Emerging Technologies

How do we bridge the generation gap?

Image: An elderly man stands in Copacabana in Rio de Janeiro. REUTERS/Ricardo Moraes.

Jean Pisani-Ferry
Professor, Hertie School of Governance in Berlin
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If one considers some of today’s main challenges – including climate change, pensions, public debt, and the labor market – an obvious conclusion emerges: It is relatively much worse to be young today than it was a quarter-century ago. Yet in most countries, the generational dimension is remarkably absent from the political debate. Fifty years ago, people spoke often, and loudly, of a “generation gap.” Today, that gap has become invisible. This is bad for the young, for democracy, and for social justice.

Start with climate change. Its containment requires changing habits and investing in emission reductions so that future generations will have a habitable planet. The alarm bell was first rung in 1992 at the Earth Summit in Rio de Janeiro; but over the last generation, little was done to contain emissions. And progress following the landmark agreement achieved in Paris in December is unlikely to be fast, because the accord is premised on postponing major efforts. Universal assent was made possible only by further delaying.

Given the massive inertia inherent in the greenhouse effect, the gap between responsible and irresponsible behavior will start resulting in different temperatures only in a quarter-century, and major consequences will follow only in 50 years. Anyone older than 60 today will hardly notice the difference between the two scenarios. But the fate of most citizens currently younger than 30 will be fundamentally affected. In due course, the respite gained by the older generations will have to be paid for by the younger ones.

Now consider debt. Since 1990, public debt has increased by about 40 percentage points of GDP in the European Union and the United States (and much more in Japan). Given near-zero interest rates, the corresponding drag on income is currently low; but, because inflation is virtually inexistent and growth is anemic, the debt ratios have only stabilized. So debt reduction will take longer than expected in the aftermath of the global crisis, which will deprive the coming generations of the fiscal space they might need to invest in climate action or in the containment of security threats.

Future pensions represent another form of debt. The pay-as-you-go (PAYG) systems in place in many countries are giant intergenerational transfer schemes. True, everyone is expected to contribute while they work, before becoming a recipient in retirement. In an ideal steady state, pension regimes would not redistribute income across cohorts born at different points in time. As specialists say, they would be generationally neutral.

But the baby boomers (those born from the mid-1940s to the mid-1960s) paid little into the PAYG schemes because economic growth, population size, and their parents’ low life expectancy made financing pensions easy. All these factors have now gone into reverse: Growth has slowed, the baby boomers are a demographic bulge weighing on their children, and they are expected to live long.

Countries where pension reforms were introduced early have been able to limit the resulting burden on the young and keep the balance between generations approximately fair. But countries where reforms were delayed have allowed that balance to place the young at a disadvantage.

Finally, consider the labor market. Over the last decade, conditions for new entrants have worsened markedly in many countries. The number of young people categorized as NEET (neither in employment nor in education or training) currently stands at 10.2 million in the US and 14 million in the EU. Furthermore, many of those who have recently entered the labor market have suffered from job insecurity and repeated spells of unemployment. In continental Europe, especially, young workers are the first to suffer from economic downturns.

On all of these issues – climate, debt, pensions, and jobs – the younger generations have been made relatively worse off by developments over the last quarter-century. A telling symbol is that there is often more poverty among the young than among the elderly. This ought to be a major political issue, with significant implications for public finances, social protection, tax policy, and labor market regulation. And it reinforces the imperative of reviving growth through productivity-boosting policies.

Yet the new generation gap has had little direct political effect. It hardly arises in electoral debate and has generally not led to the emergence of new parties or movements. Instead, the generational divide shows up in electoral participation.

In the latest US mid-term elections, the turnout rate among younger citizens was less than 20%, compared to more than 50% for senior voters. Similar trends are observable in other countries. Despite the increased uncertainty they face, younger citizens are much more disengaged from electoral politics than their parents and grandparents were at the same age.

This generational gap in electoral participation explains why politicians care more about the elderly than about the young. But in aging societies, the more the young abstain from voting, the more decisions by parliaments and governments will be biased against their interests.

True, parents are generally not selfish. They help their children through private transfers and grants. But only those with income and wealth can provide meaningful support. The result of neglecting young people collectively while supporting them privately is social inequality on a massive scale.

How to redress generational biases in the political system is a key question for all democracies. Solutions do exist: mandatory voting, term limits for elected officials, and youth parliaments or special bodies to examine intergenerational issues, for example. But such measures are either difficult to implement or only moderately effective in view of the magnitude of the challenges.

Current trends are clearly unsustainable politically and socially. What is unclear is when and how young people will recognize that and make themselves heard.

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