In this article, Tan Suee Chieh, Immediate Past-President of the Institute and Faculty of Actuaries, explains how young people globally could become a “lost generation” unless policy shifts towards prioritising the long term.
During a war it is usually the young who are sent to do the fighting. If you view the pandemic as a peacetime equivalent of war then on first glance it the older cohorts who appear to be in the front line – at least in terms of threat to life. But this is misleading, in terms of broader, non-illness related impact as it is the young who appear to be the casualties in economic and social terms, if not in terms of life threats.
There is a real concern that once the pandemic health effects have washed through the system (in economic terms at least) there will be a lost generation who will have to pay the economic and social “long covid” effect. As the Polish academic Piotr Arak argued in a recent World Bank blog:
“Crises define generations. It will be no different for the young people who are experiencing today’s pandemic – the cost of which for them, in mental, educational and labour terms, has reached $1.7 trillion globally – some 2% of global GDP. This generation will be scarred for life.”
In the UK the London School of Economics in its “Generation Covid” research has calculated that 14% of UK 16–24 year-olds have lost their job – more than double the average. And 58% of young people saw a reduction in earnings compared with 42% on average.
Global issue of lost education
According to the United Nations (UN), school closures have affected 1.6 billion young people globally and significantly changed how they live and study. The International Labour Organization argue that more than one in six people between the ages of 18 and 29 have stopped working since the start of the pandemic. Furthermore, those who have not lost their jobs have seen their working hours fall by 23%.
This could have a major impact on the life trajectories of a younger generation, impeding their transition into the jobs market, according to Professor Jean Yeung, founding director of the Centre for Family and Population Research at the National University of Singapore:
“The longer the current crisis lasts, the harder it is for the youth to recover from its negative impact. With no effective interventions, they could very well become a lost generation.”
These are big impacts. Some have even argued that Gen Z is being supplanted by Gen C (the Covid generation….a “lost generation”). Yet other cohorts of age have been hit too. The UK Resolution Foundation has identified the group of older pre-retired workers also badly hit in terms of job losses and struggling to get back into the job market post-Covid unlike younger, more flexible cohorts.
Build back more fairly?
But how can we use the recovery to build back not just better, but fairer across the generations? The actuarial profession has been arguing that this requires a long term, integrated vision and a policy path which supports this rather than piece-meal quick fixes.
This relates to a much broader swathe of challenges. And it requires intergenerational co-operation rather than pitting young against old in a sub-zero dash for resources.
The global population is growing, individuals are living longer, and in the coming decades there will be a growing proportion of older people. The number of those over the age of 75 is projected to double over the next 30 years. All the while, improvements in healthy life expectancy are not keeping pace with this increasing longevity.
All these trends point towards increased pressure on public services, in particular social security, health and social care, as the number of people using public services – such as drawing a pension or using the health services – and the challenge for many countries of how to pay and support older generations.
One theme the actuarial profession has been investigating is the trend to individualise risk and the consequences this has. Discussion of intergenerational financial transfers have been a key theme for exploration by the actuarial profession not least with our current Great Risk Transfer campaign. As actuaries we are also concerned about the transfer of risk between generations, from within the family, from someone’s employer, and from the government to certain individuals.
The key task for us all is to address the challenges that Covid-19 may have widened not created. We need long term solutions that deliver a system that is sustainable across generations and properly “future-proofed”.
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