengthy recession hasn’t helped. But I suspect that at least some of this can be explain by a combination of a skills gap, and increasing automation.

What do I mean by that? Put simply, a lot of the starter jobs we all did when we entered the commercial world have been automated out of existence. That applies in every field – those automated ordering machines in McDonalds are there to reduce the workforce in each restaurant – but also applies in IT. More automation means fewer obviously entry level IT roles, unless companies are consciously planning ahead by hiring and training at the junior end.

At the same time, whilst teaching skills like coding is becoming part of the conversation in education (and rightly so – I think coding is rapidly becoming an absolutely core skill and I personally feel the lack of it – see here for a good article with an amusingly inflammatory headline on the subject), the current generation entering the workforce haven’t had that background. So again, they are reliant on enlightened companies hiring and training. That may be happening in isolated pockets but I’m not sure that it’s commonplace.

The upshot of all this is a skills gap – companies struggling to find highly skilled IT engineers with essential skills, and an underqualified group of candidates struggling to find reasonably paid ways in to the market.

The potential solutions to all this are manifold – teaching coding in schools, a functioning apprenticeship scheme, and so on. But ultimately the onus, I think, is on companies to think long term. Hiring people out of school and university and training them helps build a motivated, loyal workforce with the skills you need in place, as well as a company culture of learning. It’s all good – but it’s not going to add to your bottom line this year. And that’s tough.

As a recruiter I obviously benefit when companies need to find rare skills in the market – and there will always be times when outside hires are essential. But growing your own has to play a part – and the fact that that isn’t happening as widely as it ought is one of several reasons why Gen Y are literally paying the price for a dysfunctional jobs and skills market.

As always this is just my opinion – and I’d be interested to hear if you disagree. Do get in touch!

At Vocative Consulting, we help companies find and secure the technical people they need to drive change and improvement in their business. It’s the art of recruitment.

Next post >