Recession creates ‘lost generation’ among under 45s

The creation of a “lost generation” may have emerged as a result of the recession that hit Ireland over the last few years.

A report by the Economic and Social Research Institute (ESRI) has highlighted how younger households are bearing the burden of the financial crisis much more than older ones.

Data analysed by the Government’s economic think tank shows that unemployment, mortgage arrears and negative equity are major concerns for families where the head of the household is under 45 years.

The report’s author, ESRI researcher Petra Gerlach-Kristen described the contrast between the experience of younger and older households as “striking”.

While average income and consumption increased steadily for the over-45s between 1994 and 2010, disposable income fell by 14% and real consumption dropped by 25% for the younger group since 2005.

The report claims such declines are large both by international standards and by historical comparison.

Ms Gerlach-Kristen said the experience of younger families where consumption levels fell at a faster rate than declines in income ran contrary to standard economic theory. She said such a development could be explained by the inability of households to access loans or to have built up earlier savings.

The unemployment rate among single people under 45 was 14.2% in 2009/2010, in contrast to just 5.6% for over 45s in the same period.

A larger proportion of younger families hold mortgages which exposes them further to the risk of arrears and negative equity, and makes them a credit risk for banks.

The report said the younger half of the population bore the main burden of the crisis because younger households were more likely to become unemployed and have bought property before the crash.