Graphic / NZ Herald
In Part 2 of our series on the Covid Generation, Jane Phare looks at what the last of Gen Z and the first of Gen Alpha face in the coming years, and what older generations can do to help them prepare.
If economist Cameron Bagrie had his way, financial literacy, or knowledge, would be a compulsory core subject in New Zealand secondary schools.
He has two daughters, a 10-year-old – among the first of Generation Alpha – and a 14-year-old, the last of Gen Z. Bagrie, like others, thinks their generation is in for a tough time. They'll have come through the "lightning bolt" of Covid while dealing with climate change, or what he calls "Mother Nature, the big disruptor".
They'll be part of the fourth industrial revolution – the digital world – turbocharged by coronavirus forcing people to learn, shop and communicate online. With technology firmly embedded in their lives, they will face new challenges. "The bullying of yesteryear used to be on the field, now it's off the field."
They'll be caring for an ageing population and then there's the multibillion-dollar debt we're now racking up to help New Zealand out of a Covid-induced hole. "Who is going to end up paying the bills for the money that we are ploughing into the system today?" asks Bagrie. "It's the next generation."
That generation will face a future where careers once thought glamorous and safe – becoming an airline pilot or running a luxury lodge – are no longer the best option, in their parents' view at least. Food production, farming and horticulture will become the flavour of the decade.
Some predict their worlds will become more insular. Air travel will no longer be cheap and easy, the customary OE no longer a given.
In the face of all that, Bagrie says he will make sure his daughters have an understanding of three things: financial knowledge, resilience, and the ability to be creative and flexible.
The former ANZ chief economist can't understand why, at his elder daughter's private school, learning a language is compulsory but financial literacy is not. To him, it should be the other way around.
"To me, money skills are a life skill and we've got to treat it as such."
Life Education Trust chief executive John O'Connell agrees that financial knowledge needs to be viewed as a core life skill for future generations, not an academic achievement aimed at students who will go on to do business degrees.
The Life Education Trust charity has introduced a new programme for Year 10 using theatre to teach kids about financial decisions. Students follow the lives and decisions of the characters, then follow up on those decisions back in class using the website Banqer.
In terms of resilience, Bagrie would like to see young people able to survive disappointments and learn the balance between risk and return.
"We don't want these kids to hunker down and not want to risk anything. In some ways they're better equipped to take risks than other generations because of the way their minds operate."
As for the creative element and flexibility, Bagrie says today's kids will be tomorrow's business owners, and they'll face new challenges.
"We're in a world where things are accelerating at a rapid clip. Change is going to be more rapid and regular and that means we need to be a lot more flexible, a lot more adaptable," he says.
"Change brings opportunity but challenge. You've got to be able to embrace one but handle the other."
Bagrie wonders aloud if society has become too risk averse and whether protecting children from making mistakes won't help the next generation cope with what's ahead of them.
"The reality is that when you go through a sustained high period of unemployment, the younger generation tend to wear the brunt. What's going to be their resilience when they walk into their first job interview and they get knocked back?"
Those interviewed for this series predict that the last of Gen Z and Gen A will be better at saving than their predecessors, more frugal, and will see excess consumption as wasteful.
Research carried out by the Commission for Financial Capability (CFFC) between January and June showed an upswing in most people's knowledge of their personal finances. Respondents were more informed about their KiwiSaver funds and were able to save more.
The group that caused concern were the 18 to 30-year-olds, Millennials and Gen Z. They came out of New Zealand's first lockdown and spent up large. In this group, those who thought money was there to be spent increased from 29 per cent to 42 per cent and by May-June 37 per cent agreed that they tended to live for today and let tomorrow take care of itself.
The commission's head, Retirement Commissioner Jane Wrightson, says the live-for-today attitude is likely to be coming from the current uncertainty. She thinks that in comparison, the next generation will have learned to save more, will be careful about waste and will be natural recyclers - unlike their Millennial parents, who Bagrie describes as the Freddy Mercury generation: "We want it all and we want it now".
Wrightson, brought up by parents overshadowed by post-Depression hardships, and who admits to still saving brown paper for reasons that are unclear, says she is perplexed by the excessive consumption of younger generations.
"I don't understand why having 10 shirts is a thing."
She thinks the young ones coming through will reverse that trend, re-using items rather than constantly buying new.
"And it saves you money. That's a good thing."
And they're going to need to save. Net core Crown debt is expected to soar as the Government borrows billions of dollars in an effort to buffer New Zealand from Covid-related economic chaos. By 2024, a total debt of $200 billion is forecast, more than 50 per cent of New Zealand's annual GDP.
Economists question how that debt will be repaid and who will bear the brunt.
Bagrie: "Are we prepared to raise the retirement age? The answer is no."
Auckland economist Shamubeel Eaqub says building up billions of dollars in debt for our children and grandchildren is a choice but it doesn't have to be that way.
"We can of course choose to pay it off now, or gradually. Like climate change and any of the big issues, it is within our power and responsibility to do something about it now."
There are other choices but none are an easy fix, he says. They include increasing taxes for high-income earners and on wealth; spending less on public services; means testing in areas like superannuation and health; targeting higher inflation to increase the size of the economy and tax revenue; or a one-off direct money injection from the Reserve Bank (money printing) to the Government.
"The extent of the changes become more radical the later we do it."
Life Education Trust's John O'Connell agrees the next generations will need to be more frugal, are likely to be taxed more and get less state support in the future.
"The current kids coming out of school won't have the luxuries that the kids of the last few years have had. It's just the reality of having to pay back $50 billion."
O'Connell tells his own three teenagers to be aware of what they're in for.
"I keep saying to them it won't be paid back by me because hopefully I'll be retired by then, but it will have to be paid back."
Eaqub worries about the effect on a generation of children who have had their education interrupted, particularly those on the wrong side of the digital divide.
"These children are probably going to suffer the consequences for the rest of their lives. Their education is likely to be delayed compared to other generations either side of them."
Despite schools scrambling to quickly adapt to online learning, educators say we need to do more to keep up with young tech-savvy digital natives.
The Up Education group of private colleges, which trains around 11,000 students a year, has "gone hard" on online learning, spending millions of dollars on their digital platforms to meet those expectations, says its chief sales and marketing officer Tim McFarlane.
"A PowerPoint sitting behind a logged in password wall is just not good enough anymore." Digital natives are comparing their learning experience to playing online and using social media, he says.
Some of the group's colleges adapted quickly after lockdown, with culinary instructors wearing GoPros on their heads during classes.
"That stuff was really well received. Attendance was up.""
McFarlane doesn't see a return to the old ways of teaching. He anticipates a blend where online learning is very much part of the mix, and that schools and other institutions will need to create systems fit for purpose.
Celia Hay, director of the New Zealand School of Food and Wine, agrees that schools will need to adapt quickly to a changed way of learning, to cater for young generations coming through.
She's now running classes online on Google Meets and using Google Docs for assignments.
"Lockdown forced us to force the students to improve their computer skills."
She is perplexed at why young people know about Instagram, Facebook and Snapchat but don't know how to use an Excel spreadsheet to help with time planning, budgeting and costings.
"No-one's taught anything at school about this stuff. It horrifies me how useless people are (at spreadsheets). Why isn't it taught at schools? "
Around 18,500 public servants received a pay rise in the quarter.