Canada “flirts with intergenerational inequity” while the inaccessibility of real estate reduces the savings power of young people, worries the president and CEO of Desjardins Group, Guy Cormier.
“We are flirting with intergenerational inequity, he warns in an interview on Thursday. We are not completely there, but if we are not vigilant…”
Desjardins Group has published a series of three studies that paint a portrait of the economic and social challenges faced by young people under the age of 34 in anticipation of a rally organized by the cooperative in Montreal on June 19 and 20.
The cost of living is forcing young people to postpone certain pivotal moments in the transition to adulthood, adds Desjardins Group chief economist Jimmy Jean. “Young people today can do all the right things: get a diploma, enter the job market, work hard, build their careers. Despite that, it’s difficult to make the transitions to the big steps, whether it’s forming a couple, buying a property, having children. »
Yet time is “the key” in building wealth and planning for retirement, says Cormier. “It’s not about portfolio yield or real estate appreciation. If you miss 10 years over a period of 40-50 years, you have ten years less to grow [tes actifs]. »
The affordability of the real estate market has particularly deteriorated across Canada during the pandemic and the slight improvement in recent quarters is not enough, adds Mr. Jean. Ways will have to be found to stimulate supply, namely the construction of new housing.
“We need affordable housing, but also places where young people will want to stay for a long time, not just condos. This is a solution that is not always suitable in the long term. »
Light to this dark picture, many young people will benefit from an unprecedented transfer of wealth while their parents are wealthier than previous generations. In 2019, Canadians aged 65 and over had a collective wealth of $3.6 trillion, according to Statistics Canada. This is more than triple in constant dollars than 20 years ago, still for people 65 and over at the time.
Not everyone will be able to benefit from this parental legacy. In addition to the less fortunate, the economist gives the example of young immigrants who must financially support family members abroad. “There are issues of inequality that need to be addressed. »
Environmental concerns
The inaccessibility of real estate is not the only reason that influences the decision to start a family or not. Many are questioning their desire to bring a child into the world in a context where climate change makes them pessimistic about the future of the planet.
One in five Canadians (21%) say they are having fewer children or have given up starting a family due to concerns about climate change. Mr. Cormier recognizes that population decline can contribute to reducing greenhouse gas emissions, but this trend could bring other long-term challenges.
“It may have other consequences elsewhere on our ability to afford the education and health network we want. I’m not saying that for 2025. I’m thinking 2040, 2050.”
It would be wrong to blame young people for the challenges they face in their transition to adulthood, adds Mr. Jean. He takes the example of the famous toast to lawyers” used to discredit young people’s financial concerns.
“Young Canadians and Quebecers outperform in terms of financial literacy. […] It is not true that young people go crazy. When you look at the time it takes to accumulate a down payment compared to 20 or 25 years, it’s a lot longer regardless of whether they decide to be frugal or not. »