The Growing Intergenerational Divide in Europe

Written by | Thursday, March 17th, 2016

The recent economic crisis has led to the deepening of the intergenerational gap in the European Union. Youth unemployment has increased and poverty among the young people has deep-ened. In contrast to the young Europeans, the economic situation of the elderly has not worsened to the same degree. If we take into account the Union as a whole, the unemployment of those under 25 has increased significantly, whereas it has increased only marginally for the people between 50 and 64. In 2013, unemployment reached even 23.7 percent among the young, whereas it was only 7.8 percent among the older European population. Although this trend can be observed across the EU, the worst situation was in Greece, Italy, Ireland, Spain and Cyprus, thus mostly in the countries of southern Europe and those hardest hit by the eco-nomic crisis. These numbers are significant not only because of the very fact that young people are out of work but also because they have a negative impact on their lifestyles and productivity.

Intergenerational differences have their roots in the three fundamental measures adopted by the EU Member States during the economic crisis. First, some countries resorted to austerity measures to cope with the sovereign debt, which in turn suspended investments in the slumping economy and caused a rise in the unemployment among the young people. Second, the redistribution at the government level was too much in favor of pensions and at the expense of health, education and family policy. Third, many states introduced pension reforms. The analysis of the changes in the ratio between the incomes of pensioners and those actively employed has demonstrated that today’s pensioners are better off than today’s actively employed will be, according to forecasts, in 2060. This will, in turn, lead to rising socio-economic disparities be-tween the generations.

An obvious solution is to enforce measures against youth unemployment and balance the costs associated with pension reforms more fairly across generations of Europeans. Such policies include, for example, the introduction of training programs during the education process or reforms providing a greater certainty for maintaining a workplace for a temporary employment where young people are often employed. Another challenge is to try to set up coordinated fiscal rules both for the whole Eurozone as well as in the countries outside the Eurozone. Finally, it is necessary to invest in education and children much more because they are our future and arguably only an educated young man or woman will succeed in the labor market. This may help mitigate the intergenerational differences in the future and therefore it should be the EU’s key priority.

The study can be downloaded here

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