Tuesday, March 27, 2007

IPOD - - Insecure, Pressured, Overtaxed and Debt-Ridden

A recent feature in Newsweek magazine said that Europe has spawned a generation of "baby losers," society's 20-somethings who are missing out on the economic benefits that their baby-boomer parents took for granted but is the angst justified?

In the United Kingdom, the younger generation has been dubbed Ipod, for "Insecure, Pressured, Overtaxed and Debt-Ridden;" France has the "Génération Précaire" -- the precarious generation; in Germany, the well-educated members of "Generation Intern" accept unpaid jobs, hoping for a rare shot at a permanent position.

Newsweek says that young adults in France, like their contemporaries across Europe, face a slew of problems never experienced by their middle-aged leaders. Consider: a 30-year-old Frenchman who earned 15 percent less than a 50-year-old in 1975; now he earns 40 percent less. Over the same period, the number of graduates unemployed two years after college has risen from 6 percent to 25 percent, even if they typically have better degrees. Thirty-year-olds in 2001 were saving 9 percent of their incomes, down from 18 percent just six years before.

Young people who snag stable jobs, gain access to credit and buy homes later in life are particularly angry that the older generations continue to rack up public debts for which they will get the bill.

The older generation in many countries still enjoy the benefits of a generous welfare system that sees only 30 percent of Belgians older than 55 who still work, for example. A report by the London-based think tank Reform put the issue plainly. "People over 50 are developing the lifestyles of teenagers."

Newsweek says that some countries have so far avoided the malaise. In Ireland, the birthrate peaked late and the strong economy still provides jobs for all. In fact, "this is the first generation to have grown up in Ireland with no question that they would be able to find a job in the country," says Tony Fahey of the Economic and Social Research Institute in Dublin. Ditto for Spain, where everyone is enjoying the new prosperity and a welfare system vastly expanded since the end of the Franco regime. "[The young here] don't live worse than their parents; in fact they live much better," says Federico Steinberg, an economist at the Autonomous University of Madrid.

But even the happy Irish and Spanish share a housing problem. Across the continent, spiraling property prices and poor job prospects are conspiring to keep youngsters living at home. According to the Italian Institute of Social Medicine, 45 percent of the country's 30- to 34-year-olds still sleep in their old beds and enjoy Mama's home cooking.

In France, the proportion of 24-year-olds now living with their parents has almost doubled since 1975, to 65 percent. Even in the U.K., with its enviable record of job creation, the average age of the first-time home buyer has climbed from 26 in 1976 to 34 today. Property prices are now eight times higher than the median earnings of the ordinary twentysomething.

Matthew Lynn, a columnist for Bloomberg News says that "life has mostly improved for each generation since the Industrial Revolution of the 18th century. There is no reason to think that has changed now."

That is certainly true, in terms of improvements in medicine and many aspects of the quality of life. However, not all the post-war generation are doing well today, never mind the twentysomethings. For example, in Ireland the majority of private sector workers have no occupational pensions and in developed countries there is a growing income divide.

Young people with parents of property or properties of value, won't miss the boat. As to the rest, the pressures of globalisation will be a challenge and there is always the civil service for the French or Irish post the construction boom. A 2005 polled showed that 76% of French 15- to 30-year-olds aspired to civil-service jobs from which it's virtually impossible to be fired.