Employment Hero’s June Jobs Report reveals that Baby Boomers and Gen X workers are leading wage growth in the UK SME sector, while Gen Z falls behind.

Amid the ongoing cost-of-living crisis and post-budget recovery, new data reveals that the UK’s older workforce is seeing the largest gains in take-home pay. Employment Hero’s June Jobs Report, which analyses real-time payroll data from over 105,000 employees across nearly 5,000 small and medium-sized businesses, shows that Baby Boomers and Gen Xers are reaping the biggest wage increases, leaving younger generations trailing.

In June, pay for Boomer workers rose by 4.8% compared to May, the highest month-on-month wage growth among all age groups. Gen X workers also saw a significant rise of 1.9%. By contrast, Gen Z workers experienced a 0.2% drop in pay during the same period, marking the only generational decline that month.

This isn’t just a short-term spike. Boomers led on quarterly and annual metrics too — their salaries are up 6.8% over the past three months and 10.4% year-on-year. Meanwhile, Millennials saw more modest gains: a 0.6% increase month-on-month, 0.5% quarter-on-quarter, and just 0.1% across the year, lagging well behind inflation.

“After a rocky few months following the Autumn Budget and tax hikes in April, signs of growth are finally starting to show across the SME industry. This uplift in pay will come as welcome relief to many workers feeling the pinch from cost-of-living pressures. It’s positive to see momentum building and the trend is heading in the right direction. But the challenge now is keeping that growth moving. The focus for small and medium-sized businesses must shift toward sustaining these gains and building long-term confidence,” said Kevin Fitzgerald, UK Managing Director of Employment Hero.

He added: “We’re also seeing SMEs investing in older generations like Boomers and Gen X leading the way on salary growth. While that’s encouraging for seasoned workers, it’s a reminder that we also need to ensure younger generations, particularly Gen Z, aren’t left behind. They’re the future of the workforce and now is the time to give them the support and opportunities even amid ongoing cost pressures.”

The generational split in pay growth appears to reflect a post-budget recalibration in hiring patterns. With National Insurance hikes and economic uncertainty in play, SMEs may be prioritising experienced hires who can deliver immediate impact. This strategy has likely favoured older workers with long-standing skills and sector-specific knowledge.

Overall, wages grew by 1.0% in June,  the highest month-on-month increase since the Autumn Budget last October. This follows a steady climb from January’s -1.1% low point. While the general trajectory is positive, the uneven distribution across age groups signals a need for strategic workforce planning, particularly around inclusion and talent pipeline development.

For Gen Z, the downward pressure on pay may be influenced by a continued high share of part-time and entry-level roles, as well as weaker bargaining power. While Gen Z wages are still up 3.5% year-on-year, their quarterly figures show a dip of 0.3%, a worrying sign if the trend continues.

This divergence comes at a critical time for UK SMEs. Sustaining wage growth,  especially across all generations,  is key to attracting and retaining talent in a tight labour market. It also raises broader questions about fairness and intergenerational equity in the post-pandemic economy.

Looking ahead, employers may need to adopt more proactive strategies to engage and retain younger staff, from mentorship and career development to performance-linked pay adjustments.

The June Jobs Report confirms that while older generations are thriving, a balanced approach is vital to future-proof the workforce.