Eight years on from the global economic crisis,
social inequality is rising in the majority of EU member states, according to
recent studies. Even worse, the gap between the generations has widened
considerably, as pensions and benefits for older people have not shrunk as much
as incomes and opportunities for younger people. Unemployment, precarious
lives, poverty, public debt accumulation and limited access to quality social
services all nurture anti-establishment political behaviour among the
millennials and their working-class parents.
Similar signals can be seen everywhere in Europe
now, but Greece has been dealing with these trends since the outbreak of the
crisis. After seven recessionary years and three bail out agreements, reforms
are still sporadic, the public sector has only been reduced in size rather than
cost and labor market flexibility has not paid off. The recessionary policy mix
is unsurprisingly deepening inequality between genders and within social groups
and generational cohorts. Apart from setting unrealistic fiscal targets and
inadequately handling public debt, the government and lenders have given their
consent to a socially unfair policy mix, now based on over-taxation, an
imbalanced pension system that depends on excessive individual contributions
and limited financial support for research, public investment and targeted
social policies.
All this evident lack of social and economic
logic is demonstrated in the 2017 central budget plan approved by the Greek
Parliament in early December. But, unexpectedly, Prime Minister Alexis Tsipras
then announced that €617million of the state’s primary budget surplus would be
redistributed – not among the NEETs nor the ailing state schools or hospitals,
but among pensioners. Possible short-term electoral gains clearly prevail over
the damage to Greece’s social mobility: 70.8% of the unemployed are in extreme
poverty, whereas only 3.8% of pensioners and 0,7 % of public sector employees
crossed the deprivation threshold in 2015. More than half (54%) of the jobs
created in 2016 are either part-time or occasional, offering salaries up to
€400 euros per month for almost half a million workers. And more than a third
of the long-term unemployed (2015) were between 15 and 24 years old.
In other words, the young are losing the
generational war in Greece. The same or similar trends apply in Italy, Cyprus,
Malta, Hungary, Spain and Portugal. By contrast, the Nordic and Baltic states
have resisted demographic pressure and inequality by paying more attention to
education, family policies and welfare. But the big picture demonstrates that
fiscal straitjackets undermine social justice and deprive current and future
generations of the prospect of enjoying better living standards than their
parents and their grandparents.
Could an orchestrated policy-mix at national
level combined with medium-term anti-austerity interventions at EU level
reverse these trends?
Arguably, as the EU and the Eurozone countries
are locked in another round of sluggish growth, the current ECB interventions
should be complemented by: an inclusive Juncker-style investment plan in all
member states; stronger domestic demand in high-surplus countries; relaxation
of the Stability Pact rules on financing public investment projects; and bold
Eurozone decisions in the field of public debt management.
Today, many analysts argue that direct
intergenerational transfers, such as the Youth Guarantee, require a more
generous budget and more inclusive implementation at the national level, as
well as a more unified approach to recognizing qualifications and the transfer
of social security entitlements. Progressives cannot overlook the fact that the
increase in labor mobility or flexibility requires more sustainable social
security systems and stronger national supervisory authorities. Otherwise,
social security schemes could be brought to the brink of collapse and poverty
rates could skyrocket among the underpaid.
From an institutional perspective, the
introduction of good governance principles, evidence-based policy-making and
monitoring social policy legislation by national ombudsmen and parliaments can
avert excessive transfers that favor older generations at the expense of their
children. Some European countries have already introduced constitutional
clauses in order to balance intergenerational transfers and halt the
accumulation of excessive public debt. In the meantime, younger people should
be equipped with all necessary information to hold their political
establishments to account and know where their (or their parents’) money goes,
through the decisive promotion of open government institutions.
Unfortunately, progressive political powers
continue to favor current ‘insiders’ and beneficiaries of social security
systems so as to attract the pensioners’ vote. In this way, they weaken the
financial sustainability of pension systems and they provoke current workers
into stopping paying their social contributions. Therefore, rapid demographic
decline in countries like Germany, Hungary, Italy and Greece is a wake-up call
to national policy makers to reconsider the Danish (multi-pillar) social
security model that rewards labor and provides incentives to the elderly to
stay on in working life. Additionally, more social policy interventions could
focus on high quality early childhood education and provision of daycare and
pre-school facilities for younger couples, as in Sweden. While unemployment
remains a social exclusion trap, businesses should be incentivized to employ
young, poor or vulnerable social groups.
All the above requires a radical social
democratic rebirth, with open minds towards co-operating with other European
progressive powers. As the millennial ’precariat’ and NEETs gradually develop a
distinct class identity with post-ideological characteristics, they become more
vulnerable to the simplistic and appealing sirens of the post-truth politics of
the extreme Right. And, as western democracies are considered corrupt and
distant from the daily concerns of the average citizen, it is no surprise that
technical fixes and blueprint reforms hardly appeal to a cornered working class
and its children. Figures, trends and election results call for a renewal of
the social contract and a new focus on its intergenerational dimension: more
resources and opportunities, openness, transparency, social accountability and
access to decision-making is not and should not be a lost cause for the ‘lost
generation’.
Published in Social Europe (here).
