Class divide?

Graduates from richer families earn significantly more than poorer students who do the same degree at the same university, a huge study of over quarter of a million people has found. Research has found a marked link between parental income and earning potential of their children. In 2012/13, the average gap in earnings between students from higher and lower-income backgrounds was £8,000 a year for men and £5,300 a year for women, 10 years after graduation.

Even after taking account of the subject studied and the university attended, the average student from a higher-income background earned around 10 percent more than the average student from other backgrounds.

Between the richest and the poorest graduates,  the differential was even starker. The 10 percent highest-earning male graduates from richer backgrounds earned about 20 percent more than the 10 percent highest earners from relatively poorer backgrounds.

Jack Britton, a research economist at the IFS and an author of the paper, said that income inequality appeared to persist even among students with the same university experience. “This work shows that the advantages of coming from a high-income family persist for graduates right into the labour market at age 30.” 

Meanwhile, High Pay Centre finds that UK chief executives continued to enjoy pay and benefit rises, with average FTSE 100 boss receiving a £5.6m overall package. Stefan Stern, director of the High Pay Centre, said: “The evidence, which is coming directly from companies’ own annual reports, is that the 20-year rising trend in top company pay continues unabated. Yet, the average UK worker suffered from six years of falling wages in real terms from 2008 as inflation outpaced pay growth. Average weekly earnings still worth £40 a week less than before the financial crash.