ZANDILE MAKHOBA | Born-frees could have the ‘adulting’ thing right

Born-frees, the colloquial term for South Africans born after 1994, makes them sound like perpetual babies. It is almost shocking to think of this age group being of voting and working age, let alone parents.

They have changed “adult”, a noun describing a full-grown human who, by default, assumes certain responsibilities, into “adulting”, a verb more optional than given, and adulting as a responsibility most might like to opt out of.

It is from this cohort that our new professionals are emerging.

“The First 100 Paychecks Report: An investigation into South Africa’s new professionals” is a report released recently by the University of Cape Town’s Liberty Institute of Strategic Marketing, which focuses on economically active graduates of various tertiary institutions, looking at their path to employment and stable earnings.

Those who’ve entered the working world in the last 10 years or so have probably never seen a cheque in their lives, a small reminder that the world is constantly evolving and things can change, sometimes permanently.

Changes in payment systems have placed banks in special positions in our lives, affording us swift receipt of income, the ability to pay for the things we desire without ever seeing currency, and easing the access and process of getting credit.

With the increased uncertainty across all facets of life, graduate career and earnings trajectories are becoming less predictable. Given the times we are in, even doctors face the threat of AI surgeons

Adulting has seen this group approach credit with increased responsibility. Data shows young professionals are more credit-savvy than their forerunners, taking up less credit, being more diligent with payments and opting to save up for items they can postpone.

Where did this maturity come from?

At a time when most university graduates come from middle- to upper-income households, finishing their studies is the beginning of a wake-up call. Graduates are facing an array of socioeconomic challenges that force them to grow up faster than they would perhaps like.

Slow economic growth has seen the unemployment rate among graduates rising from just 6% in 2008 to 12% in 2023. They begin their careers in recessionary conditions and high living costs, made worse by the post-Covid work changes and the wave of AI in the workplace.

Economic theory assumes the rationality of agents: that consumers not only consider what has happened in the past and what is happening in the present in making decisions, but also make some calculated assumptions about what the future might hold based on available information.

However, with the increased uncertainty across all facets of life, graduate career and earnings trajectories are becoming less predictable. Given the times we are in, even doctors face the threat of AI surgeons.

Because of this, born-frees are also less influenced by their parents and previous generations. They have assumed the weight of navigating the unknown, and the rational decision seems to be to tread slowly. They delay moving out of their parents’ homes and making property purchases. They delay marriage and parenting. But they do eventually get there when they are financially ready.

Yet with a spending power of R1-trillion — around 14% of South Africa’s annual GDP — young professionals are significant to the economy both as providers of human capital and as consumers. In a generation that is questioning the value of education, they attribute their success to it, with more than 80% of the study’s participants saying they believe tertiary education was a worthwhile investment.

Moments in history give birth to pivotal economic theory, as economies and their economic actors try to make sense of changes. While it’s not the first time that South Africa or the world sees dramatic socioeconomic and environmental shifts, it’s safe to say there is something quite unique about the era we’re in.

Many of the outcomes of this strange period will be dependent on how recent graduates navigate this time. While they are impacted, they are also impacting.

The research highlights the development of a midway life phase — emerging adulthood — that sits between graduation and career stability, which forms a solid foundation for partnership (which may or may not become marriage) and parenting, which fewer than 40% are opting in to.

Coincidentally, this “in-between” period tends to happen around the age of 25, when the prefrontal cortex, responsible for rational decision-making, reaches full maturity. Which leaves one wondering: maybe the born-frees do have this “adulting” thing right after all.

• Makhoba is an economist and lead specialist of research and analytics at Liberty, part of the insurance and asset management arm of Standard Bank