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Four out of ten Brazilians in debt belong to the younger generations
The younger generations are in debt, with 25 million people in the red, in a scenario of very high default that affects more than 60 million Brazilians. Out of every ten Brazilians in debt, four belong to generations Z and Y (also known as millennials), who entered the consumer market with a high level of debt. These are some of the findings of the unprecedented study carried out by ANBC on the impact of default on each of the generations. To reach the conclusions presented in the study, we used data published by the sector and the IBGE (Brazilian Institute of Geography and Statistics).
Also according to the study, 32% of generation Z, the age group between zero and 21 with a total population of 13.8 million, are in default. In absolute numbers, there are 4.4 million in debt. The situation is even more worrying for the next generation, Generation Y, aged between 22 and 37, with a total population of 51.5 million. The percentage of indebted people is 40%, equivalent to 20.6 million Brazilians, with a debt of R$ 3,737.00, more than double the average ticket of generation Z, which is R$ 1,676.00.
These figures reflect an environment that lacks financial education and a savings mentality. These two aspects apply not only to young people, but to all generations. What makes the problem more serious for those in generations Z and Y is that there is a clear shortage of jobs and difficulty in accessing education.
In the second quarter of last year, according to the IBGE, unemployment among workers aged 18 to 24 was 26.6% - more than double the general rate, which registered 12.4%. In 2017, according to the IBGE, Brazil had 48.5 million people between the ages of 15 and 29, but 11.1 million were not working and were not enrolled in a school, college, high school technical course or professional qualification. This group, which accounted for 23% of young people, became known as “nem-nem”, since they neither work nor study, and unfortunately continues to grow rapidly.
This problem of a lack of jobs for young people is not exclusive to Brazil. According to an IMF (International Monetary Fund) report released in January, around 20% of the population in developing countries between the ages of 15 and 24 neither work nor study. This percentage is double that of developed countries. According to the IMF, the absence of young people in the labor market and at school has disastrous consequences for the country, such as a reduction in the potential growth of the economy and an increase in social conflicts.
In this analysis of young people's indebtedness, we can't ignore the effects of consumerism. The prevailing culture in society is one of excessive buying. Things like sneakers, cell phones and laptops are constantly being exchanged for the latest model. As we know, there is no budget that can withstand so much spending - even more so in an adverse economic environment characterized, as we have seen, by high unemployment. This compulsive and irrational buying behavior is strongest among young people. For many of them, acting in this way allows them to be included in a social group or a certain reality.
Finally, it should be noted that the scenario in terms of debt tends to get worse. The members of these younger generations, in general, have not yet started a family and, therefore, have not suffered the pressure of having a series of additional expenses to deal with on a daily basis, such as house maintenance, children's education and health insurance. These are precisely the expenses that place such a heavy burden on the generation X.
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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor
