Decent employment for younger generations should be the focus of the stimulus package

In our latest blog, NERI economist Ciarán Nugent looks at the effect of the Covid-19 crisis on the younger generations in Ireland.

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The latest figures, released on Monday are extremely worrying. More than twice the amount of employees that have been kept on through the wage subsidy scheme (283,000) have been made unemployed (584,000), in addition to 225,000 on the live register. Initial figures showed a disproportionate effect on younger workers. However, the age breakdown of the latest two rounds of numbers have not been released. Nevertheless, there’s no reason to suspect that trend to be different once the details are released. It’s probably even worse!

The fact that millennials footed the bill for 2008 is an uncomfortable fact that has been ignored for a decade. The legacy of Anglo and the rest still constrains Irish policymakers. Although our debt-to-GDP ratio has fallen (due to an increase in GDP most people didn’t notice), government has hardly made a dent in the debt burden of the Irish state after seven years of uninterrupted economic growth. From €220 billion in 2013 to 212 billion in 2019. The Irish state has third highest debt per person (about €90,000) in the world. This means that a bottom-up bailout of workers, investing in a productive (possibly green) economy etc. or investing in services like a one-tier health system or state provided childcare is much more difficult to fund due to the legacy of the disastrous bailout of bankers in 2008. 

The resentment stemming from 2008 has rarely, if ever, been acknowledged. And that’s not just Fianna Fail and Fine Gael. Attempting to highlight the lived experience of this group tends to make much of the commentariat uncomfortable and elicits quick, fierce and often outlandish attacks. The answer has been mostly either flat out denial of the statistics presented to them, or gaslighting. This has further underpinned a general feeling of underrepresentation and undermined the trust of a generation in Irish institutions, both in politics and traditional media.

The key to an effective response to the Coronavirus crisis depends on acknowledging and internalising this message and making sure it informs the design and direction of the stimulus package (whenever that is rolled out). Without a focus on giving the younger half of the Irish labour force some hope for the future, some kind of bailout, the institutions of Irish democracy will not last long. We are in unprecedented times. The social contract needs a redraft or it will be forfeit.

This video went viral a couple of years ago. It was covered in traditional media outlets in the US, UK and here too. More often than not, however, the mainstream media didn’t seem to understand that the video was a bad attempt at satire. I heard it presented on national radio station, Newstalk on no fewer than two occasions (maybe three) as evidence of the laziness and entitlement of millennials. The fact that anyone would believe it, is a sign of the depth and breadth of the generational divide. I suspect it also signals that millennials are underrepresented and have little to no influence in our media. This would make sense in the context of layoffs after 2008 and the following years of low recruitment. And it’s probably indicative of why the general election results in 2016 came as such a surprise to most commentators (‘Let’s keep the recovery going’. Remember that?). The same reason the electoral performance of Sanders and Corbyn were such a shock. Sinn Féin seemed even to surprise themselves in February, such is the dominance of the narrative of economic success over the past decade and the general neglect of issues affecting groups left behind. Their success was driven by the votes of disaffected millennials and Gen Z’s. No millennial could have believed that video. The older ones especially, remember working conditions before 2008. Pouncing on this video with a strange type of glee is symbolic of the gap, the general disinterest, the antipathy even of successive governments and the media in representing younger generations, in hearing them, or in speaking to them in a language they can understand. 

The post-2008 labour market is not the same as the hope and promise of the Celtic Tiger. Jobs.ie were still getting 34 applications per job in 2019. The Phoenix just advertised an internship for someone with a minimum of 5 years’ experience. The unemployment rate for under 25’s was still 14 per cent at the end of last year. Our job vacancy rate, a key indicator of the vibrancy of the labour market (the share of vacant posts as a percentage of overall employment) is less than half the EU average24 per cent of workers under 30 were on temporary contracts in the final quarter of 2019 compared to 8.8 per cent in 2006 and they’re shorter in duration. Transitions from temporary to permanent and from part-time to full-time employment are among the lowest in the EU. Wages are lower and basic living costs are higher. Underemployment is still three times the rate in 2006 and the share who are not working full-time due to childcare has been rising. All of this, even though we’ve invested more in education than any other generation in the history of the state. 

While politicians and the media celebrated rising property prices in unison over the past few years (many if not most of them probably made ill advised property investments pre-2008 themselves), younger people saw their chances of a stable home slipping away as the number forced to stay at home doubled in the decade up to 2016, infantilised. Concerns that tackling negative equity for older property owners was at the expense of younger people have never been seriously entertained. If we do manage to get a mortgage, state-owned (or at least ‘bailed out’) banks are charging us €80,000 more over the lifetime of the contract on average than the average EU mortgage holder. But I thought we already bailed out the banks?

A dysfunctional rental market compounds the fear of losing employment, especially in the cities. Homeownership is pretty much out the window for singles. It’s not a lifestyle choice many can afford. A lot of us live in constant fear of eviction. Most of us have put back the milestones other generations took for granted, not through choice but through insecurity. 

