by: Dick Stroud
What a great sounding title? Maybe it’s a tad pompous? What it means is that as the sky falls in and the economic and financial structure of the West disintegrates, the old and the young will be affected in very different ways. This is the first of my muses about this subject. To begin with I thought I would amass some factlets about Europe’s stressed-out 18-34 year olds.
The French talk a lot about "Génération Précaire"—the Precarious Generation. A less elegant name is ‘babylosers’. For the first time in recent history a generation of French citizens, aged between 20 and 40, will experience lower standards of living than their parents.
Consider this, a 30-year-old Frenchman (I assume Frenchwoman as well) earned 15% less than a 50-year-old in 1975, today they earn 40% less. Over the same period, the number of graduates, still unemployed two years after leaving college, has risen from 6% to 25%.
The proportion of 24-year-olds now living with their parents has almost doubled since 1975, to 65%.
Not surprising a recent poll showed that only 5% believed young people had a better chance of succeeding than their parents.
Germans now talk of "Generation Intern". These are well-educated graduates forced to accept unpaid jobs in the quest for fulltime and pensioned posts.
According to the Italian Institute of Social Medicine, 45% of the country’s 30-34 year-olds have yet to leave their parent’s home. This may be due to the atrocious cooking skills of young Italian woman but I guess it’s more like due to prohibitive cost of going-it-alone.
Mileuristas are defined as Spanish people aged 23- 43, with incomes less than 60% of the full time average. There are lots of them.
Even during the boom years, when growth outstripped the rest of the European Union, the ‘mileuristas’ found themselves unable to afford their own homes. But now with the implosion of the housing market their prospects are grim. In the first three months of 2008, Spanish unemployment hit 9.6%, the highest for three years.
The term applied to 18-34 year-olds is the iPoD generation. Not the normal reference to their technical prowess but the fact they are Insecure, Pressurised, Overtaxed and Debt-ridden.
Since 1999 the median annual full time earnings of the iPoD generation has increased by 28%. During this time the price of the average first-time buyers’ property has shot-up 104%. Property prices now 9 times higher than the median earnings of the ordinary twentysomething.
Not surprisingly the age at which people acquire their first home has climbed from 26, in 1976, to 34 today.
The high levels of debt that young people service (with increasing real interest rates) is graphically illustrated by the fact that graduates’ post-university debt has risen 300% in the past 7 years.
Time are tough and getting tougher for young people. Unfortunately, the hard times are only just beginning. The costs of health and care, resulting from the aging population, are only just becoming visible.
Older people are not immune from the downturn. The oldest and poorest group are being hit hard, especially by the rising costs of oil and food. More of this in a later blog posting.
Surely Europe’s marketers must see what is happening to the purchasing power of their beloved 18-34 year olds. At an aggregate level it is going to fall. The balance of power between young and old is changing, much faster then most people realisE.