Inequality: A Void For Youth

Inner-contradictions riddle capitalism. The system's hunger for profit prefers youth workforce as it tastes fine to swallow: young muscles, comparatively, bear more burdens, young brains easily adopt new technology, muscle and brain of the youth is lucrative for capital to exploit. But capital deprives the youth, pushes it out from job market.

“Over the four years since the onset of the crisis, young people (aged 18 to 25) suffered the most severe income losses … Across the OECD countries, average household disposable income fell in real terms by around 1% per year among youth ….” (OECD (2014), "Income Inequality Update - June 2014 ”) In Greece , Iceland and Ireland , the youth found significant income losses. Spain , Estonia , Portugal , Hungary and the Netherlands also found large declines in the area. (ibid.)

On the other hand, the older group was relatively hit less hard. “These differential patterns of income growth are reflected in the evolution of the income-poverty risk, i.e. relative to the total population”. (Figure 1) (ibid.)

Figure 1: The risk of poverty has shifted from the elderly to the young

Relative poverty rate of the entire population in each year = 100, mid-1980s to 2011, OECD average

Source: OECD (2014), "Income Inequality Update - June 2014”. © OECD 2014

Note: OECD un-weighted average for 18 OECD countries for which data are available from the mid-1980s: Canada, Denmark, Finland, France, Germany, Greece, Israel, Italy, Japan, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Sweden, Turkey, the UK, the US. 2011 data for the UK are provisional.

Earlier “OECD reports highlighted that over the past 25 years youth replaced the elderly as the group experiencing the greater risk of income poverty. The recent crisis has accentuated this trend. By 2011, people aged 66 to 75 faced a risk of poverty that was 25% lower than the population average, and which was … the lowest among all population groups. Prime-age adults show lower poverty rates than the entire population.” (ibid.)

The system thus excludes that part of labor, which is hard working, and which is trained with latest education/knowledge although the system requires hard working labor equipped with latest knowledge and modern training as it prefers a horse instead of a human if the horse works harder, if it's more educated, more knowledgeable and more efficient than a human, and if the cost for propagation of similar horses is less than that of a human. Capital's character is anti-human.

It appears capitalist crisis is “kind-hearted” to the older people. But actually, it's the system's inefficiency. It can't distribute properly; it can neither protect its productive force nor is it benevolent to any group. Otherwise, the older population would have experienced easy and dignified life in all capitalist lands.

Hostile market required intervention

Markets that the world capitalist system has built up for the youth are harsh and hostile. The financial/banking/debt crisis made the market more hostile to the youth. Italy , Portugal , Spain and Greece experienced high youth unemployment. (Italian National Institute of Statistics, “Employment and unemployment: provisional estimates”, July 2013, & Eurostat, “Unemployment rate by age group”, 2013) “Although they were close to the EU average in 2006, both youth and adult unemployment rapidly increased during the Great Recession in Spain . Youths in particular were strongly affected by employment loss after the financial and debt crisis and the bust of the real estate bubble. As a result, unemployment rates of 15- to 24-Year-Olds soared from 18% in 2006 to 56% in 2013.” (Francesco Berlingieri, Prof. Dr. Holger Bonin & Dr. Maresa Sprietsma, Youth Unemployment in Europe, Appraisal and Policy Options , Robert Bosch Stiftung, Stuttgart, August 2014) In Portugal , the youth are “very vulnerable to job losses in case of a recession. Moreover, an average youth can expect to wait more than four years before finding a permanent job after leaving school which is the longest duration as compared to the other countries considered.” (ibid.)

Youth unemployment has a broader picture. The issue “is not a recent phenomenon that can be ascribed only to the Great Recession. Most European countries have faced difficulties in integrating youths in the labour market for many years, and youth unemployment rates are generally higher than adult unemployment rates.” (ibid.) “A particularly alarming feature of some youth labour markets [is] the high rates of young people that are disconnected, as they are neither in education, employment or training. In Italy , the proportion of such disconnected youths has ranged between 15 – 20% since 2000…” (ibid.) To many, these youths “are referred to as a ‘lost generation'” (Dr. Ingrid Hamm, “Foreword”, ibid.)

The precarious situation the youth faced during the recent crisis forced them to leave their countries. A reverse stream it was. The Wall Street Journal in a report headlined “Exodus of Workers From Continent Reverses Old Patterns” ( January 14, 2012 ) informed: “Economic distress is driving tens of thousands of skilled professionals from Europe , and many are being lured to thriving former European colonies in Latin America and Africa , reversing well-worn migration patterns. Asia and Australia , as well as the US and Canada , are absorbing others leaving the troubled euro zone. … The toll is mounting in Spain and Portugal , countries losing skilled workers to their former colonies. More people are emigrating from Spain , Portugal , Ireland , Slovenia and Cyprus than are moving to those countries, and in Greece officials worry that a similar trend is taking hold there. The European Union has no overall data on migration, but concern about the impact of severe budget cuts is growing in the U.K. , France , Germany and Italy , all grappling with losses of top research talent.”

