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Government's populist practice of buying off grey vote has damaged the young

The 2008 crisis hit Generation Y hardest. Meanwhile the government is only interested in helping older generations, writes Victor Duggan.

SINCE TIME IMMEMORIAL young people have grown up in the anticipation that they will live a life at least as comfortable as that of their parents – that the next generation will reap the benefits of social, economic and technological progress.

This is at the foundation of the social contract between generations, not just in Ireland, but across Europe and around the world. But, something has changed.

Next generation can expect to work harder for less

Generation Y, the so-called millennials, born since 1980, may be the first generation for whom this dream turns out to be a mirage. Long-term demographic trends, coupled with the long-term slowdown in productivity growth in developed countries, mean that the social escalator of yesteryear has broken down.

But, the real tipping point came with, and since, the 2008 financial crisis. Youth unemployment soared across Europe. In Ireland, mass emigration made a comeback as many who graduated from school or college – or lost their jobs in construction-related trades – saw few prospects at home.

Rather than helping, public policy often makes things worse. 

Welfare disparity

Yes, recent austerity hit people of all ages, but it was the young that bore the brunt. Who can forget the 2008 success of the grey army in mobilising to ensure only the very wealthiest people aged over 70 would lose their automatic medical cards. Maybe everyone, of all ages, should have a medical card, but that’s a debate for another day.

In the decade since, successive governments have been careful to avoid the wrath of the aged and, more recently, to put them first in the queue for the reversal of past cuts. Basic working age welfare payments have lagged increases in living costs and in the State pension, which is now more than double the rate of jobseeker’s allowance for the under-25s, for example.

In isolation, of course, the government’s stated objective of increasing the State pension to 35% of the average wage is a laudable goal. It would be even better if these efforts were rooted in a coherent and comprehensive national pension policy strategy, as has long been promised by successive governments, as opposed to the recent populist practice of buying off the grey vote.

Workplace woes

The younger generation are faced with longer working lives for less pay and in poorer conditions. The young are far more likely to be unemployed than those in middle age, while young people lucky enough to be working at all are twice as likely to be stuck in part-time jobs when they want to be in full-time work.

Meanwhile, poverty rates for the young are multiples of those for people of retirement age. Without suggesting that older people have it easy, the stats nonetheless paint a picture of misery for the next generation.

Housing crisis

The national housing crisis disproportionately impacts on young adults and their children. Younger people in Ireland are more likely than previous generations to be renting accommodation, to have super-sized mortgages, to be living with their parents into their thirties, or to be completely homeless.

A big frustration in the eyes of many of today’s young people is the palpable sense that those who came before them were largely responsible for the global financial crisis and that, having secured their own financial lifeboat, they could be leaving those coming behind them dead in the water.

It is galling to see so many of the private and public sector executives most directly responsible for Ireland’s “Celtic crash” retiring on gold-plated pensions while calling for the rest of us to tighten our belts.

Many older folks are meanwhile sitting on properties bought for a fraction of their current prices, or have already retired on defined benefit pension schemes that are closed to those coming behind. On top of this, the generous tax breaks currently incentivising pension contributions are skewed towards those on the highest incomes in the private sector, undermining the fairness and sustainability of the pension system as a whole.

Generation X, and the baby-boomers before them, born in the decades after WWII, worked hard for what they have and to provide for their families. It is quite right that they should be able to look forward to a comfortable retirement, and that steps were taken during the early years of the century to stamp out the scourge of old age poverty.

But, there is a need now more than ever for social investment that rebuilds inter-generational solidarity. We need more housing, better childcare, and an education and welfare system that gives young adults a decent second chance while ensuring their children have the same opportunities as their grandparents’ generation.

Budget 2018

Budgets are about choices and priorities. Where public resources are limited – that is, always – they should be targeted to where they can do the most social good. The current Minister for Social Protection, Regina Doherty TD, should be commended for having flagged a number of weeks ago her intentions to do just this with any extra funding available for the 2018 welfare budget. She was absolutely right.

But, then the lobby groups and populist politicians rowed in, and the government’s commendable position collapsed like a wet paper bag. Even when it comes to the welfare budget for pensioners, “protecting the vulnerable” suggests prioritising a reverse to cuts in home help hours, for example, rather than a blanket increase in pension payments.

As the Minister for Finance and Public Expenditure, Pascal Donohue TD, puts the finishing touches to his budget over the coming weeks, let’s hope that he and Leo Varadkar TD remembers the sage advice of the Taoiseach’s  father, Ashok, upon his son’s elevation to the role: “I want him to look after the most vulnerable . . . to work for those who need help.” Let’s hope the so-called republic of opportunity is also a republic of compassion, equality and solidarity.

5 quick stats:

  1. In 2015children in under the age of 18 are more than four times as likely to be in consistent poverty as those aged over 65 (11.5% v 2.7%), twice as likely to suffer at least two types of enforced deprivation (31.4% v 15.4%), and nearly twice as likely to be at risk of poverty (20.3% v 10.9%).
  2. In July 2017, there were 96 people aged over 65 classified as homeless in Ireland, but there were 826 aged 18-24. There were 905 homeless single parents, and a total of 2,973 homeless dependents.
  3. A decade ago, a 24-year-old recipient of the means-tested jobseekers’ allowance received nearly as much as (€185.80) every week as a 66-year-old receiving the non-contributory state pension (€200). In 2017, they receive less than half (€102.70 v €227).
  4. The unemployment rate among under-25s in Ireland was 16.5% in mid-2017, down from 19% a year previously, but still more than double the 6.4% among the working-age population at large.
  5. Workers under 30 are twice as likely (20% v 9%) than those aged 30-65 to be in part-time jobs but would rather be working full time.

Victor Duggan is an economist and public policy expert, having worked in the OECD, World Bank, European Commission, European Investment Fund and the Irish Labour Party, as well as in the private sector.

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