by Giles Merritt
In early March, the EU’s youngest Commissioner is to unveil his plan to get Europe’s Gen-Z generation a fairer deal. Glenn Micaleff, Malta’s 36-year-old member of the Commission, has a better idea than most of the widening gap between elderly or middle-aged ‘haves’ and struggling younger ‘have nots’. How his ideas are received by his older colleagues remains to be seen.
The odds are stacked heavily against his ‘Intergenerational Fairness Strategy’ because the EU lacks key competences in most relevant policy areas. But Micaleff can be comforted by shifts in Europe’s political mood, with policymakers increasingly aware that continued neglect of younger generations will severely handicap the Union’s future. Mainstream politicians also fear populist parties’ growing appeal to younger voters.
Reversing the unfairness trend will be hard. This century has been tough on Europe’s youth and has aggravated their problems. Young job-seekers find opportunities scarcer and wages lower than earlier generations, with their difficulties often compounded by the digital revolution.
For the less skilled, robots are reducing warehousing and factory payrolls, and for traditionally secure professions like the law or accountancy, artificial intelligence (AI) is starting to make huge inroads. The outlook seems grim for Gen-Zers and their Generation Alpha successors born from 2010 onwards.
The under-35s averagely pay a greater proportion of their earnings in taxation than their elders, contend with sky-high housing costs, and according to the International Monetary Fund (IMF) own only 5% of Europe’s net asset wealth in property or financial holdings.
There’s little the EU can do specifically to help the young with regard to jobs and wages; these will be determined by overall efforts to streamline the European economy and kick-start innovative start-ups. Brussels can, however, encourage member states to focus on the burdens beyond the workplace that weigh so heavily on younger people.
Housing is a major challenge for many EU citizens – a third say they are being impoverished by high rents or mortgage costs, and young people are among the worst affected. The EU has pledged financial help for 35 million new homes by 2030. Here, Commissioner Micaleff could usefully redouble efforts to improve housing conditions, especially for young couples to underpin efforts to tackle Europe’s alarmingly low fertility rates.
Tax is another area where the young need urgent relief, not just because they are unfairly over-taxed but also because by the early 2040s they will be called on to finance soaring healthcare and pensions of Europe’s ageing populations.
Millennials now entering their 40s, Gen-Z’s ‘zoomers’ and soon Gen-Alpha all pay proportionately more tax than earlier generations because so many EU member governments have hiked indirect taxation, which falls most heavily on people with lower incomes.
The EU has little or no clout in these policy areas, and shaping its ‘fairness’ strategy is made no easier by the fuzziness and lack of definition of the problems facing young people. Their employment conditions are unsatisfactory, but many have themselves opted out of the old-style jobs market. ‘Gig’ jobs and zero-hours contracts are underpaid, but they’re often a first choice for the Zoomers who led the post-COVID-19 ‘Great Resignation’ when millions stayed home and rejected formal employment.
EU labour markets are in flux. As well as the inroads of smart technologies, employees are themselves looking for more flexible options. ‘Side hustles’ are increasingly popular because additional part-time work not only means extra money but also the security of not relying on a single boss.
With the world of work changing so fast, Glenn Micaleff’s youth strategy will need to reflect more than the unfairness created by Europe’s ageing. No one can doubt that much stems from our greater longevity. The ‘Baby Boomer’ generation thrived in times of solid economic growth, and longer lifespans mean their wealth is being passed on more slowly to their inheritors.
This is where youth-friendly redistributive taxes will be essential. But it’s a much bigger and more complex problem than that; Europe’s familiar socio-economic structures need to be overhauled. If in the years ahead today’s young people are to finance snowballing pension and healthcare costs, we need a radical re-think of their place in society.
By mid-century, runaway healthcare costs will have overtaken spending on pensions, and together the two will mop up over a quarter of each EU member’s state spending. Optimists say the AI revolution will come to the rescue, but more pessimistic analysts warn against ‘magic wand’ thinking.
Opinion polls reflect widespread fears among parents that their children will not have the same lifestyles that they’ve enjoyed. Middle-aged and elderly Europeans are sympathetic, but that’s not enough. They must make concrete, even painful, concessions if their own pensions and healthcare are to be guaranteed. Today’s young people are the geese that can produce tomorrow’s golden eggs, so at long last they need to be cosseted and cared for.
*The views expressed in this Frankly Speaking op-ed reflect those of the author and not of Friends of Europe.
**Published first on FriendsofEurope.org
By: N. Peter Kramer
