By Neil PatrickWhilst this blog is focussed on job and career matters for mature professionals, we all know that the global jobs crisis is also hitting young people exceptionally hard. And in the UK, still-inflated house prices and cautious bank lending means many remain living at home with their parents sometimes to 30 years of age or more.
But this isn't just a tragedy for the young. Unemployment and underemployment amongst the young has a profound impact on their parents' financial sitautions too.
The average age of first-time UK house buyers is now 35 years old, according to a survey by Post Office Mortgages. This compares to 28 ten years ago, and 30 five years ago.
In the early 1960s, the average age was 24.
The survey also found that half of all prospective first-time buyers believe that it will take them ten years just to save enough to raise the deposit to get on the property ladder.
With the average price of a first-time property at £137,500, the average deposit required is £27,500.
Now I actually think that this is not such a bad thing. Irresponsible lending and borrowing particularly in the US and UK housing markets are one of the major root causes of today’s western economic woes. So a sizeable deposit requirement and the self-discipline and sacrifices required to achieve this would seem to be a good thing, right?
Well not exactly. You see, whilst it might be tempting to imagine young people working and saving hard and finally reaching a position where they can finally afford that deposit down payment, that’s not what is happening in reality.
In the vast majority of cases, the deposit isn’t found in this way. So where’s is it coming from? Family. The bank of Mum and Dad - if you are lucky enough to have parents with £30,000 or so just sitting around with nothing better to do.
Ironically, this large deposit requirement creates a new generation of young home buyers with absolutely no personal stake in their home investment! And with interest rates so low, the monthly payments are very easy - for now…
And how many do you think have budgeted for a possible interest rate rise on their repayments…I don’t know either, but I’d be willing to take a bet…
Once we see any sort of upward movement of interest rates, then everything will start to look very wobbly.
So this is the uptown story.
Moving downtown, there’s a whole different story playing out.
The recent National Institute for Economic and Social Research (NIESR) study shows the jobs situation for 16 to 24-year-olds is much worse than even the raw unemployment figures of 979,000 suggest.
The lack of job opportunities for young people during the downturn is brought into stark relief when we consider the fact that nearly a third of those counted as being in work are actually “underemployed”, according to NIESR.
So whilst nearly a million are completely out of work, many times more than this are not getting as many hours work as they’d like.
Of those in the age group that did have jobs in 2012, 30% wanted to work more, according to authors David Blanchflower and fellow economist David Bell. They report that that standard unemployment figures - which have fallen overall in the past year - failed to give a proper picture of “labour market slack” in the economy.
In the whole UK workforce, the proportion of the workforce who were jobless or underemployed rose from 6.2% in 2008 to 9.9% in 2012, according to an index calculated by the researchers, while over the same period the unemployment rate rose from 5.8% to 8%.
Even if there were an upturn in demand, employers would be likely to extend the hours of existing workers before taking the risk of hiring new young employees.
So we have a two speed society amongst the under 30s. One group that thanks to modest family wealth, are enjoying a comfortable cruise through the recession. And a second much larger group who are facing a very uncertain future with low incomes and little prospect of achieving even the modest living standards that were accepted as normal in the west until the last few years.
So in different ways, both groups are remaining highly dependent on their parents and families well into their adult lives. But with growing job and income insecurity amongst the baby boomer parents, how long before even this fragile arrangement collapses?