Can Gen Z handle inflation better than previous generations? | European | News and current affairs from across the continent | DW

“I always thought that by the time I got to that age I would have bought a little used car, so I could drive to my grandmother’s house in Bavaria and visit her more often,” said Alia Hudeib, a 23-year-old Berliner, of the plan she made in high school. She expected to pay for the car by working as a student. “It’s definitely not going to happen anytime soon,” she told DW.

With the cost of living constantly rising, Hudeib said his car project is far from the only compromise in his life.

She is currently undergoing vocational training in health administration and receives a monthly stipend of approximately €600 (about $630). To make ends meet, she also works part-time in a cafe. “My income is not enough to buy the kind of food I want, like healthy, organic food from local producers,” she said. “With these prices, someone like me has to stick to the cheapest products from the supermarkets.”

In Germany, inflation has reached its highest level in decades. Data from the International Labor Organization shows that the rate of inflation in the world in March 2022 had almost tripled compared to the previous year. What started as supply chain bottlenecks caused by the COVID-19 pandemic and the war in Ukraine has now triggered an unprecedented spike in the price of essential goods, including fuel and food.

For Generation Z, people between the ages of 18 and 25, this is the first time in their lives that they have experienced such rapid price changes. But how will it affect them?

Inflation hits everyone, but not at the same level

“Inflation has a different impact on every individual,” Professor Enzo Weber, senior researcher at the German Institute for Employment Research, told DW. “It depends on factors such as lifestyle, spending habits and financial situation.”

For example, research conducted by international organizations such as the world Bank shows that a high inflation rate generally weighs more on low-income households, while it can benefit asset holders.

The same is true for different age groups. Although there are individuals who suffer greatly from high rates of inflation at any age, young people, in general, can be more flexible than older adults, allowing them to better absorb the blows of economic hardship.

Benefits of being young and resilient

Valérie Lorraine, a 24-year-old student, moved into her new apartment in Berlin a few weeks ago. She shares it with two other people. “My previous landlord raised the rent for the apartment I was living in,” she told DW. “I was lucky to find a smaller one, which is within my budget.” Many of her classmates were forced to return to their parents or live somewhere further from town, she added.

“Most people in their 30s and 40s can’t cut spending the way younger people do,” Weber said. “For example, those with families cannot easily move to a cheaper apartment, or move elsewhere to find better paying jobs.”

Additionally, “young people often live in smaller homes and use less energy than middle-aged people,” Weber said. “In some countries like Germany, most of them don’t have a car, so rising petrol prices have less of a direct impact on them. So they spend a smaller share of their income on energy.”

Labor shortage and wage increases

Across industrialized countries in recent months, a labor shortage that began when businesses reopened after pandemic shutdowns has pushed up wages.

That means people who want to enter the workforce can choose the highest-paying jobs, Weber said. “Especially if you’re willing to learn new skills and try new jobs,” he added.

“It’s much easier for someone in their early twenties to change jobs and pick a better one than it is for someone who’s been a decade or two in a certain career,” he said. declared.

A customer passing a hiring sign outside a store

Wage increases in Germany, the United States and the United Kingdom have not kept up with inflation

Can Jobs and Wages Save Gen Z?

Students and high school graduates in industrialized countries might be able to ride out inflation by cutting some of their expenses and renegotiating their salaries, but that’s not all.

In major economies such as the United States and the European Union, there are serious doubts about whether rising wages will be enough to offset rising prices. According to a German official Datathe average real wage, or the purchase value of wages, has fallen despite an increase in the amount of the minimum wage. US data shows a similar pattern.

Older members of Gen Z must first try to make up for their losses during the pandemic. Two years of periodic closures have irreparably damaged the prospects of a large number of young graduates around the world, preventing them from entering the job market on time. And a slower start may reduce gains. A study 2017 found that one month of unemployment between ages 18 and 20 resulted in a permanent loss of income of 2% throughout a person’s working life.

“We live in a time of fundamental transitions,” Weber said. “Our technologies, our jobs and our professional demands are changing. This imposes both threats and offers opportunities.

“My advice to young people is to look for different opportunities and keep an open mind,” he said. “The less flexible you are, the more vulnerable you are to the worst damage from each calamity.”

In the poorest countries, the price of basic foodstuffs has skyrocketed and there are no signs of post-COVID-19 recovery yet. This leaves little room for young people in these countries to be as resilient as their peers in advanced economies. In Argentina, for example, food prices and unemployment rates have both increased, while 25% of young people remain unemployed.

Edited by: Rob Mudge

Mary I. Bruner