Gen-Z, those born from 1997 to 2012, are increasingly ignoring work and schooling at a time when debt is on the rise and wages struggle to keep pace with rising costs.
Millions of youth are classified today as NEETs in major economies. This means that they do not have employment, are not enrolled in education or are not undergoing training.
The shift in the labour market has raised concerns over long-term economic growth and participation.
Global institutions’ and surveys on labour indicate that financial stress, poor job prospects and changing attitudes towards work all contribute to the growing disconnect between youth and the workplace.
Inactivity among youths is on the rise
According to the International Labour Organization, in 2023 around 1/5 of people between 15 and 24 years old will be classified as NEETs.
This trend is most visible in Europe.
In Spain, more than a half-million young people are neither employed nor studying. Nearly 3 million Gen Z people in the UK are not working or studying, and 384,000 have joined since the COVID epidemic.
PwC found in a report that 4/10 Gen-Z employees would be willing to leave their job and instead rely on unemployment benefits. The trend is a reflection of a disengagement with traditional career paths.
Debt burden rises
This shift is largely due to student debt. One graduate in the UK owes over PS314,356, which is more than the cost of the average home. This new record has been set.
A small, but growing group of graduates leaves the university in debt. They owe more than PS267,000.
As interest compounded, more than 150.000 borrowers have debts exceeding 100 000 PS.
Globally, the pattern has been observed. Total student debt in the US has exceeded $1.7 trillion.
Despite this, the earnings of young people have not kept pace. The data shows that people in their early 20s earn around $45,500 compared to $51,852 when adjusted for inflation for millennials of the same age.
Since 2000, the house price has risen twice as quickly as earnings, increasing the gap between income and affordability.
The job market is tightening.
The opportunities for newcomers are getting more and more restricted. More than 1.2 millions applications have been submitted in the UK for less than 17,000 graduate positions during a recent recruitment cycle.
Some graduates have reported applying for hundreds of positions without success.
Organisations such as Goodwill in the US have warned about a possible rise of youth unemployment due to artificial intelligence replacing entry-level jobs.
As employers shift their priorities, they place less importance on academic degrees and instead focus on skills that can be applied.
Work shift attitudes
The economic pressures are changing the way Gen Z views work. They are not as focused on long work hours and traditional career paths.
Others choose lower-pressure jobs with greater flexibility such as teaching or trades, while some avoid corporate careers.
Decisions are also affected by mental health trends. Over a third (18-24) of those aged between 18-24 report anxiety and depression.
The financial strain of life is causing key milestones to be delayed.
A quarter of recent graduates claim that debt forced them to delay moving out, starting a family or saving for retirement.
One in three recent graduates believes that their education was no longer worth it.
The post Is Gen-Z leaving the workforce because of rising debts and low wages? This post may change as new information becomes available
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