Research released today by Owl Labs, a global collaborative technology company, looking into how the cost of living crisis is impacting different generations across the workforce, suggests that younger workers are being disproportionately affected by the cost of living crisis.
Gen Z workers who have to work from the office full-time are £10,779 worse off per year than their Baby Boomer peers. Similarly, Millennials are the most affected by rising commuting costs, with nearly a fifth (18%) opting to work from home more often to save on travel expenses.
Skyrocketing energy prices are also taking their toll, with almost a third (30%) of the Gen Z workforce expecting their employers to contribute to their energy bills by offering a one off £1,000 payment.
Financial inequality threatens to cause deeper divides across an increasingly multi-generational workforce if companies fail to take action.
Counting the pennies: WFH vs WFO
With prices rising at their fastest rate in 40 years, disparities are beginning to emerge between workers who have to be in the office full-time and those who are fully remote. On average, fully remote workers spend up to £2,923 a year, predominantly on energy, WiFi and childcare.
When working remotely, Millennials are the most inclined to splash out on breakfast and coffees, spending £271 on average each month, while Baby Boomers are the most stringent with their home working costs (£136).
In stark contrast, UK workers expected to be in the office full-time are £6,633 a year worse off than those who are fully remote, as they spend a whopping £9,556 a year working from the office on costs such as commuting, childcare, coffees and after work socialising. This breaks down to £41 a day – for Londoners, this rises to £83 on average per day. Yet again, it’s the younger generations feeling the financial pinch. Gen Z workers who have to be in the office full-time spend a staggering £16,005 a year while Baby Boomers only spend £5,226 – that’s a difference of £10,780. If left unchecked, this could lead to greater divides across the workforce with younger talent having to leave jobs they love if they don’t feel financially secure.
This generational divide is also evident for hybrid workers who work both from home and the office each week, with Gen Z £6,955 worse off than Baby Boomers.
Frank Weishaupt, CEO of Owl Labs said, “Given the current economic climate, it’s likely that younger workers are having to live even further out of the city centres and spend more on rising public transport costs than their older workers.
“Companies need to ensure that they are treating both remote and in office workers equally and that they are not inadvertently penalising younger workers and preventing them from being able to progress in a career or company they love, simply because they cannot afford to. Companies must offer flexible, hybrid work options which benefit all employers equally.”
Things are getting heated
With warnings that the typical household energy bill could rise well above £4,000 a year from April 2023 with the end of the Energy Relief Scheme, the UK workforce now expect greater levels of support from their employers when working remotely and are rethinking their working habits accordingly.
As a result, over a fifth (21%) of workers plan to go into their workplace more to save on home energy bills. Moreover, over half (53%) of the UK workforce expect their employers to contribute to their energy bill to some extent.
Gen Z are the most concerned about rising household energy bills, but how they plan to save differs. While over a third (34%) plan to go into their workplace more to save on bills, others hope to save by staying at home as 30% expect their employers to contribute to their energy bills by offering a one off £1,000 payment.
Financial concerns are disproportionately affecting the younger workforce. Companies need to ensure that they are taking these concerns seriously so that they do not facilitate a two tiered workforce in which younger generations are unable to progress due to a lack of financial security.
More bills, more problems
While the prospect of saving money on their own home energy bills might be luring workers to spend more time in the office, expensive commuting costs remain an important factor.
This year alone, commuting costs have risen by 8.8%, and are expected to rise again in March 2023. To put that into context, a yearly travel card from a popular commuter belt such as Brighton to London would increase by £452 to £4,932 a year. Unsurprisingly, 14% of workers plan to work from home more to save on commuting costs.
Millennials are the most impacted by rising commuting costs, with almost a fifth (18%) planning on working from home more often to counter costs. This is likely due to many aged between 25-40 years old moving out of the city for the first time as they purchase their first homes.
Rallying against disparities in the workforce
With UK job cuts on the rise across the board including Royal Mail, Klarna and the BBC, UK workers are increasingly nervous about their own job security. Currently, only 35% of UK workers are confident about their current level of job security. As a result, almost a quarter (22%) are actively looking for another job with better pay.
Similar to the pandemic, the cost of living crisis is widening the disparities across the workforce as younger workers are being disproportionately affected.
Unsurprisingly, Gen Z workers are the most nervous about costs, with over a fifth (21%) recently switching job roles for a higher salary, while a further 37% of Gen Z are actively looking for another job with better pay. In contrast, Baby Boomers are the least anxious with nearly half (45%) of workers aged 57-75 confident about their current level of job security.
Weishaupt added, “Younger workers are unfairly at risk of being pushed out of careers they love by the ongoing cost of living crisis. Companies face losing large portions of the younger workforce if they fail to take action to support their younger talent.
“Robust hybrid work policies can prevent a two tiered workforce by ensuring everyone is treated equally and fairly regardless of location.
“By working closely with their teams, managers can adapt processes accordingly. It’s clear that businesses can no longer take a one-size fits all approach to hybrid work policies and must implement policies that are unique to their workforce.”