The current world economic crisis is bound to bring about long lasting changes in the way western societies behave. As baby-boomers slowly fade away into retirement, younger generations will establish a new paradigm of pragmatic living defined by the new economic realities that are quickly evolving. Sociologists are hard at work making predictions on how our societies will change in the next two decades.
The spending habits of the younger generations are likely to change as the ingrained belief of their parents that the future can only bring about more material wealth is proven to be increasingly unrealistic. Consumerism will not be eliminated, but the long-term uncertainty that this latest global economic downturn has brought about will temper our urge to spend. Frugality, prudence and sobriety will increasingly characterise our behaviour.
As governments in most western European countries continue to pussyfoot around the looming pensions and healthcare time-bombs, more and more people will resort to do-it-yourself schemes to protect themselves for the future. It is a sad reality that much of the wealth created in the boom years of the last two decades was wasted in both public and private consumption that has done very little to improve our future prosperity prospects.
When the going was good, many were lured by exceptionally low interest rates to invest in property that in some European countries has now lost half of its value. Speculation was fuelled by easy access to cheap credit which, as we all know, has cost the taxpayer dearly. Those who were relying on their homes as a nest egg for retirement have to draw up new plans to avoid a distressed quality of life that they never envisaged. Their children too will have learnt the lesson and will adjust their spending patterns to avoid these risks.
Globalisation will also mean that developing countries will take a bigger share of the wealth created by global trade in goods and services. We have to get used to increasingly seeing visitors from developing countries visit Europe for their holidays while western Europeans cut out on the amount of money they spend on leisure.
Perhaps the most significant social change that we will experience is a more pronounced split in western societies as a result of the rigidities that still exist in labour markets in many European countries. Those with jobs, especially those in the public service, will continue to be defended by governments, employers and trade unions, while younger people and the long-term unemployed will have little bargaining power and even fewer prospects for finding stable employment.
The social cohesion that has characterised the socio-economic policies of various governments of different political beliefs in Europe will come under threat if much needed fiscal reforms are delayed. Labour market policies have become so rigid that employers in some EU countries are today too reluctant to employ new staff and prefer to rely on overtime work or part time work to improve productivity.
The reluctance to address healthcare reform to make it more sustainable may also lead to a new underclass of people who are not well served by public health schemes, but who cannot afford private care. Some will be rescued from poverty by children who still have a sense of duty for their parents’ wellbeing, but others will be caught in the poverty trap.
As demographics continue to evolve, we will see more people living longer, but also facing financial uncertainty as the pensions on which they depend fail to be sufficient to guarantee them the quality of life they expected. Countries that have actively addressed this problem, like Sweden and Denmark, will probably avoid the worst affects of this pensions’ crisis, while the others could well face increasing poverty in sections of their society.
A development that is difficult to predict is the likely effect that immigration will have on western societies. This is a highly charged emotional issue with increasing numbers of people in most EU countries considering immigration as the greatest threat to their future. It is not unconceivable that as a result of this we will see a radicalisation of policies on immigration.
Many lament the lack of strong political leadership in most western European countries that is increasing the uncertainty about the future. Realistic social pacts that take into account the changing economic realties and focusing on the need to protect both those who are still in employment and those who are not are the only realistic means to preserve social cohesion in our western societies.
jcassarwhite@yahoo.com