A fair recovery: employment, housing and tax
16 July: A fair recovery must focus on getting young people into work, addressing the housing crisis and reforming the tax system, intergenerational fairness expert Maja Gustafsson tells ICAEW Insights.
The issue of intergenerational fairness has come to the forefront during the COVID-19 pandemic, with many feeling that an already unsustainable socioeconomic situation for young people has been further exacerbated.
Maja Gustafsson, a researcher from the Resolution Foundation think-tank and intergenerational fairness expert, told ICAEW Insights that wealth held has been increasing faster than income. “The people who are wealthy now are becoming increasingly wealthy, whereas people who are relying on a wage have seen little progress.”
Socioeconomic vulnerability amongst young people has been compounded by the economic impact of coronavirus, with the millennial generation bearing the brunt of the crisis disproportionately. Already insecure employment conditions during the lockdown (short term, temporary or zero-hours contracts, for example), particularly within the industries of hospitality and retail where a large portion of young people work, have led to job losses or furlough for some.
“Lines have been heavily drawn along pay, employment and how secure your contract is,” said Gustafsson. “All crises tend to be worse for the youngest, but because this crisis has hit retail and hospitality extra hard, it is disproportionally the case that young people have lost their jobs to a much greater extent than other age groups.
“On top of that, young people are more likely to have been on insecure contracts, creating a double whammy situation,” she continued. “Furthermore, there have been stalling wage increases for the past decade, with many of this cohort living in rented accommodation with children. It’s an unsustainable situation.”
The problem of intergenerational inequality has developed over the past few decades leading to the millennial generation, those born between 1980 and 2000, having less wealth than previous generations, and the pandemic has made these pre-existing trouble spots much worse.
Such areas of disparity have been the focus of research and growing awareness amongst policymakers calling for change, particularly in the years leading up to the COVID-19 pandemic.
A fair recovery package
So, for Gustafsson what would be a fair recovery package moving forward from the pandemic? Unemployment amongst young people is the most pressing and immediate need. Where possible, young people should be enabled to find work and stay in work.
Employment opportunities could include online internships or online trainee contracts. The working from home model encourages new flexibility. For example, young people who can no longer afford to rent in London can move somewhere more affordable but still have good job prospects online. Also, there are opportunities for working internationally, while physically based in the UK.
However, those who are working in hospitality or retail cannot work from home, and these sectors have also been hit especially hard by the lockdown. Here Gustafsson called on the government to think about re-skilling. There could be incentives for training people for jobs that are needed more than ever due to the crisis: social care, environmental sustainability and improving the housing stock.
Of the measures announced so far, Gustafsson commented that it was “great to see” the government focusing on young people through its new Kickstarter Scheme.
“Triple the size of the Future Jobs Fund that it replicates, it [the Kickstarter Scheme] could create up to 350,000 jobs for young people. The focus on both employment and training to find a permanent job is exactly what we need to see. It will be a huge delivery challenge, however, that will require many of these jobs to be created by local authorities rather than private companies.”
Tax reform is also high on the agenda for intergenerational fairness campaigners, who feel that the burden of paying back all the recovery packages should be shared fairly across the generations, and not be disproportionately paid by wage takers.
For Gustafsson, a fair, sustainable recovery both from a green and socio-economic perspective is possible, considering the various challenges that must be given priority, particularly for the younger generations.
“You can have an employment boost for everyone but especially for young people,” Gustafsson explains, “and you can also invest in the green economy and invest in the housing stock. There are lots of ways to make sure that many objectives are hit within a few different policies over the next five to ten years. Getting people into jobs is going to be the main priority, and maybe it’s time to start fixing all these related problems.”
For more information go to ICAEW’s Global Recovery Hub.