BarcelonaThe idea that younger generations will live worse than their parents may seem like speculation when talking about the future, but it is a reality when talking about the present. In the last 10 years, young people have entered the labor market with the worst crisis of the century, the pandemic and now runaway inflation. This has meant that the so-called millennial (those born between 1982 and 1996) and Z (between 1996 and 2015) generations have far worse economic, employment and general well-being conditions than the generations immediately preceding them, according to the study The curse of eternal youth, published last month by the NGO Oxfam Intermón. One figure serves as an example: the wealth of young people has fallen to more than half of what they had in 2008. But there are many more that demonstrate this situation.
Income by generations in Spain
Evolution of income per capita. Index where 100 = income in the year of birth
“One in three people between the ages of 16 and 29 is at risk of poverty or social exclusion,” indicates the study, which also calculates income data for the evolution of per capita income by age. As seen in the accompanying chart, when he was 21 years old, the per capita income of a person born in 1960 was more than 130% higher than at the time of birth. On the other hand, if you were born in 1990, at the age of 21 the increase in income compared to the moment of birth was below 30%, while a person who is 21 years old today has seen his per capita income grow by only 8% .
The debate on inequality between generations is not new, but has lasted at least since the outbreak of the crisis. A report from think-tank European Bruegel already indicated in 2015 that the economic situation of young people painted “a worrying picture”, with an “intergenerational division” that affected the whole of the Old Continent, but especially “southern Europe”. “Increases in youth unemployment and youth poverty are of particular concern because they have long-term effects on productivity and potential growth and scar young people for life, reducing their productivity and often excluding them from labor market for a long period of time,” the document from the Brussels institution pointed out. In addition, demography suffers due to “negative effects on fertility rates”, due to “uncertainty related to unemployment” and “consequent decisions to postpone starting a family”.
In 2018, with the economy already more recovered, a CaixaBank report described millennials as “a generation that has come of age in a time of uncertain and unfavorable economic conditions, with a depressed job market and a declining real estate sector.” In 2020, the book The Tap Generation by Josep Sala i Cullell, definitively uncovered the debate in the Catalan public sphere.
The consequence of all this is that “after each crisis, young people are always a step below the rest of the generations, without enough opportunities and impulses to allow them to move forward and undertake the projects that correspond to their stage of life”. adds the Oxfam paper. And the situation “extends once the age of 30 has been reached, when the period of youth was traditionally considered to have ended”.
Stagnant wages
The average income per person among the youngest people “has remained practically stagnant since 2009”, just one year after the outbreak of the financial crisis: it has gone from 10,797 euros per year to 10,903 euros, an increase of 106 euros in thirteen years The fall in the purchasing power of those under 35 has been 17% for young people between 16 and 24, and 10% between 24 and 35.
“Generation Z, at the age of 20, has seen economic growth 40% lower than that enjoyed by people born in the 60s at the same age,” says the study. The generation born in the 90s has suffered an even worse context: “They experienced, at 30 years of age, a growth rate 50% lower than that of the 60s generation at that same age.”
Purchasing power for generations in Spain
Evolution of the CPI and the average monthly salary by age group, in euros
“Falls in GDP are accompanied by falls in employment, especially among those who carry out precarious work, sectors in which young people are overrepresented,” says the report.
Labor reform does not fix precariousness
Unemployment affects young people much more than older people. The unemployment rate for the group between 20 and 24 years old doubles the Spanish average: from 12.4% of the entire population of the State, in this age group unemployment rises to 24.1%. Among young people between the ages of 16 and 19, 48.6% of workers looking for work do not have one, four times more than the average.
Temporality has been one of the plagues that has affected young people in the workplace, one of the problems that the government sought to address with the labor reform that came into effect this year. However, according to the report, the drop in temporary employment since the entry into force of the new regulations has not meant a very tangible improvement in the working conditions of young people, especially in terms of pay and the number of hours worked – and, therefore, paid for. Oxfam notes that the reform has made it possible to triple the number of young workers with intermittent fixed contracts between December 2021 and the third quarter of 2022, but “this type of contract, by its very nature, does not imply that young people work all the time ‘year”.
Part-time work – working less than full time – remains “significantly higher among younger groups” and “has grown significantly since 2008”. Spain therefore has rates of part-time work “significantly higher than the European Union average and which have a direct and immediate impact on the wage levels of young people”. This means that “the current young generation has much lower wages than the rest of the workers”.
Fewer investments and fewer mortgages
“The scars left by low wages at times of entry into the labor market and opened again with the arrival of new crises in short periods of time have ended up diminishing the wealth that young people have today.” In other words, the fact of working in worse conditions, for lower wages and for less time has meant that young Spaniards have not been able to invest as much as previous generations in past decades. The prototype family with 30-something parents, kids, car and house with the half-paid mortgage typical of the 1980s and 1990s is now a mirage for anyone that age. Access to housing among people under the age of 35 “has fallen by 50% in 15 years”, the report points out, although the cost of bank loans in recent years has been the highest reduced in decades thanks to the low interest rate policies of the European Central Bank.
Considering that housing is the main investment of families in Spain and that, in addition, lower salaries and temporary work make it difficult to save through products such as investment funds or pension plans, “wealth net of young people has suffered a percentage variation of -56%” from 2008 until now, while on average the decline has been 16%. In 2014, 4% of millennial families had invested in the stock market, less than half of the previous generation in 2002, according to CaixaBank. The crises have impoverished everyone, but much more so the young generations, who, due to a temporary issue and life and work experience, are always the least wealthy from the outset.
Access to housing
Percentage of population according to type of housing in Spain
Rents are skyrocketing
The lack of ability to buy a home has pushed young people into a rental market where prices have also skyrocketed. As you can see in the attached graph, the percentage of 16-29 year olds who own a residence was 54.9% in 2008, while the figure plummeted to 32% last year. Conversely, young people are forced to look for a rented flat: from 32.9% of young people who lived in a rented flat 14 years ago, it went to 47.7% in 2021.
With the bursting of the financial bubble, in the city of Barcelona the price per square meter of rent fell by 20.8% between January 2007 and the same month of 2014, when it bottomed out, according to data from the real estate portal idealist But from then until last month, rent has soared nearly 77%. At a time when wages are not moving much and young people have less access than ever to owning a flat, the rise in rent means that the younger population has to devote a much higher percentage of their salary to housing, in a direct transfer of money through rents from young tenants to owners, who are of older generations.