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It has never been so expensive to be a 30-something in Ireland

It may seem pathetic but I tend to see the world through the prism of great football tournaments. Great eras are defined by great matches, players and competitions. For many people of my generation, the memories of Italia 90 are still fresh. I can’t think of the early 1990s without cursing the name Toto Schillaci. That Irish football team were not lucky; they were good, some would say our best team ever.

A joyous summer, Italia 90 can be seen a bridge between the economic darkness of the 1980s and the renaissance light of the 1990s. The 1990s was period of peace in the North, the Belfast (Good Friday) Agreement was signed and, for the first time since independence, our economy began to truly grow. In contrast, the 1980s was a mess on every metric you care to measure.

Yet things have been tricky for those 371,206 Irish citizens born at the beginning of the ‘Irish Renaissance’, in this hinge period between qualifying for Euro 88 and being knocked out of USA 94. Many came of age, leaving school just as the economy collapsed in 2008. They left college in the middle of the post-crash recession, looking for jobs just as austerity began to bite. Tens of thousands then emigrated and when they came back, found themselves slammed by a pandemic just as their careers were taking off.

Locked out of the property market, many are living back in the box room with parents who have become enormously wealthy over that same period. It’s common to hear parents bemoan what they regard as the psychological softness of their children’s generation, but when you look at the data it not hard to see why levels of anxiety are elevated.

This generational divide is the defining economic issue of our times. In 2008, I wrote a book called The Generation Game, highlighting this coming dilemma, but it is even worse than I imagined back then.

Although these citizens were born and brought up in the most successful period of the Irish economy, many don’t feel it. Even before the pandemic, the financial crisis amplified the inequalities between the generations. Far more young people lost jobs after the 2008 crash than older people.

It was also much harder for younger people to find a job during the recession. According to the ESRI, “employment rates declined by around two-thirds from peak to trough for those age 16-19, a third for those age 20-25 and a fifth for those age 25-29, compared to around 10 per cent for older workers”.

This meant it was harder for those younger people to “launch” themselves in their late teens and early 20s. Long term American evidence indicates that falling behind the average in your 20s has a permanent negative impact on your lifetime career and earnings. In short, your 20s are important. Fall back early and you may not catch up.

Economic progress is all about momentum. The average person must “feel” they are moving forward, doing better than their Mum and Dad, for there to be a sense of upward momentum in society. But that’s not happening. The most recent numbers in Ireland show that average weekly earnings for those born in the 1990s were, when they were 20-22-years-old, more or less the same as the wages 20-22-year-olds received in the 1980s (born in the 1960s).

Wage stagnation affects the young more because they tend not to have other assets. The Italia 90 Generation are the first Irish generation that have not experienced consistently higher earnings than those born just 10 years previously, meaning the social conveyor belt is jammed.

And then there is housing …

Housing wealth grew by €95 billion in the first quarter of 2022, and this wealth is highly concentrated among the old. Today, the average first-time buyer is 35. In the 1990s, the average age was 26. The number of 25-34-year-olds living independently and owning their own homes halved from 60 per cent in 2004 to 27 per cent by 2019.

With the median house price around €300,000 and the average salary for those aged between 25-29 around €35,000, owning a home requires two full-time salaries. Add in having to pay for rent, and the prospect of saving for a house becomes impossible. The Italia 90 generation are spending more than 30 per cent of their disposable income on housing at age 30, compared with just 13 per cent for those born in the 1970s and only 10 per cent for those born in the 1960s. It has never been so expensive to be 30.

As house prices rise, the Italia 90 generation get poorer, not just in relative terms, but in absolute terms too.

And then there’s childcare …

Even if these youngish people have decent jobs, the inability to get a place to live affects all sorts of other milestones that have historically marked adulthood, such as having children. Added to the costs of rent, childcare makes having kids prohibitive.

According to a 2020/21 report from Pobal, the average cost of full-time childcare in Ireland in recent years was about €187 per week, translating to €810 per month and €9,340 annually for each child. The average figure masks the variation from county to county. For example, in Dún Laoghaire-Rathdown, the average cost is almost €12,700 per child annually. Elsewhere in Dublin it is €11,100 per child. In Cork and Galway cities, childcare comes in at around €10,600 and €9,000 respectively. A recent Newstalk survey indicated that childcare costs have surged by 20 per cent over the past four years.

To put this in practical terms, take a working couple with two children, both on the average salary of around €45,000. They take home about €71,000. Under the average scenario, childcare is costing about 26 per cent of their take-home pay. Obviously on specific cases, these figures may change but it gives you an idea of what the Italia 90 generation are facing.

These two major issues, housing and childcare, are policy choices. Other European countries subsidise housing and childcare, or provide both as a public service. Successive governments in Ireland have chosen to allow both housing and childcare costs to escalate. Both of these costs are incurred mostly by people under 40. Older citizens have never been richer, but their children are falling back, meaning that inheritance becomes even more important, enshrining class inequality. Children of rich parents, who can pass on housing wealth are advantaged. For a vibrant democracy, this isn’t a good look.

Speaking of democracy, given the policy choices made, is it any wonder the Italia 90 generation are rejecting the mainstream political parties? After all, why would you pledge loyalty to a system which has given you back so little?

These 371,206 people constitute 17 per cent of the Irish electorate. If the centre of Irish politics wants to shore up this huge swing population, it must make the right choices. Otherwise the Italia 90s babies will look for a new home.

 

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