Citing Spain 's National Statistics Institute the WSJ report said: in 2011 “ Spain became a net exporter of people for the first time since 1990”. Some 55,626 more people left the country in the first nine months of 2011 than arrived. “Spaniards are scattering to better-off European countries and beyond, particularly to Latin America . Of the estimated 37,000 Spanish citizens who left the country in 2010, nearly 60% emigrated to countries outside the European Union.” (ibid.)

Of Portugal , the WSJ report cited the government-backed Emigration Observatory in Lisbon : In 2011, at least 100,000 of the country's 11 million citizens left the country. Angola absorbed 70,000 Portuguese since 2003. In the 18 months through June 2011, the number of Portuguese in Brazil on work-related visas shot up by 52,000.

Citing Brazil 's Justice Ministry the report said: In the first six months of 2011 alone, the number of foreign residents in Brazil on temporary work and related visas rose by nearly half, to 1.46 million people, nearly 330,000 of them from Portugal and 60,000 from Spain .

Spain and Portugal encouraged job seekers to leave the countries. Portuguese prime minister urged teachers failing to find jobs in Portugal to move to one of its former colonies. Germany and Spain signed an agreement in 2011 under which German companies would offer jobs in Germany to out-of-work Spaniards, mainly in engineering, health care and tourism. Columnist Concha Caballero, writing in El País , called the emigrants “‘a new wave of exiles' whose departure bleeds the country of people who would otherwise create wealth, start companies and pay taxes.” The destinations of the new exiles are not only Brazil , Germany and Angola . China , Japan , Chile , Peru , the Netherlands and Belgium are also in the list. (ibid.)

About 18 months later, BBC in an article headlined “Jobs crisis: Europe 's great migration” said: “[T]ens of thousands of young Europeans are on the move in search of work. They are part of a great migration .… with unpredictable consequences for the countries they leave behind.” ( June 26, 2013 ) The article by Gavin Hewitt, BBC 's Europe editor, said: “The president of the European Investment Bank, Werner Hoyer, spoke of unemployment undermining the trust of a whole generation.”

“For many,” said the article, “ Germany is the land of opportunity and jobs. In 2012, 45,000 Italians moved to Germany . The Spanish were not far behind, with 37,000 heading in the same direction; 35,000 Greeks also left for Germany .” It cited a harsh fact: “It is … often the best and brightest who are emigrating. In the year up to April 2012, 87,000 people left Ireland . Many moved to Australia and New Zealand . Most of them had achieved high levels of education. … Tens of thousands of Portuguese are seeking work in places like Angola and Mozambique , countries which were former colonies. … [M]ore than 100,000 Spanish graduates have already left a country …”

Mighty market, the “panacea” prescribed by the status quo-economists, required intervention in the face of the situation it created with its bubble: Europe's leaders exercised with a billions-euro youth scheme and Germany invested 1bn euros ($1.3bn) in funding apprenticeships for young people in places like Spain and Portugal to help them find work in Germany. (ibid.) The billion-euro German apprenticeship, training, investment tells: capital needs trained humanpower to exploit, and labor will pay back with more than the invested money.

Thus, on the basis of the incidents not from the backward, under-developed economies, but from the advanced capitalist economies and once colonial powers, appears a system, which is old and matured enough to plunder lands, and is always looking for ways to maximize appropriation of labor but inefficient in using the younger and talented part of the productive force it controls. The system even can't use teachers. The economy, to say sarcastically, is ungrateful to its proponent-economists, who are always busy with hymns of “merciful” hands of market as the economy exposes the proponents' false theories by requiring intervention. The proponents, probably, are not owners of even shreds of shame as they courageously continue with marketing of their market-theory while market creates a void for the youth. The salesmen have sold out everything including their sense of shame in the market, their place of worship.

The old in the old economy

The world system old, conservative and efficient in devouring other lands doesn't show consideration to the old citizens.

In terms of number, the old citizens are not insignificant. “The global population of people ages 60 and older is more than 500 million (close to 8 percent of the total).” (UNDP, Human Development Report 2014 , New York )

“Today”, ILO says, “the majority of the world's older persons live in developing countries, where retirement is a privilege of public and private sector workers who are fortunate to work in the formal economy. Globally, the broad majority of older persons do not benefit from publicly provided minimum income guarantees, have to work as long as they are physically able to for their survival, and have to rely on kinship and charity which are often insufficient to provide even basic income security. This situation stands in sharp contrast with the global social contract embodied in human rights instruments and international labour standards, under which everybody has a right to at least minimum income security in old age.” ( World Social Protection Report 2014/15 , Geneva ) “‘[R]etirement' from economic activity in old age … is rare in developing countries.” (Robert Holzmann, David A Robalino, Noriyuki Takayama, eds. Closing the Coverage Gap, The Role of Social Pensions and Other Retirement Income Transfers , World Bank, 2009) Capital doesn't allow commoners rest in their life! For most people, savings and assets “are usually not sufficient to guarantee an adequate level of income security until the end of their lives.” (ILO, op. cit.) Till death, insecurity doesn't depart from the lives of overwhelming majority of people.

