After a decade marked by the Great Recession in the countries of southern Europe, the pandemic has triggered a new situation of economic instability that could affect the post-crisis generation ‘more intensely’ and widen the intergenerational opportunity gap. To prevent this, the Friedrich Naumann Foundation for Freedom and the Esade Center for Economic Policy (EsadeEcPol) have published the report ‘The double crisis generation. Economic insecurity and political attitudes in Southern Europe’ in which they propose implementing a series of structural measures such as completing the reform of the Spanish pension system, promoting active employment policies, reforming the labour market to combat dualism, and facilitating work-family reconciliation. 

The study examines the socio-economic situation of the post-crisis generation (those born between 1985 and 1995) in southern Europe and the evolution of their political attitudes. In Spain, Italy and Portugal, this generation entered the market with lower incomes and employment rates than those of the pre-crisis generation (people born between 1975 and 1984) at the same age. The data also show lower rates of emancipation, home ownership, fertility, and potential wealth. According to the study’s authors, ‘The gap is especially pernicious for people without higher education, who lag behind on most of the indicators.’

Fewer jobs and more dissatisfaction with democracy

In Spain, preliminary employment data indicate that socio-economic gaps are increasing with the new economic crisis caused by the pandemic: as in the recession from 2008 to 2014, employment has fallen most sharply amongst members of the post-crisis generation without higher education. Furthermore, the perception of a lack of equal opportunity and dissatisfaction with democracy are higher in southern European countries than in central Europe (Germany).

The research suggests that the hypothesis that would explain this variety in attitudes is how the gap interacts with the present and inherited political and institutional context. In the case of Spain, the opening of intergenerational gaps has prompted the first questioning of the basic constitutional consensus. The study warns that this possible increase in inequality during the current crisis ‘could increase the appeal of populist platforms as long as other political formations are perceived to be failing to respond to the breach.’

Closing current gaps and preventing future ones

The Friedrich Naumann Foundation and EsadeEcPol propose creating a system that is sensitive to these issues based on four key areas for the reconsideration of specific policies, with the aim of closing current opportunity gaps and preventing new ones from emerging in the future:

– A non-dual, flexi-secure labour market focused on building human capital. Southern European labour regulations tend to protect highly-skilled jobs. To close that gap, they propose a model that matches protection levels throughout the life cycle and a unified contract with severance pay that increases in a marginally decreasing way. To round it out, they also propose adding a growing protection mechanism, in the form of a ‘rucksack’. With regard to transfers for unemployment protection, they recommend redirecting part of this expenditure to labour profiles that are not yet accumulating contributions, in order to ensure that they can invest periods of unemployment in building human capital in order to re-enter the labour market under better conditions.

– Make it easier to start a family. In this context, the researchers write that ‘it is crucial to carry out reforms such as those already undertaken in other European countries, to ensure the provision of adequate work-family reconciliation services to families’. They propose creating a universal and accessible network of nursery schools to facilitate greater work-family reconciliation beyond the ages of 0 to 3, as well as making parental leaves of equal length, and increasing the flexibility of working hours and reductions in working hours for caregiving purposes or allowing workers to accumulate extra hours worked for use at another time (i.e. flexitime).

– A sustainable social protection system. The study underscores the importance of moving towards sustainable pension systems that take into account the ageing population, as well as taxpayers’ ability to fund them. It also proposes creating an account associated with each worker that is regularly funded by his or her employer (a percentage of the salary each month). Upon conclusion of the employment contract, and under certain conditions, the worker may decide whether to withdraw the funds or keep them until retirement. Finally, it proposes establishing a system for the efficient monitoring and evaluation of spending with the arrival of the European recovery funds beginning in 2021.

– A welfare state aimed at ensuring equal opportunity. According to the OECD, southern European countries are characterised by a social protection system that mimics the dualism of their labour markets, concentrating social transfers amongst the people who contribute most to the system. The report proposes implementing efficient redistribution systems focused on future generations, promoting education in real-life skills, and generating policies aimed at horizontalising the rental market and access to housing.