Until family life is more affordable, young people will keep delaying it
Published 19/08/2016 | 02:30
If Ireland is no place for old people, it's no place for young people either. The fates of the two generations are, in fact, linked.
Earlier this week, this newspaper reported the fact that the average private-sector worker is squirrelling away only enough to provide themselves with a weekly pension of €60. That's on top of the State pension. Add them together and an awful lot of people in this country are going to be living on €15,000 or so per annum in today's money.
As Charlie Weston, the paper's Personal Finance Editor, pointed out, on that kind of income you can forget about the new car and the exotic foreign holidays.
What's more, it is likely to get much worse because a huge question mark hangs over whether the State, which is to say the taxpayer, will be able to pay the State pension at today's rates.
As at 2013, there were 570,000 pensioners in the country. By 2026, that is in 10 years, this will climb to 855,000, an increase of 50pc, which is enormous.
To the pension bill should be added the health bill. Despite our still young population relative to other European countries, we spend a vast amount on health as a percentage of our economic output, more than practically every other EU country. What will the health bill be when the number of retired people increases by half in the space of just 10 years?
Even if we further delay the age at which people can claim the State pension, we can't stop them getting older and suffering from the ailments that old age will inevitably bring.
A measure of how bad things are going to get is the fact that while at present there are five working people for every pensioner, this will be down to two working people supporting one pensioner by 2055.
Even that doesn't fully capture how bad things are in this regard and how much worse they will get, based on current trends.
Writing in the 'Sunday Independent' at the weekend, Brendan Burgess of consumer forum Askaboutmoney.com quoted figures showing that we have by far and away the highest percentage of jobless households of any of the original 15 member states of the EU. Twenty-three per cent of households here with people of working age have no one actually working.
The other 77pc of households with someone who is in paid employment have to support the jobless households. This is despite the fact that the unemployment rate here is no higher than the EU average. We have twice as many jobless households as the average for the EU 15, which includes countries with famously generous welfare systems, such as Denmark and Sweden. Not as generous as ours, as it turns out. Leo Varadkar wants to make it even more generous. He has signalled his wish to index-link welfare payments. That is pure Celtic Tiger stuff from someone who ought to know better.
No country can afford to go on like this and it is young people growing up today who, above all, are going to have to bear the burden of a system which is building up fantastic numbers of economic dependents.
Making things even worse for young people is the resultant tax system, that overburdens those on middle and higher incomes, as well as ridiculous planning laws which make land, and therefore homes, in the Dublin area stupidly expensive and therefore out of reach for many of those trying to get on the property ladder for the first time.
A representative of the 'yoof', writing in the 'Irish Times' on Wednesday, correctly diagnosed some of the challenges facing his generation. But, hilariously and bizarrely, when he got around to policy prescriptions, he offered abortion.
Probably if you pressed him hard enough, he would have suggested more public spending, but it is precisely that which is contributing to the economic challenges facing young people. Can they seriously afford to pay the kind of taxes that will be required to meet the health and pension bills coming their way in the not-so-distant future? Not in a million years.
Then there are the various factors conspiring to cause young people to delay starting a family. One is the aforementioned price of houses.
But another is social attitudes among young people themselves. They hugely, enormously value their personal freedom. They wouldn't want to get tied down in their twenties, even if they could afford to. Therefore, they delay getting married and having children until they are in their early-to-mid thirties, by which point there isn't time to have more than two, even if that's what they want.
This also contributes to the rapidly worsening dependency ratio. We need larger numbers of young people if we are going to address this problem, but everything in our society, ranging from economics to social attitudes, means we're going to have fewer young people.
And it seems to be totally lost on our young friend in the 'Irish Times' that if we liberalise our abortion law in the way he wants, we're going to end up with fewer young people still. If we get a UK-style abortion rate to match a UK-style abortion law, the number of Irish women having abortions each year will rise from around 4,000 to around 12,000. That's not going to expand the tax base, is it?
What is to be done? We need to make it more affordable to start a family and we also need to change social attitudes, so that young people don't put off taking on the genuine adult responsibilities involved in starting a family until they are only a few years away from middle age. If we want to make it more affordable to start a family, we need to reform our planning laws for starters, we need to make our tax system more family-friendly and we need to stop making ourselves public spending promises we can't possibly keep and which will hit the rising generation hardest.