"A rather poor deal"
What do the young think about the generational debate and retirement provision? Can we expect the radicalisation of the millennials? What reforms do we need? Some answers from Wolfgang Gründinger: the 32-year-old author and spokesperson for the Foundation for the Rights of Future Generations is seen as a "lobbyist for the young" in Germany.
"A gigantic tidal wave of costs": democracy researcher Wolfgang Gründinger (32) on the burden facing the young (Photo: Axel Schmidt).
Mr Gründinger, you demand more intergenerational justice in your books and TV appearances. What is going wrong?
We are living at the expense of the young. A gigantic tidal wave of costs is rolling towards my generation in the form of government debt and population ageing. In Germany alone, the cost of pensions will reach somewhere in the region of EUR 1 trillion by 2050. Furthermore, as the older generation grows, the industrialised world is in danger of becoming a democracy of pensioners, where young people's interests fall by the wayside.
Is it helpful to play the young off against the old?
Whether helpful or not, that's what is happening. That's a rhetorical cliché used to tell the young that they shouldn't complain. Meanwhile the older generation is getting paid while the young are being denied.
Your criticisms sometimes meet the fiercest opposition from pensioners. Why are they so angry?
Many people take the pensions debate very personally and view it as an attack on their life's work. It’s also ultimately a matter of distribution and people want to defend their privileges.
Can you understand that?
Of course. Pensioners have worked hard all their lives and they are entitled to some security in their retirement. I just wish they would be more receptive. Every euro can only be spent once so you need to think carefully about what to do with it. Should it go on childcare? Sustainable infrastructure? Or extra pension payments? We need a more balanced approach because the status quo is skewed towards the older generation.
Do the millennials, people born after 1980 who are now starting work, know about this redistribution from young to old?
They know that retirement will not be as comfortable as it is now. Many of them no longer believe they will receive a good pension - there is no more confidence in our pension system. We have to pay higher contributions in return for a lower pension. We also have to save more for our private provisions while interest rates are low and salaries stagnating. That is a rather poor deal.
A survey conducted by Swiss Life on intergenerational solidarity revealed that 70% of millennials believe this redistribution will lead to conflict. Have you seen any indication of that?
Not yet. People are more resigned and fatalistic about it. They don't expect a decent pension so they don't see anything worth fighting for. Anyway young people have other more pressing issues to deal with than pensions. They are striving for a place at university; an affordable apartment; a job that pays a decent wage. All these things are more of a priority.
Is there a risk that Generation Y as the millennials are also known, will become a generation of old-age poverty?
They won't all end up like that. There is still the privileged, academic class who will have well-paid jobs due to digitalisation. However the majority, i.e. those who work part-time and low earners, are at risk of a financially precarious retirement.
What should be done about it? Is it time for the young to discard the intergenerational contract? According to the Swiss Life survey, 30% of millennials are no longer prepared to finance the older generation.
I’m surprised so many feel that way, the millennials have hitherto been prepared to finance pensioners. That makes it even more of a wake-up call telling us that young people are not to be overstretched financially and that they also need to count on having an adequate retirement pension. However, ditching the intergenerational contract would be a mistake. We don't need to terminate the contract but to renew it. We need to supplement the pay-as-you-go system.
Through more personal responsibility and private pension provision?
For those who can afford it, yes. However, that is beyond the means of many people. In the European labour market, it is the young who are suffering most from unemployment and minimum wages. Most of them can't even think about paying into a private pension scheme every month, and if they can it wouldn’t be a substantial sum. So it's neither sensible nor realistic to rely on privately-funded pension provision.
What do you suggest?
Pensions are currently financed by contributions made by people in employment. However, having a job is a precarious arrangement these days. Throw in mass unemployment and stagnating salaries and our pension system is on shaky ground. We need to deal with this fundamental design flaw by including incomes that are not based on employment, for example profits and capital earnings, investment and rental income.
Is that not unrealistic? There are so many vested interests opposing that.
The pending pensions crisis is extremely serious and it needs a radical solution involving everyone. I don't see an alternative.
Selected books by Wolfgang Gründinger
Wolfgang Gründinger has written seven books. His main areas of interest are democracy, the pension system and sustainability with a focus on intergenerational justice. His most important works are:
- "Aufstand der Jungen – Wie wir den Krieg der Generationen vermeiden können.” (Uprising of the young - how to avoid intergenerational conflict) (C.H. Beck, Munich 2009)
- "Wir Zukunftssucher. Wie Deutschland enkeltauglich wird." (Looking to the future: how Germany can help its grandchildren) (Körber, Hamburg 2012)
- "Alte-Säcke-Politik. Wie wir unsere Zukunft verspielen.” (Worn out policies. How we are squandering our future) (Gütersloher Verlagshaus, Gütersloh 2016).
And the retirement age has to be raised?
It should be linked to life expectancy. In Germany, which is the world’s second-oldest country behind Japan, it would be 67 in 2030 and about 70 by 2050. More importantly, we need to reform the world of work as it is also a source of intergenerational injustice.
In what sense?
A recent study by the German Institute for Economic Research shows that the disparity in pay between old and young – known as the generational pay gap – is growing. 30 years ago the disparity was 10% and now it's 25%. A report by the Foundation for the Rights of Future Generations also documents in detail how the labour market is placing the young generation at a disadvantage: over 50% of young people in Germany are on low salaries. The number of young people in temporary employment has also almost doubled and almost one in two people starting out in the labour market have contracts of fixed duration. Only 28% of people under the age of 35 earn more than EUR 2500 gross per month – you can't really raise a family on that money.
How can the labour market become more just?
It's time to finish with the seniority principle. It has already been banned under EU anti-discrimination legislation but it does still exist. What we really need is higher starting salaries and lower rises as you get older.
In your most recent book "Alte Säcke Politik" (worn-out policies) you call for everyone to have the right to vote. Why is that?
Young people always get the short end of the deal and they must worry that politicians aren't representing them well enough. They prefer to woo pensioners than to undertake necessary reforms. Moreover, demographic change is starting to feature more in elections as the generations have different perspectives, especially regarding cultural and socioeconomic issues.
So six-year-olds should have the vote – that sounds absurd.
Why is that? You can't be too old to vote. In Germany alone, we have a million dementia sufferers who are entitled to vote. On the other hand, those people who will have to live their whole lives with the consequences of political decisions have no voice. Giving people the vote at 16 would also be a possibility but people below 16 who want to vote and ask for the right to vote should be allowed to.
Old people would still be a majority.
That's true, there's no escaping the fact that the young generation can't act alone to change society to the benefit of its grandchildren. It's too small, fragmented and lacking in resources to do that. We need to work with old people and make a strong coalition, we must have them on board.
About Wolfgang Gründinger
Wolfgang Gründinger (32) is a democratic researcher and publicist specialising in energy policy, lobbying, intergenerational justice and sustainability. He is spokesperson for the Foundation for the Rights of Future Generations and a member of Think Tank 30, the young think tank of the Club of Rome. His commitment to the rights of the young generation has earned him a reputation as a “lobbyist for the young”. He has received a number of awards for his work, including a political journalism prize, the German Studies Award and the Award for Intergenerational Justice. He lives in Berlin and works as an author, activist and analyst.