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BackThis week, the EU Commission presented its third Demography Report. The results were not really a surprise. That the Europeans are living longer and the EU population is shrinking, is already a well-known fact. However, the EU Commission is drawing far-reaching conclusions from the demographic development. It sees the danger of exploding social expenditure in the areas of pensions, health care and long-term care. The reform of social security systems shall now provide the solution.
Life expectancy has constantly risen by 2-3 months per year
Some facts are difficult to argue with. The ageing of Europe is such a fact. If one believes all surveys we are faced with a constant increase in life expectancy by about 2-3 months per year. Each year, the number of people in the EU who are older than 60 years rises by two million. Unfortunately, the birth rate is less positive. The result is an overall fall in population, which in turn leads to over ageing. It is not without good reason that the EU Commission demands a modern family policy in this context, which is aimed at the reconciliation between work and family life. This would also lead to the fact the more people would be available to the labour market. Here exists an urgent need to take action. Both the Member States and the EU Commission have to start dealing with this problem and to stop just referring to it.
Europeans have to work longer
As a consequence of the demographic developments, the EU Commission believes that the Member States will be faced with exploding social expenditure. Hence, it particularly requests reforms with regard to pensions. The latest OECD Report “Pensions at a Glance 2011” is taking the same line. The OECD identifies trends as to how the Member States could in future deal with the problem of over ageing, but also with the funding of pension systems. One trend would be the automatic adjustment of pensions to the development of life expectancy. The demand of the EU Commission in its Annual Growth Report does not deviate much from this as the Commission is in favour of raising the retirement age and of simultaneously coupling it to the increase in life expectancy. The Chamber of Labour has been against any form of automatism as automatism would mean that governments would shed all political responsibility with regard to any future decisions of old age provision. In addition, the OECD regards the increase of the legal retirement age as another solution concerning the future funding of pension systems. It does not foresee an increase of pension contributions resp. taxes, as the Member States are currently involved in consolidating their budgets. What is completely ignored is the cause of the debt, which in the end resulted in the necessary consolidation of budgets in many Member States. However, that this alone should be associated with the inability to fund social security systems in future is more than doubtful.
Further Information:
Demography Report 2010
Pensions at a Glance 2011: Retirement-income Systems in OECD and G20 Countries
Some facts are difficult to argue with. The ageing of Europe is such a fact. If one believes all surveys we are faced with a constant increase in life expectancy by about 2-3 months per year. Each year, the number of people in the EU who are older than 60 years rises by two million. Unfortunately, the birth rate is less positive. The result is an overall fall in population, which in turn leads to over ageing. It is not without good reason that the EU Commission demands a modern family policy in this context, which is aimed at the reconciliation between work and family life. This would also lead to the fact the more people would be available to the labour market. Here exists an urgent need to take action. Both the Member States and the EU Commission have to start dealing with this problem and to stop just referring to it.
Europeans have to work longer
As a consequence of the demographic developments, the EU Commission believes that the Member States will be faced with exploding social expenditure. Hence, it particularly requests reforms with regard to pensions. The latest OECD Report “Pensions at a Glance 2011” is taking the same line. The OECD identifies trends as to how the Member States could in future deal with the problem of over ageing, but also with the funding of pension systems. One trend would be the automatic adjustment of pensions to the development of life expectancy. The demand of the EU Commission in its Annual Growth Report does not deviate much from this as the Commission is in favour of raising the retirement age and of simultaneously coupling it to the increase in life expectancy. The Chamber of Labour has been against any form of automatism as automatism would mean that governments would shed all political responsibility with regard to any future decisions of old age provision. In addition, the OECD regards the increase of the legal retirement age as another solution concerning the future funding of pension systems. It does not foresee an increase of pension contributions resp. taxes, as the Member States are currently involved in consolidating their budgets. What is completely ignored is the cause of the debt, which in the end resulted in the necessary consolidation of budgets in many Member States. However, that this alone should be associated with the inability to fund social security systems in future is more than doubtful.
Further Information:
Demography Report 2010
Pensions at a Glance 2011: Retirement-income Systems in OECD and G20 Countries