The tough reality faced by the aged citizens is further narrated by UNDP: “Poverty and social exclusion are problems for those who are ageing, especially because roughly 80 percent of the world's older population does not have a pension and relies on labour and family for income.” (op. cit.) About four years ago, citing HelpAge the World Social Security Report 2010/11 [ WSSR ] informed: “[T]wo-thirds of older people receive no regular income, while 100 million live on less than US$1 a day. Coverage by old-age pension schemes around the world, apart from in the developed countries, is concentrated on formal sector employees, mainly in the civil service and large enterprises.”

The overview provided above is enough to assume the condition of the old in the old economy: (1) Retirement is available in the so-called formal economy, and the size of the formal economy in the so-called developing world exposes the “privilege” of “retirement” the old citizens can avail; and (2) the “broad majority of the older persons” have to dependent on charity and kinship, or they have to rely on labor, sell self to capital. A cruel reality emerges: Sell labor as long as you can, it doesn't matter how old you are, or, in other words, labor is squeezed out by capital as long as there it is.

Condition in old age is not free from poverty. “Poverty in old age is more often chronic, since the lack of economic opportunities and security during earlier life accumulates into vulnerability in old age.” (UNDP, op. cit.) The WSSR also said: “The main risk when one reaches old age is poverty or income insecurity …” The world system fails to give income security to the old, who produced wealth for the system.

In OECD-countries, UNDP informs, “the old-age poverty rate is higher than the average for the whole population (13.5 percent versus 10.6 percent), and older women are more likely than older men to be poor. The situation is similar in many developing countries.” (op. cit.) The system is “efficient” enough: no discrimination between the OECD- and many developing-countries.

In this world system, poverty of the old is “blessed” with disability and abuse, violence and mistreatment. “With ageing comes a higher probability of living with a disability. Worldwide, more than 46 percent of people ages 60 and older live with a disability, and whether living with a disability or not, 15 – 30 percent of older people live alone or with no adult of working age.” (ibid.) Abuse faced by the older citizens is quite extensive. Forty-three percent of them fear, a 2011–2012 survey of 36 countries found, violence and mistreatment. (ibid.) At the same time, while “new, modern technologies and new goods and services changing the lives of more affluent groups in society” older persons with pensions not fully adjusted to inflation find their “absolute purchasing power … deteriorates and they are pushed into poverty.” (ILO, op. cit.) And, “[a]ccess to income security in old age is closely associated with existing inequalities in the labour market and in employment.” (ibid.) The powerful inequality doesn't allow the old to have a life free from inequality.

In the face of physical- and poverty-violence, what income security coverage do the old have in this system? Answer to the question is in the following paragraph:

“Nearly half (48 per cent) of all people over pensionable age”, ILO found, “do not receive a pension. For many of those who do receive a pension, pension levels are not adequate. As a result, the majority of the world's older women and men have no income security, have no right to retire and have to continue working as long as they can – often badly paid and in precarious conditions.” (op. cit.) “In low- and middle-income countries, only one in four people over 65 receive a pension.” (HelpAge International, Global AgeWatch Index 2014 , London ) And, “[d]espite an impressive extension of pension coverage in many countries, significant inequalities persist.” (ILO, op. cit.) Persistence of significant inequalities despite impressive extension tells the situation: Worse than now, before the “impressive” extension.

In low- and middle-income countries, contributory pension “schemes are not meeting the needs of a large proportion of their citizens” as “most people work in the informal sector where jobs are precarious and they do not have access to formal pension schemes. Incomes are often too low to save for old age. For the growing ‘fragile middle' of people who have escaped extreme poverty, few are likely to be able to save for a pension.” (HelpAge, op. cit.) WSSR found: “Incomplete coverage is a widespread phenomenon; it is seen not only in developing countries but in industrialized countries too.” It also found “a significant gender gap … everywhere: in nearly all countries …”

Helplessness of the aged citizens is part of the reality in which markets limit government's sovereign power. “Pressures of tax competition and global financial markets limit governments' ostensibly sovereign power to introduce increases in social security contributions and taxes where necessary to prevent benefit cuts.” (ILO, op. cit.)

As usual pattern in the world system, private capital extends its powerful hands. “Lobbying by the international financial services sector was successful in pushing for large-scale privatizations of social security pensions …” (ibid.) What not is handed over to private capital? Even pensions for the old are not spared. Private capital, thus, profits from even the old.

The system, thus, creates a void for the youth, fails to engage part of productive force and neglects the aged citizens. In a system based on wealth, the reality creates inequality.

It's part III of an essay on inequality.

Errata : The source in the paragraph just above Figure 1 in part I ( Countercurrents.org , October 19, 2014), is “ OECD (2014), “Income Inequality Update - June 2014” ” instead of “ibid.”; the last sentence in paragraph 4 in part II ( Coutercurrents.org , October 23, 2014), will be “ Unpaid work, whether it's in home or in agriculture field, goes to the account of surplus value produced in an entire society, and capital appropriates it. ” instead of “ Unpaid work, whether it's in home or in agriculture field, goes to the account of surplus value an entire society produces and capital appropriates. ”, and in the last sentence in paragraph 2 in the same part, the “ is ” preceding “ can ” will get omitted.