Millennials hit by pay squeeze as wages drop to lowest level in almost a year

Millennials are facing a bigger pay squeeze than any other age group, with wages for full-time Generation Y workers plunging to their lowest level in almost a year, according to new data from Employment Hero.

Employment Hero’s SmartMatch Employment Report, which analyses real-time data from 90,000 employees at UK SMEs, shows that the average full-time salary for Millennials has fallen to £38,331, its lowest point since March 2024.

This trend is driven by a significant pay squeeze over the last three months, with Millennials being the only generation to experience a decline in wage growth (-0.6%) from November through January.  In comparison, Gen Z wages grew by 2.1%, Gen X by 0.3%, and Boomers by 0.8%.

The year-on-year picture is also stark. Millennials have seen the slowest wage growth of any generation at just 2.4%, a sharp contrast to Gen Z (8%) and Boomers (7.7%).

Despite declining wages,  full-time employment among Millennials has continued to grow, rising +2.1% in the last three months – higher than the UK workforce average.

Kevin Fitzgerald, UK MD of Employment Hero said, “Millennials are still landing jobs, but they’re feeling the pay squeeze more than other generations. Why? One explanation is that the UKs economic uncertainty is making those with the biggest financial commitments more hesitant to switch jobs or take risks – keeping their pay stagnant.

“Now in their 30s and 40s, many Millennials are managing mortgages, childcare and rising living costs, and the idea of job-hopping, when businesses are gearing up for major employment law reforms, is going to feel very risky.

“Millennials are arguably the engine of our workforce – when their wages stagnate, the ripple effect spreads across the economy, affecting everything from housing to retail spending and business sentiment. At the same time, SME owners are facing very tough decisions. Rising employment costs mean they need to strike a balance between increasing pay for existing staff and investing in growth.

“This all comes down to policy and a clear growth strategy. Businesses need the confidence to reward Millennials with pay rises, and Millennials need the right opportunities to keep pushing forward. But right now, the environment isn’t set up to fully support business growth – and that needs to change.”