Tuesday, 26 April 2016

The Greatest Financial Challenge Facing My Generation: Unemployment

by Mimi de Trafford (shortlisted for the Young Financial Journalist of the Year competition)

There are plenty of potential pitfalls when it comes to financial security for my generation. Many people may have different opinions on what is to be considered the biggest. For instance, some people may think that housing will be the crucial issue, or that supporting an ageing population will pose the greatest problem. Fluctuating markets and currency or pensions could also be considered the pivotal threat. But in my opinion it is unemployment that offers the largest risk for coming generations.  There are many reasons that inform my opinion and I will discuss these in my essay. The issues that I will explore are: population growth, retirement age, immigration and technological advancement.

Firstly, I think that population growth will play a large factor in unemployment, as the more people that there are applying for jobs the harder it will be to find employment. It is estimated that over the next 25 years the population of the United Kingdom is expected to rise by approximately ten million people due to high birthrates along with other factors like migration. It is predicted that by the year 2039, the U.K’s population will have increased by 9.7 million. This is likely to result in higher levels of unemployment. It is simple maths that the greater the number of people next to a stalled number of jobs means that it won't be possible for everyone to have a job and as a result there will be much higher levels of unemployment.

Secondly I come to the related issue of retirement age.  Already the average retirement age has started to go up, as people have started to live longer. Recently, the average life expectancy for men has gone from 70 all the way to 79, so as people are capable of working for longer, this will result in fewer jobs becoming available for the younger generation.. It used to be that the general age that most people would retire was 65, but a number of things, including life expectancy increasing, have resulted in more and more people starting to retire later and in recent years retirement ages have sharply increased. This will be limiting the number of jobs that become available to younger generations.

My third issue to consider is immigration. If more people are coming to the UK to live than there will be an impact on the job market as there will be fewer jobs available for the existing population (although with global migration increasing as many people could potentially leave as arrive). An additional factor to consider with immigration is that there will be more competition for certain jobs.  This could lead to wages falling as people will be so willing to do the job that they want, that they will accept less money to do it; while some people still won't even get a job at all and so the levels of unemployment will rise.

Finally, I think that technological innovation will affect the number of jobs available.  As people have started creating machines that are capable of replacing humans there will be a considerable reduction in the need for more workers. For example, companies like Snapchat reach the world market with only a few hundred employees. This is different from the current industry which uses a lot of manpower. Another example of this is a self checkout at a supermarket, as instead of using people they can use technology instead. Or even how Amazon, and online shops like it, are planning on using drones in the future for deliveries, which will limit the amount of drivers that they will need to employ. Whilst this is good news for companies as it will save them money, it will limit the amount of jobs that companies would have offered to new employees. In brief, if there is a development of labour saving technology, then there will be a reduction in demand for labour.

In conclusion these factors paint a pretty bleak picture for the future of financial stability for my generation. Although overall I think that all these things put together make the worst case scenario for what could happen in the future with unemployment, and it is possible for the outcome of these circumstances to resolve themselves positively. However I do think that these points are all possible, and so I do believe that there is a distinct possibility that unemployment will be the greatest obstacle in my financial future.

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