All is not lost for the millennial generation
Among the risk cases in the 2014 Global Risks report, "Generation Lost?" examines the challenges facing the so-called millennials, those young people born roughly between the fall of the Berlin Wall and the millennium. This analysis has been provided by a team of experts from my company, Swiss Re. As a parent, let me say straightaway that this subject interests me intensely.
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Any examination of this topic is tricky, since it will tend to contain observations based on anecdotal as well as empirical data. Then there is the thorny problem of drawing conclusions that will apply both to millennials in the developed world and those in developing countries. The expectations of 18-year-olds in sub-Saharan Africa are unlikely to bear any resemblance to their counterparts, say, in Western Europe. In other words, there is no one youth in the world.
All that said, this analysis prompts us to ask the right questions about the kind of far-sighted policies that need to be adopted in order to offset some of the problems facing our young people today.
The Swiss Re analysis draws attention to how chronic unemployment across many countries is preventing young people's efforts "to earn income, generate savings, gain professional experience and build professional careers. Traditional higher education is ever more expensive and its payoff more doubtful." These are clearly issues that cry out for attention if we are to avert "the risks of a breakdown in social cohesion and enduring loss of human and economic potential."
And as if that was not enough, young people in many developed economies will also bear the growing financial burden of ageing populations, on top of saving for their own retirement.
In Latin America and Africa, the problems have more to do with the "youth bulge"(where a high share of the population consists of young people), the growth of mega-cities and the needs of a young generation making the transition from rural to post-industrial economies. Here, the report says, the challenge will be to generate sufficient economic opportunities for a growing and increasingly better educated labour force.
The proposals the report makes to tackle these problems include recalibrating education and immigration policies. For example, part of the educational challenge facing young people entering the labour markets in many developed economies is that they have too often been trained in disciplines that do not match their country's economic needs.
One possible long-term solution might be to introduce vocational training systems that help ensure young people leave school with the kinds of skills that are actually in demand. Germany and Switzerland's training systems could act as models. In theory at least, rolling out similar models in other countries would not only boost employment but also a society's long-term resilience.
In tandem with appropriate educational systems, smart immigration policies could also prove beneficial both for developed and developing countries.
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Young immigrants with certain skill sets can help boost a country's competitiveness in international markets, strengthen its public services, create jobs by starting up companies and generally contribute to its social resilience. And because they do all of these things, they can also help to offset the adverse financial impact of an ageing indigenous population by paying taxes and making pension contributions.
Even though our analysis describes the daunting challenges facing young people, it also points to their resourcefulness. This is a reason for us to be hopeful. As the report says: "The mentality of millennials is realistic, adaptive and versatile. Smart technology and social media provide new ways to quickly connect, build communities, voice opinion and exert political pressure. They are full of ambition to make the world a better place."
David Cole is chief risk officer and member of the executive committee