Generation Covid: Are there short-term fixes to help young adults?

Ireland’s young people are having a tough time of it – as the latest Economic and Social Research Institute (ESRI) report makes clear – with flat-lining wages and higher housing costs among the challenges they currently face.

Solutions, particularly to the State’s long-term housing crisis, will take time, though there are some immediate changes that could help, according to experts.

Housing

The ESRI report highlighted the high cost of housing and rents, and the collapse in home ownership, which is compounding the dire financial situation hurting many young adults.

Rory Hearne, assistant professor of social policy at Maynooth University, said that scrapping the tax break for real-estate investment trusts and putting limits on investor purchases of housing aimed at first-time buyers would have a "cooling effect" on speculative investment.

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"It would definitely send a signal to investors that Ireland is not as attractive," he said.

He points to the potential stock of up to 25,000 houses and apartments on the National Asset Management Agency’s books that could be produced as affordable housing if the State agency “put the skates on”.

“That is over a year’s supply of housing that Nama potentially could develop within six months to a year,” he said.

In all, 800 houses and apartments on lands on Nama’s books are under construction. At a stretch the number that could be built within a year could rise to 2,000 or so.

Saying Ireland is closed for business in terms of building new homes is exactly the wrong signal to send

However, it is not possible to sell them at so-called “affordable” prices – €400,000 in Dublin, for example – that are not commercially viable and could, in the agency’s view, expose it to EU state aid breaches.

Others caution against shutting off Irish property to outside investment, which has been the source of 80 per cent of the funding for property development in recent years.

"Saying Ireland is closed for business in terms of building new homes is exactly the wrong signal that you want to send out because we need lots of new homes built over the coming decades," said Ronan Lyons, assistant professor of economics at Trinity College Dublin.

Lyons sees “cost rental” – where a tenant’s State-subsidised rent on a property is used to fund the long-term cost of the home – as a way of offering social housing and shifting the Government’s social housing supports out of the competitive private housing sector where they do not belong.

Cost rental and reducing construction costs would be steps in the right direction, he said.

“It is not something that is going to fix things overnight and the ultimate reason for that is that it is going to take time to build homes,” he said.

Dermot O'Leary, chief economist with Goodbody Stockbrokers, said that longer-term policy planning – beyond the five-year election cycle – empowering the Land Development Agency to produce a more stable housing system, along with longer-term and larger-scale State procurement of housing, would all help the market, though none of these solutions offer a "quick fix".

Employment

The higher age profile of civil servants could present job opportunities for the younger generation, while the post-Covid shift to remote working could help the young avoid the "crunch" of higher living costs in city locations, said Alma McCarthy, a business professor at NUI Galway.

“They have grown up in digitalisation and given how all sectors will retain some online work practices, they will be able to contribute to that because they are at the forefront of that,” she said.

Taxation

For young people on stagnant wages, the tax burden could be eased with a lower rate of universal social charge for younger workers or delaying the payment of PRSI to an older age.

"The question is where would the cut-off point be. It would be very, very hard to target it," said Brian Keegan, director of public policy at Chartered Accountants Ireland.

Mental Health

Brendan Kelly, professor of psychiatry at Trinity College, said that young people are resilient and will "bounce back" from the setbacks of the pandemic but he believes there should also be help for those worst affected. He said that the Counselling in Primary Care scheme through GPs should be expanded to people on low incomes not on medical cards and the under-18s.