A race against time

Aging in the EU will be the subject of a European conference which the EU Commission will be holding on July 11 in Brussels. Experts, high-level policy makers and civil society have been invited to discuss the issues involved in a phenomenon that runs throughout all EU members states and about which awareness in Malta is increasing, even if the seriousness of the problem does not seem to be a priority in certain quarters.

Many simply believe that this is a question of older workers and pension reform. Not only, says Vladimir Spidla, EU Commissioner for Employment and Social Affairs. "This development will affect almost every aspect of our lives, for example the way businesses operate and work is being organised, our urban planning, the design of flats, public transport, voting behaviour and the infrastructure of shopping possibilities in our society."

If nothing is done, by 2030 the EU will have a shortage of 20 million people of working age. That same year roughly two active people, aged 15-64, will have to take care of one inactive person from 65 upwards. In other words two working persons will have to subsidise pensions for one pensioner; today's ratio hovers between three and four per pensioner.

The decline in the working-age population, brought about by falling birth rates and rising life expectancy, will have major implications for prosperity, living standards and relations between generations.

These and other topics are the subject of a Green Paper published on March 16 by the Commission with the aim of triggering debate and action on these "unprecedented demographic changes that will have a major impact on the whole of society."

The Commission wants to open a debate on how to tackle the problems in its various aspects.

Take the extremely low birth rate. What share of the problem do late access to employment or job instability bear; what about expensive housing and lack of incentives, such as family benefits, parental leave, equal pay, child care? Should, for example, EU policies for work-life balance and equal opportunities be harnessed to boost the birth rate and bring about population growth? What about the management of immigration into the EU?

The Union's population, now calculated at 458 million, is set to register a slight growth until 2025 when, thanks to immigration, it will reach 469.5 million; after that it will drop to 468.7 million in 2030. The total working age population (15-64 years) is due to fall by 20.8 million between 2005 and 2030.

Aging could cause potential an-nual growth in GNP in Europe to fall from 2-2.5% today to 1.25% in 2040 with all it entails for entrepreneurship and initiative all over the EU.

Immigration is therefore an economic must and has to be managed effectively and transparently. Proactive integration and equal opportunities, in particular for young people, have to be ensured to achieve a balance between respective rights and responsibilities of migrants and host societies. Policies have to be discussed with countries of origin.

The EU Green Paper speaks of the challenge of a "new solidarity between the generations". As the years go by, there will be fewer young people and fewer young adults, and ever more older workers, pensioners and very elderly people, a demographic mix that is already surfacing.

"New forms of solidarity have to be developed between generations, based on mutual support and transfer of skills and experience," says the EU document.

This takeover of 'the young' from 'the old' points to a potential for higher productivity and greater adaptability, given that today's and tomorrow's levels of education and training are certainly markedly higher that those that were available to yesterday's generation.

At the same time young people are finding it hard to integrate in economic life. The unemployment rate for under-25s was 17.9% in December 2004, compared to 7.7% for those aged 25 and over.

Young people are at particular risk of poverty; 19% of the EU's 16-24-year olds are exposed to this risk, compared to 12% of those aged 25-64 and to 17% of those aged 65 and over.

Skills learnt at school are not always in line with the requirements of the knowledge society. School failure is a source of constant concern; in 2002 some 16.5% of 18-24-year-olds left school without any qualification. Does this call for more family support and a modernisation of teaching systems to raise the level of initial training and offer more flexible pathways consonant with the needs of an ever-changing economy?

Does social dialogue between government and civil society have a role in this sphere?

The Green Paper discusses embryonically the approach to the working life cycle and notes that in the near future companies will have to rely increasingly on the experience and skills of older workers while preparing those younger than 55 to replace them.

Despite a certain degree of progress, the employment rate for people aged 55+ (40.2% in 2003, i.e. around 20.5 million) is far below the EU objective of 50%.

Young employed persons may want to spend more time with their children and work more at a later time of their life.

Job quality and the working environment will also contribute significantly to keeping people at work by reducing occupational risks and improving workers' health. Anti-cipating such changes will make the management of the working life cycle better.

Other questions come to the fore. How can the organisation of work be modernised to take into account the specific needs of each age group? How can young couples' integration in working life be facilitated? How can they be helped to find a balance between flexibility and security to bring up their children? Would this help the birth rate go up?

Can young and middle-aged workers be trained to update their skills to meet the demands of the labour market? How can older people be enabled to work more? How can work organisation best be adapted to a new distribution between generations, with fewer young people and more older workers? What role can trade unions and civil soc-iety play in this scenario, in particular by way of social dialogue?

There are other considerations regarding elderly people, who will be more active and in better health. They will also be better off, having been more likely to build up a full pension, and will have more savings than their predecessors and their children.

In certain countries the elderly have become as mobile as the young and middle-aged. On an EU level they are consuming more new goods and services, and want to participate actively in social life, in particular in the voluntary sector. They may wish to continue working or to combine part-time work with retirement, a trend that is developing in the USA.

The employment rate of 65- to 74-year-olds in the EU was 5.6% in 2003 (USA: 18.5%).

The European co-ordination of retirement scheme reforms is promoting more flexible bridges between work and retirement.

Should there be a statutory retirement age, or should flexible, gradual retirement be permitted? How can activities employing elderly people in the voluntary sector and the social economy be developed? What about pensioner mobility between member states?

Very elderly persons (80+) will increase by 17.1% between 2005 and 2010, and jump up by 57.1% between 2010 and 2030, reaching 34.7 million (2005: 18.8 million). The proportion of people living alone, particularly women, will also increase.

Families, on their own, will not be able to solve the matter of caring for these people, however dependent or independent they are. Besides, high-intensity care will be needed by more persons than it is today.

This calls for specialised social services and networks of solidarity and care within local communities. The co-ordination of national social protection is due to be extended to long-term care for the elderly in 2006.

In this context, should a distinction be drawn between retirement pensions and dependency allowances? What can be done to reduce inequality between men and women when they reach retirement age? What about the training of human resources in the caring sector, and an upgrading of their status, qualifications and salaries? How can new technologies support older people?

The Green Paper suggests that the EU should pursue three essential priorities:

A return to demographic growth, in view of which two simple questions have to be asked: What value do we attach to children? Do we want to give families, whatever their structure, their due place in European society? The determined implementation of the Lisbon agenda can create new opportunities for investment, consumption and creation of wealth.

Ensure a balance between generations, in the sharing of time throughout life, in the distribution of the benefits of growth, and in that of funding needs stemming from pensions and health-related expenditure.

Find new bridges between the stages of life. Young people still find it difficult to get jobs. An increasing number of "young retirees" want to continue participating in social and economic life. Study time is getting longer and young working people want to spend more time with their children.

A tall agenda, that will grow taller if the problem takes too long to go out of the discussion stage and enter the decision stage. It is a race against time.