“Many Young people today face an uphill battle,” said David Cole, Swiss Re’s Group Chief Risk Officer and a member of the Group Executive Committee, speaking at the World Economic Forum Press Conference in London. “As a result of the financial crisis and globalization, the younger generation in the mature markets struggle with ever fewer job opportunities and the need to support an ageing population,” he added.
As detailed in the recorded podcast, Cole spoke with the IJ after the conference to expand on the subject. Not only is it complex, but it also varies from country to country and even from region to region within countries. If it’s not addressed, however, a whole sector of the population, born within the last 20 years or so, risks becoming a new “lost generation.”
“We recognize that it’s not an original title,” Cole said, but “we think it’s quite relevant to this new generation, who were basically born in the 1990’s and early 2000’s – people who are between 15 and 25 at this point in time.” It is this group that is suffering the most from the “knock-off impacts of the financial crisis.” They are affected by both unemployment and “underemployment, whether it’s in developed markets or emerging markets.”
Students in developed markets are increasingly going into debt to finance their higher education, and when they do come out of these institutions they are “unable to find appropriate jobs.” As a result it’s more difficult to repay the loans, and “still start the financial stability need to buy a home, and, importantly, in the developed markets to provide for the financial security of previous generations,” Cole said.
In emerging markets the situation is different. There you see “very rapid population growth with very limited levels of employment – and certainly very limited levels of formal employment.” Investments in many developing countries are also quite low and getting lower. Cole pointed out that due to the financial crisis, which has hit banks and imposed new regulations and capital requirements, a number of them “are tending to bring their investments home.”
He also said the situation is in stark contrast with the technical abilities of the 15-25 generation, as they are “highly tuned in; they’re the ‘digital natives’. They understand the new technology; they use it; they’re the ones who come up with new innovations; they developed social media. But they’re being left out because there aren’t enough opportunities for them to either gain skills or to employ the skills they have. They’re not tuned out; they’re being left out.”
He described this generation as having “good quality, lots of ambition; they know how to collaborate.” As a result Cole said society needs “to reach out to them and bring them back in to our discussions, and to make sure that we are providing the types of opportunities that they need.”
If this isn’t done, it will be increasingly difficult “for this generation to recover; they’ve lost those ten years,” which makes it ever more difficult “to get back into the system, and to recover the skills you did not develop.”
Cole acknowledged the “tremendous growth” and improvements in emerging markets “over the past several decades,” but, he said, now “we have to deal with the financial crisis,” which although lessened “isn’t over; so we have to be thinking long term.”
The types of investments required in these markets should include “the young people,” providing them “in the long term with health care and financial security.” While supporting growth in emerging markets is “wonderful, they [developing countries] won’t do it by themselves.”
Essentially, they won’t be able to achieve the type of growth necessary to reach the economic levels of developed countries, and to eventually become insurance users and buyers. Insurers and reinsurers, who are entering emerging markets, increasingly count on this to occur, as it is seen as essential to provide future growth for the industry.
In addition to the financial crisis, the ever increasing use of technology has meant the loss of millions of jobs worldwide, which used to employ lots of people. Their work is now done by machines, and their jobs won’t be coming back. Cole agreed, that there’s no one single cause to the problems the lost generation faces. “One of the important messages we’d like to insure people are aware of today is that it’s actually the ‘interconnectedness,’ which is causing it or exacerbating it.”
Cole stressed, however, that interconnectedness is basically “a good thing; it allows us to collaborate” and do things, “which otherwise we would never be able to do.” It’s provided “tremendous value to all of us over the last several decades. We need to find measures for our societies to be resilient, and recognize that interconnectedness does bring complexity.”
Within our societies, economies and infrastructures we need to understand that they “are susceptible to problems that may develop elsewhere.” This awareness is very important, as it enhances the measures needed to work together across different societies to “improve resiliency; where can we look ahead? where can we plan?” Even if we don’t know where the next issue or problem may arise, we need to “invest in the spots that are the most visible, and then we have the advantage of applying the old adage that ‘an ounce of prevention is worth a pound of cure.’”
Cole and others at the press conference stressed the link between employment and investment. “If you want to provide employment, you need to encourage investment,” he said. This means “investments in new capabilities…in new technologies…in our young people. It’s not a short term solution, but I think it’s a sustainable solution. We need to make sure that we put policies in place, and that we have agreements across the different sectors and the different countries that actually stimulate this connection.”
Eventually this will create the ability to “train people” and to create “new jobs in multiple different locations,” not just to “focus on our own back yard.” This would involve developed countries [U.S., UK, Europe, Australia, etc.] addressing the concerns of large segments of their societies about immigration policy.
Cole said: “While I understand the emotive and the political issues around immigration, I certainly wouldn’t profess to have the answers, but I do know that if we actually go into short term thinking mode, thinking more about protection rather than sustaining, growing and improving, that we’re liable to take some short term measures that have a detrimental impact.”
As an example, he cited the immigrant experience in the U.S., where “waves of very significant migration contributed tremendously to the economic development of the country. We still see that around the globe. So, at the same time we need to recognize that people who are concerned…who are afraid for their jobs, sometimes have a tendency to think ‘short term’ responses, as opposed to what do we actually want to achieve over a period of five, ten or fifty years? Our plea is to not forget about the long term thinking…about where we want to be as a society.”