Salary increases hold significant importance for all employees, particularly for those just starting their careers. In these early stages, base salaries are typically lower, making every penny vital. Since raises are often calculated as a percentage, for someone earning a modest salary, the actual increase may feel minimal. For instance, a 1 percent raise on a £25,000 salary only results in an additional £20 a month before tax and pension deductions.

The last few years have posed considerable challenges. Since the onset of the Covid pandemic, private sector pay raises have been largely absent. Although the minimum wage for young workers was increased in the recent budget, the concurrent rise in employer national insurance contributions casts a shadow over the future. The Office for Budget Responsibility (OBR) anticipates an initial 2.4 percent growth in real earnings for this year, which is projected to decline to 1.2 percent next year and stagnate in 2026 and 2027. Notably, wage growth is expected to remain under 1 percent per year until at least 2029.

Simply put, young professionals entering the job market today can expect minimal salary growth, if any, over the next several years. This situation could lead employers to rethink their hiring practices, further impacting recent graduates seeking employment.

Furthermore, young individuals are likely to face difficulties in other aspects of their lives.

Rental costs have surged and this trend appears set to continue. Landlords experienced an added burden with a two-percentage-point increase in stamp duty on second homes and investment properties, raising their additional rate to 5 percent. This will increase their expenses and exert additional pressure on the rental market, potentially leading to a reduction in available rental units.

First-time buyers aspiring to enter the housing market will incur thousands more in stamp duty starting next spring, as the government chose not to extend a previously offered discount. Beginning in April, the tax-free threshold for all homebuyers will revert to £125,000 from £250,000 and for first-time buyers, it will drop to £300,000 from £425,000.

All of this occurs against the backdrop of house prices, which are predicted to rise another 13.5 percent over the next five years, as indicated by the OBR. This means that those not yet owning homes will need to save even more, while their wages stagnate and rising rent costs consume larger portions of their income.

Moreover, many young individuals continue to struggle with significant student loan debts, often referred to as a “student tax.” Some graduates find themselves facing an effective tax rate of 47 percent on their earnings, even when they are technically classified as basic-rate taxpayers.

In a discussion with two younger colleagues about their perspectives on the future, one shared that nearly all of her friends who graduated this year have moved back in with their parents due to exorbitant rental prices. For many, buying a home seems unattainable without parental assistance. She expressed feelings of despair over the overwhelming debts associated with university education, stating, “Of course, nobody has to go to uni, but it still puts you in an extortionate amount of debt when you’re really young.”

The other colleague described friends relocating further from central London to find affordable rent and being compelled to share accommodations well into adulthood, all while witnessing their dreams of homeownership fade away. “There was just nothing for us in this budget,” she remarked.

Amid ongoing discussions around declining birth rates in the UK, questions arise about the reluctance to start families. Simultaneously, a record 2.8 million individuals are out of work due to long-term health issues, often exacerbated by mental health challenges, particularly among youth. While these matters are complex and multifaceted, a lack of salary increases, homeownership opportunities, and an overall bleak outlook can only intensify these concerns. Ignoring the struggles faced by young people poses risks for the entire society; their challenges today could lead to widespread issues for all in the future.