TCS Daily


Old and In the Way?

By Dominic Standish - October 28, 2003 12:00 AM

During the summer, Italian TV promoted the elderly. Grannies competed to become TV hostesses in the popular 'Velone' series and the reality show 'Super Seniors' began. But the Italian government sees old people as a problem and is planning to cut their pensions.

 

To protest the government's pension reforms, a general strike brought much of Italy to a standstill on 24 October. There has been a similar pattern of legislation and strikes in France and Austria this year. Germany is currently preparing legislation and the trade unions are beginning to rumble.

 

This unrest has been a response to proposals that include extending the minimum age to qualify for a full pension and various reductions in states' expenditure on pensions. Governments are introducing these reforms based on predictions of higher proportions of elderly people in many European countries.

 

A United Nations (UN) conference in Madrid in 2002 debated the possibility that aging is a greater threat to the quality of life in developed countries than war, disease and natural disasters. The UN Population Division ('World Population Prospects. The 2002 Revision') made predictions for the percentage of people over 60 years old in the following populations by 2050 and compared them with percentages in 2000 (medium variant):

 

  • Belgium. 2000 = 22.1 percent. 2050 = 33.3 percent.
  • France. 2000 = 20.5 percent. 2050 = 32.3 percent.
  • Germany. 2000 = 23.2 percent. 2050 = 34.5 percent.
  • Italy. 2000 = 24.1 percent. 2050 = 40.6 percent.
  • Netherlands. 2000 = 18.2 percent. 2050 = 30.7 percent.
  • Spain. 2000 = 21.2 percent. 2050 = 40.9 percent.
  • UK. 2000 = 20.7 percent. 2050 = 29.6 percent.

 

The focus is often on the period up to 2050 because the large 'baby-boom' generation, born in the 1950s and 1960s, will have retired. Few commentators point out that the percentages of Europeans over 60 years old are widely predicted to fall by 2075 (for example to 30.9 percent in Italy, according to The World Bank).

 

More significantly, as Phil Mullan eloquently explains in The Imaginary Time Bomb (2002, I.B. Tauris), contemporary aging is caused by secular falls in fertility rates, not people living longer. Statistically, a relative shift in the proportions from young to old is more important than the absolute number of elderly people. Therefore the problem is one of aging from 'below', not 'above', with fewer young people creating a higher proportion of old.

 

Indeed, the countries listed above with the highest predictions for the percentages of over 60s in 2050 are those that have had very low and falling fertility rates over the last 30 years (Italy and Spain). This means there are fewer people currently at their peak reproducing ages than previously.

 

With this in mind, it is a mistake for governments to concentrate population policies on the elderly. It is more effective to raise the birth rate. The Italian government has included a cash bonus for couples who have a second child in its budget for next year. But this is unlikely to have a significant impact with inadequate childcare facilities for working parents.

 

Barring disasters, there will be greater numbers of European elderly in 2050. The fallacy about them becoming a burden presumes that this will change while all other aspects of these societies remain static, such as fertility rates and economic growth.

 

A recent report by London's Catalyst Forum ('The Challenge of Longer Life', 2002) points out that historic levels of productivity growth mean most industrialized countries will probably be more than twice as wealthy by 2040. On present trends of rising productivity, employing the same number of people in 2040 as now would produce over double the amount of wealth we currently have to provide for the pensions and care of the over 60s.

 

Other factors are bound to change too. A country like Italy, faced with one of the 'worst' aging problems, could easily provide for more elderly by increasing the proportion of employed women (currently at relatively low levels for Europe). Such labor market changes produce a much greater impact on dependency ratios than aging. Creating more jobs for the unemployed, those now in education and the elderly are other options for European countries.

 

Cutting pensions is not the answer. But the elderly should be provided with opportunities to be employed beyond current retirement ages and trade unions should embrace these changes. Shorter hours and less demanding work may be appropriate. Compulsion is unnecessary. Healthier and longer lives mean more people can and already do work until later in life. Living in your sixties or seventies has changed for the better.

 

The myth of a pension time bomb is being exploited to instill a sense of individual responsibility for provision in old age. The elderly are being stigmatized as a burden to justify many cuts in welfare. But continuing productivity growth will cope with more pensioners, even if we ignore changes in fertility rates or labor markets. What happened to the belief that how we provide for the old should be an indicator of how civilized we are?
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