The crisis has dug a gulf between the incomes of different generations, and young people are increasingly poorer. The fault is of a country that grows little. But also of the school system.
Today, three teams are playing the game of economics and politics: Baby Boomers, Generation X, and Millennials. And the English labels, invented by sociologists and made popular by the mass media, identify three generations, separated not only by their date of birth but by very different worlds and experiences.
The Baby boomers were born between the post-war years and the end of the Sixties; Generation X is the age group of those who came into the world in the decade of the Seventies, the Millennials came into life between the Eighties and the end of the Nineties.
The problem is that the comparison between the different generation teams is far from balanced. The most unbalanced match is the one between Baby boomers and Millennials: the former has gone from one success to another, they have received the baton from their parents, protagonists of the economic boom, and have consolidated their position in terms of income and assets; the Millennials have a not insignificant problem: they arrived when the party was ending and immediately met the most serious economic crisis since 1929. The result of such a disparity of conditions is, as economists write, that the social lift has come to a standstill. Not only are the children no longer destined to become richer than their fathers, but, on the contrary, the direction has reversed. “Just make two calculations on the latest numbers released by ISTAT,” explains Giovanni Ajassa, director of the Study Service of Bnl-Paribas. “The economic crisis has dug a gap between the incomes of the different generations to the detriment of the younger generation.
FATHERS AND SONS
The data are those published in the chart: since 2007, the incomes of those under 35 years of age have decreased by 20%, the age group between 35 and 44 years of age has reduced losses to 12%, the “old” close to retirement have lost only 7%. Everyone, with the small recovery underway, has started to recover something. All except the under 35s. If instead of income we look at assets, things don’t change. According to data from the Bank of Italy, in the decade between 2005 and 2014 the wealth of families led by people over 64 years of age remained practically unchanged, the households between 55 and 64 years of age lost just over 10%, while young people under 35 left 20% on the streets.
In a recent study, Carlotta de Franceschi, president of the think tank Action Institute and professor at New York’s Columbia University, uses Greek mythology to explain what is happening: Chronos, father of the gods, afraid of losing power, devours his children until Rhea intervenes, who hands her husband a stone wrapped in a cloth in place of the last born, Zeus, who will then give birth to the gods of Olympus and the lineage of men. The difference is that today “the figure of Rhea seems to have disappeared: the young generations are left alone and helpless, prey to the greed of Chronos.” To interpret the figure of the bad dad are, willingly or not, the Baby boomers: “They have benefited from a long period of economic growth and have been able to enjoy the fruits of a still generous welfare state. Two advantages that they have not left to the Millennials” explains Carlotta de Franceschi.
A COMMON PROBLEM
It’s not just an Italian problem. In the study already mentioned (“A past that weighs on the future”), de Franceschi speaks of an “intergenerational fracture that threatens European countries.” In the last twenty years, the variation in the income of young people has been, in practically all developed nations, negative compared to the national average and almost everywhere, it was the increase in youth unemployment linked to the crisis that impoverished the under-30s. Italy, however, has its peculiarities. “In our country, a dual labor market has been created, and even the pension reform, I’m referring to the Dini reform of 1996, took 20 years to get into the system. In practice, the economic world in the Peninsula has been divided into two parts: on the one hand the so-called guaranteed workers and those who could retire with the rules of the past; on the other hand, those who were not that lucky. Inside the fortress, sheltered from the blows of the conjuncture, protected by a forest of laws, the unionized labor force and pensioners ended up with cheques calculated according to the salary system. Outside the walls remained the young people.
EXPENSES AND EDUCATION
“The public spending choices of recent years have also widened the intergenerational divide,” explains de Franceschi. “Austerity policies have included more flexible budget items, and that involve young people more, such as education or spending for families than those that are politically more expensive, such as pensions and health care. And education (or lack of education) is one of the keys to understanding the specificity of our country. “The problem of youth impoverishment begins at school,” warns Ajassa of Bnl. Italy is by far in the lead in a very unenviable ranking: the so-called Neet, young people between 15 and 29 years old who do not work and at the same time are not employed in any education and training activities. Between 2007 and 2016 they grew by 6 percentage points, and today we are at levels three times higher than Germany and almost twice as high as the average of the euro countries.
Not only is our economic system growing less than all the others, but we are also showing a greater inability to manage the entry of young people into the labor market. To understand the reasons for this twofold disadvantage Carlotta de Franceschi points out some data: public spending in education is significantly lower in our country than in the average of OECD countries, and the educational system appears decidedly out of sync with the needs of the digital age: we have 26% fewer science graduates, 29% fewer IT experts, 21% fewer people with elementary IT skills than the European average. Is it enough to be pessimistic about the future of the tricolor Millennials? If you want to, you can make it worse by adding one more element: according to the Bruegel Study Centre in Brussels, Italian pensioners in 2060 (today’s Millennials) will see their cheque cut more than all the others in Europe. In 2007, Italian pensioners received 68% of an average salary. In 2060 the percentage will fall by 21 points to 47%. In short, there is little to do: the Italian boys and girls (see also the box at the top of the page) can only hope for a good inheritance.