An issue of key importance was underscored in the 2017 Employment and Social Developments in Europe Review published by the European Commission Yesterday, July 17th. This year’s review — which focused on analysing how various structural, technological and demographic changes in the labour market are affecting younger generations relative to older generations — noted the need for the welfare states to actively generate intergenerational fairness in order to maintain “social cohesion, support for reforms, and trust in the economic systems and institutions”.

The rising age of the European population, pensions, and changing structure of the labour market were all noted as foreseeable problems in need of attention by the 2017 report. Regarding pensions, the Commission took note of the “double burden” currently placed upon young people. An increase in the dependency ratio between generations was acknowledged, meaning that, as time passes, a smaller number of people will be contributing to an overly dependent pension system, confronting them with larger rates of contribution. At the same time these contributions from younger generations may be irregular and fragmented due to the difficultly of finding full-time work, leading to potential long-term problems for future pensioners.

This issue regarding finding full-time work for young people was also highlighted. Due to the shift towards non-standard work, young people were stated to often struggle to find stable, long-term jobs. Reportedly, younger workers are twice as likely to be in temporary work compared to older age groups. In 2016, just over 30% of people between the ages of 25 and 39 in the EU said that they work part-time because they could not find full-time employment. The Commission attributed a potential decrease in productivity growth to this trend, also noting that, consequently, young people “postponing household formation, home ownership and parenthood may in turn have inter-generationally adverse consequences.”

In order to deal with these challenges, the Commission has made various recommendations. In terms of mitigating the problems resonating from an aging population, an emphasis was placed on increasing net immigration and higher fertility, as well as bringing more potential workers into employment for longer periods of time. In the long term, investment in innovation and skills for young people to increase productivity is a must.

In addition, engaging with social partners in order to bridge the gap between the young and old generations was recommended, promoting apprenticeships, mentoring or tutorship programmes. The creation of employment protection legislation, active labour market policies, and the promotion of life long learning are a few of the ways workers’ and employers’ representatives can have an impact on intergenerational fairness.

Overall, while economic growth is currently high and unemployment at a record low in the EU, efforts are still necessary to ensure that these economic benefits are shared equally by all age groups. The more quickly decisions are made at the policy level in order to promote intergenerational fairness, the more effective they will be at mitigating future problems.

Hayley Stauffer

Sources:

Press releases on the 2017 Employment and Social Developments in Europe Review:
http://europa.eu/rapid/press-release_IP-17-1988_en.htm
http://europa.eu/rapid/press-release_MEMO-17-1987_en.htm

Read the full report here:
http://ec.europa.eu/social/main.jsp?langId=en&catId=89&newsId=2841&furtherNews=yes