Grandparents’ economic value
This week Italy celebrated Grandparents’ Day – an occasion when we honour this group of people, mainly for what they have done and what they have bequeathed to our and future generations.
It is interesting to note that different countries celebrate Grandparents’ Day on different days.
However,it may be that we have not stopped to think enough of the economic issues related to grandparents and pensioners in general (admittedly not all grandparents have reached retirement age and not all pensioners are grandparents).
Grandparents contribute directly or indirectly to the economy more than we might think.
There is a number of people in this group that are working and therefore take an active direct part in the economy.
There is also an increasing number of such persons, who when they reach retirement age, seek to remain economically active. This has led to the idea that retirement should be tied not to a specific age but to life expectancy.
In fact, there are many who have retired or are about to retire and who can still give a valid contribution to the organisation with which they are employed, thanks to their experience, their accumulated knowledge and their ability to pass these benefits to younger people.
This segment of the population is also becoming an important segment of the consumer market. The reasons for this are three.
First, this group is growing – as the population ages, they form a higher proportion of the total population.
Secondly, even if they do not work, grandparents still want to remain active and therefore are willing to spend money that enables them to remain active.
So they would indulge in certain expenditures that previously were outside their reach, such as for leisure-related activities.
Third, statistics show that expenditure on private elderly care is growing significantly, as evidenced by the number of care homes that have opened in Malta in recent years.
There is another consideration to make about the contribution that grandparents make towards the economy.
Very often, their availability and disposition to care for their grandchildren enables their offspring to pursue their careers.
It is a known fact that many women would not be able to work otherwise. In this regard, the economic value of grandparents is particularly important.
However, the economic value of this group needs to be also viewed from the perspective of the welfare costs it absorbs.
They have lived in a scenario where there was (and still is) the expectation that the state looks after the citizen from the cradle to the grave. As the population ages, the persons who work are being called to make an ever-increasing contribution to the country’s welfare budget.
There is agreement that this cannot remain so forever. This would mean a change in the social contract that we are used to.
By social contract, I mean the unwritten understanding between the state and the individual, that the state will support the individual when the need arises.
This could mean that at some stage, health services may not remain free for all, that individuals will be expected to have their own private pensions, that the retirement age would rise to redress the balance between active and inactive population.
Other countries have started to address these issues. We cannot run away from them forever until one day they catch up with us.
This is why grandparents have an impact on our economy that is far more significant than one would assume.
I believe their impact is far more positive than negative.