Giles Merritt is Founder and Chairman of Friends of Europe
The European Union has rightly been chided for failing to develop a strategy on ageing, but where it has really fallen down is on younger people. It is they who will be asked to shoulder the huge costs of more migration and of disruptive changes to Europe's labour markets. Yet they are an impoverished generation.
We need imaginative responses to the intergenerational divide, but there's no sign of these on the EU policy agenda. The widening wealth gap between younger and older Europeans is an invisible crisis with far-reaching implications that can only be addressed effectively if national policymakers act in concert.
The European Commission hasn't been making much of this. It produced a report in 2015 on ageing that emphasised the already well-known fact that by 2040 there will be only two working age Europeans for every pensioner – the present ratio is just under 4:1 – but since then, silence.
We need imaginative responses to the intergenerational divide
The fact of Europe's ageing is widely recognised, even if its full impact seems little understood. Even less attention is paid to the other side of the coin – the disadvantages younger people are having to contend with, and the way these are growing. At the start of this century the under-24s seemed all set to do better economically than their parents. No longer.
The age-old 'convection' of assets from parents to children has been dislocated. Greater longevity means savings are no longer being smoothly transferred to inheritors. On top of that, the shift in the 1960s toward smaller families means that today's millennials will be outnumbered for the foreseeable future as a voting bloc.
The IMF drew a gloomy picture when it looked at the financial prospects of younger people. The under-34-year-olds have less than 5% of net wealth in Europe, and only a tenth of the median wealth of the over-65s. Older people are hanging on longer to homes and pensions, while the young face high barriers to jobs and housing.
This underlines the need for a much more cohesive Europe-wide approach to taxation and benefits systems. The goal should be to reduce the handicaps on younger generations through a cultural and political revolution. Europe's national governments won't make much progress towards these reforms without pushing for a global re-think on inter-generational imbalances.
The under-30s account for about a quarter of the global population, and rising. They already suffer unfairly high unemployment levels, and these will increase over the next decade with another billion young job seekers. Meanwhile, digitalisation, the gig economy and under-development in poorer countries will be creating veritable armies of dissatisfied and jobless people.
The focus on Europe's ageing has seen shifts in spending towards healthcare and pensions. Other than the EU's trumpeting of 'youth policies' like Erasmus exchanges for university students and some free Interrail passes for teenagers, there has been nothing to address the yawning intergenerational gap.
The young are arguably their own worst enemies; they find it hard to think ahead but that doesn't mean they should be penalised
Most state-run pension schemes in Europe are headed for bankruptcy. Young couples increasingly cannot afford home ownership. Under-40s in the EU pay on average four times more in taxes than over-65s and receive four times less in benefits. Without wage subsidies to boost their take-home pay they can't afford a private pension arrangement, and they certainly can't afford large enough families to head-off demographic disaster.
It's not too late to resolve these problems. Europeans need to embark on root-and-branch reforms, and to avoid beggar-thy-neighbour low tax competition they must do so at an EU level. As well as easing the burdens on younger people they must introduce common-sense measures like placing the heaviest taxes on city centre land values rather than the buildings on them, and on the investors in companies that have become so adept in tax avoidance.
The young are arguably their own worst enemies; they find it hard to think ahead. That doesn't mean they should be penalised. EU and national policies should aim to redress the imbalances in wealth and opportunities that are handicapping their futures.
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