Early this week, the Economic & Social Research Institute (ESRI) revealed the current generation of adults in their 20s and 30s will be financially worse off than the previous generation. The report ‘Poverty, Income Inequality and Living Standards in Ireland’ states that it is the first generation to experience a decrease in life standards from the one previous.
The College Tribune will explore how this came about, what the impact is, and what experts have had to say on the matter:
Financial Crisis Fallout & Covid-19 Impact
Early indications from the ESRI report, due to be published later in the week, claim the decrease in a standard of living can be attributed to the financial crisis of 2008 and the global pandemic.
According to an article in The Irish Times, the ESRI report states there has been “widespread stagnation in earnings growth” since the 2008 financial crisis. Further, high housing costs are a big factor in the decreasing standard of living. Most of the affected generation are forced to pay over 30% of their disposable income on housing.
However, the report indicates that the problem was amplified by Covid-19. Employment areas occupied primarily by young adults such as retail, hospitality, and arts have been impacted heavily by the pandemic.
Harsh Reality.
Newstalk presenter Kieran Cuddihy summarised the issue in a blunt manner. “You are screwed. The current generation in their 20s and 30s will be worse off than the generation before them, for the first time in this state.”
Cuddihy further revealed that home ownership in 20- and 30-year-olds is the lowest it has ever been in the history of the Republic Of Ireland. The hard shoulder presenter described the current generation as “disenfranchised.”
One of the most damming revelations of the ESRI report is that workers in their 20s are – in real terms – earning less than they did in the 1990s and 2000s. Employment in 15–34-year-olds has dropped off by 14% since the pandemic. The report further warned that the financial impact on the state due to; stagnant earnings, high rent, and disproportionately high unemployment levels, can last up to 15 years.
A Ruptured Social Contract & Political Challenges
University College Dublin (UCD) Politics & International Relations Lecturer, Aiden Regan, stated that the social contract is “ruptured” by the ESRI report.
Regan stated that “International research shows that when the expectation of a living standard isn’t met for a generation, they tend to challenge the status quo. They will vote against centrist governments. In the Irish case, many of their votes will go to Sinn Fein.”
Regan further stated that this is a “scar” from the financial crash and “younger people are feeling the brunt of it once again.
“We have a problem in this country, our aggregate measures of economic growth are junk. You can talk about GDP growth and economy growth, but which age groups are benefitting from growth? The report shows market incomes in Ireland are disproportionate. There’s a clash here between ‘full employment’ and positive outlooks, against the harsh reality for many people, where they can pay up to 60% of their disposable income on housing.”
A Potential Solution?
Speaking to The Irish Times, ESRI economist Barra Roantree, said policy makers should increase the volume in training programmes for young people post pandemic. He also said young adults risk being “left behind” if policies are not enacted to tackle “the root causes of high rents.”
Until these solutions and more can be met, the reality remains this: The current generation of young adults in Ireland face two broad choices. They can stay here, hoping the older generation will act on this ESRI report and create a more affordable and progressive economy for young people. Or they can emigrate to a country that is already taking care of their generation.
Luke Murphy, Co-Editor.