Social mobility has also been hampered since 2008. To do a post-grad, even if you get the grant for payment of fees of €6,000, you have to figure out how to live for 11 months with no income. This is almost impossible without significant supports from family that not everyone can avail of. The participation rates for 15-19 and 20-24 year olds were still both 15 points lower in 2019 than in 1998. Even part-time jobs, abundant during the Celtic Tiger era are not there to help struggling students. I know myself, I would have never been able to get through my first stint in college in 2002 without the part-time work I found (easily and as much as I wanted at the time). And getting a student loan since 2008 has also been much more difficult, even from banks who owe their current existence to a state funded bailout. 

All this considered, just think of how galling it must be for the 28,000 under 25’s in February and the many more who preceded them to see the introduction of a €350 a week unemployment payment when they’ve been forced to live on €100 for years. All this avocado talk is incendiary.

This story is rarely if ever told. Instead coverage has focused on imagined character flaws of a generation who weren’t at the wheel in 2008 or in 2020. There is a disturbing consensus about these flaws in Irish political discourse.

When flat out denial isn’t working, it turns to offensive gaslighting of the most educated group in the history of the state. 

One form this takes is telling us that actually, all of the above is great and we are really lucky. The ‘isn’t it great that you can expect to have five careers and a lifetime of constant upskilling?’ approach. I’d rather have a choice really. I suppose it wouldn’t be all that bad if I get paid appropriately. Renting a one-bed apartment in Dublin is over 50 percent of the take home pay of the median earner in the 25-34 year age group. You can’t get a mortgage on a temporary contract.

We also get the ‘we had to live through the eighties’ line. A damning indictment of the current set up and of the economic management of the past number of decades in my opinion, and an own goal by anyone putting the argument forward. We’re not to expect, in over thirty years of unmatched technological development improved living standards? The economy has more than quadrupled in size since then. Where’s our share? Where’s our future? It’s diversion. It’s probably embarrassment. The eighties wasn’t preceded by a decade of ‘we have it all figured out’ and the world is your oyster either. And standards of living improved during the eighties and it was followed by the Celtic Tiger. Material deprivation rates were still higher in 2018 than in 2006. If I wanted to buy the same house my father bought with a single salary in 1980 (when he was ten years younger than me) I’d need to be in the top 5 per cent of the Irish income distribution. I invested a lot more in education than he did too. Why does it take two post-graduate full-time workers to scrape together enough to buy a three-bed semi-d in Dublin in 2020 when one worker without a degree could afford one in 1980? Because we’re lucky we have it so good what with the smartphones and flat screens, that’s why.

Another form of gaslighting is tied in to the last; that things that were achievable and a reality in most developed countries in 1980 are now naïve and too expensive. ‘Fantasy economics’. It’s to prime us about how unrealistic dreams such as working hard to buy a house are or a one-tier health system. Things that are available to most other Europeans (we know they are, because we can use the internet). Many, which were available to our grandparents. Incremental improvements to living standards is pie-in-the-sky stuff post-2008. Higher house prices are what’s really good for us. And you don’t want higher wages either, that would be bad. Housing affordability isn’t an issue. Growing homelessness is normal. Even for all the ‘people who get out of bed in the morning’ talk. A prominent housing commentator was on national radio a few months back telling us not to worry about our wealth being extracted in private rental accommodation because one day we’ll inherit our parents’ house; the exact opposite of a Republic of opportunity. Not everyone has a dynasty to look forward to.

In the past week or so there’s been many voices in the media priming us for a post-Covid reality. Again, a one-tier health system is unrealistic, fixing the housing crisis is unrealistic, fixing childcare is unrealistic, a living wage is unrealistic. And of course, any additional revenue raising measures that may be the norm on the continent are unrealistic (actually, they are not even discussed and we’re going to have to have that conversation soon). 

And the thing is, a generation ago, all that might have worked, because narratives were easier to control. But we have the internet. We can fact check Prime Time ourselves, in real time. We were able to google that video. We can also google the price of an avocado, have another tab open with house prices and another with a calculator.

What I think is unrealistic is expecting a generation to shoulder the cost of a second economic crisis and the institutions of the state to survive it. Irish democracy will not last another two years of austerity. Any stimulus package should be directed at creating decent and sustainable employment for younger generations and some kind of hope of a bright future. 

This should start with an Irish green new deal to avoid the next crisis. The one we’ve been watching coming towards us for decades.
 

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Ciarán Nugent


Ciarán Nugent is an Economist at the Nevin Economic Research Institute and is based in the Dublin office. He is currently working on a number of projects relating to the Just Transition and the Irish labour market. Ciarán has an MA in Economics from NUI Maynooth and a BA in International Politics. His research interests include income distribution, wages, precarious work, the cost of living and intergenerational inequality. He graduated with an MA in Economics and BA in International Politics from NUI Maynooth.

Ciarán also produces the NERI video and podcast series.

Contact: [email protected] or 00353 1 889 77 22.