Challenges for sustainable social security

2

Subjects

Important trends from the past Individualism & diminishing solidarity Graying society Concepts for development

Important trends from the past Societal:

Less marriages More divorces Smaller families And….

Labour market Growing average income Higher participation rate More temporary employment More self-employed More part-time employment End of one-employer careers More flexibility Greying work force

3

Marriage & divorce

4

1965 1970 1975 1980 1985 1990 1995 2000 2005 20070.00

500000.00

1000000.00

1500000.00

2000000.00

2500000.00

3000000.00

3500000.00

4000000.00

Marriages EU 27 1965-2007

1965 1975 1980 1985 1990 2000 20050.0

200000.0

400000.0

600000.0

800000.0

1000000.0

1200000.0

Divorces EU 27 1965-2005

Average household size 1980 - 2005

5

More societal characteristics (Western-Europe) Single parenthood increased Age segregation:

Culture Housing Care

Criteria for “ageing” remained unchanged, despite increased life expectancy and health

Age discrimination (labour market) Orientation on individual rights, rather than on

households

6

Growing average income

7

1998 1999 2000 2001 2002 2003 2004 2005 200625000

27000

29000

31000

33000

35000

37000

EU (27 countries)CPI EU27EU (25 countries)CPI EU25EU (15 countries)CPI EU 15

Employment related indicators

8

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

55

5759

6163

65

6769

Labour force participation EU15 1968-2008 OECD

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0.0

5000.010000.0

15000.020000.0

25000.0

30000.035000.0

Employers & Self-employment EU 27 1987-2009 Eurostat

1988 1998 200812.0

13.0

14.0

15.0

16.0

17.0

18.0

Part-time employment shareEU, 1988-2008, Eurostat

1988 1998 20083.04.05.06.07.08.09.0

10.011.012.013.0

Temporary employment shareEU, 1988-2008, Eurostat

More on flexibility

Life Long Learning widely accepted Employability widely applied End of “one-employer careers”

Example from my family Future end of one-occupation careers Growing self-employment Self-employed pay a high price during crises… Some occupational pension schemes (based on

outdated concepts) hinder development of employability (military services, firemen etc.)

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Ageing Europe

10

196019701980199020002010202020302040205069.071.073.0

75.077.079.081.083.085.0

87.0

Life expectancy at birth

NordicRhinelandAnglo-saxonMediterranean

2010 2020 2030 2040 2050 20600

100000

200000

300000

400000

500000

600000

Population projection EU 27

>8065-8015-640-14

2010 2020 2030 2040 2050 20600%

10%20%30%40%50%60%70%80%90%

100%

Population projection shares EU 27

>8065-8015-640-14

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

2830323436384042444648

Median age Europe

Dependency ratio

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EU27 Nordic Rhineland Anglo-Saxon Mediterranean0

10

20

30

40

50

60

70

80

90

206020502040203020202010

Dependency ratio: Number of people aged 0 to 14 and 65 years and olderNumber of people aged 15-64 X 100

“Real dependency ratio”

12

2010 2020 2030 2040 2050 20600%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Population projection shares EU 27Based on current participation rate

>8065-800-1415-64 i15-64 a

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People in EU are getting older (life expectancy) Number and share of people > 64 increases In particular people > 80

Population EU is growing older (median age) Population 15-64 decreases Substantial cost effects arise:

Labour market shrinks Less productive workforce Rising sick leave, unemployment benefits & disability pensions Number of old-age pensions Duration of old-age pensions Health care costs Long term care costs Participation rate of older workforce is lower

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Age related expenditures for Pensions, Health Care, Long term care, Unemployment benefits and Education – % GDP - no change scenario

15

Austria

Belgium

Bulgari

a

Cyprus

Czech

Rep

ublic

Denmark

Estonia

Finlan

d

France

German

y

Greece

Hunga

ry

Irelan

dIta

lyLa

tvia

Lithu

ania

Luxe

mbourg

Malta

Netherl

ands

Poland

Portug

al

Roman

ia

Slovak

ia

Sloven

iaSpa

in

Sweden

United

King

domEU 27

Euro ar

ea

-5

0

5

10

15

20

25

30

35

40

2007-20602007

Population• 2004-2050

Labour force- Participation- Employment- Unemployment

Labour productivity

Real interest rate

• GDP

Pensions

National models

Health care

Long-term care

Education

Unemployment benefits

Total age-relatedspending

Measuring the ‘cost of ageing’: common long-term budgetary projections

Measures to consider

Preventive measures: Increase participation rate Increase average working hours (decrease part-time

rate) Immigration Reduce sick leave, age-related unemployment and

disability pension Retirement age (relate to life expectancy) (make babies?.... Fast!)

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Measures to consider

Defensive measures: Reduce pension & social benefit levels Stop occupational pension schemes Reduce (social) benefits duration Reduce health care benefits Close (instead of build) long-term care facilities (Reduce health care innovation) (Stop resistance against voluntary euthanasia)

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Measures to consider

Investments: Culture change: re-value family Health promotion (smoking, alcohol, weight, exercise,) Culture change: really life-long learning and changing (modular) education & training (assistive) technology Flexibility rewarding social security systems

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Group assignment What can be done to deal with the possible higher

expenditures due to an ageing society? What kind of investments are thinkable to deal with the

effects? Are there other measures to consider?

Assess the suggested measures and consider whether they can be a solution for:

(current) EU countries Turkey

Motivate your answers 25 min. group discussion, 10 min. preparation report, 5 min.

plenary report, 20 min. plenary discussion

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Examples of possible cost-reduction / awareness

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Examples of possible cost-reduction / awareness

22

23

2010 2020 2030 2040 20500%

10%20%30%40%50%60%70%80%90%

100%

Turkey population projection shares

>8065-8015-640-14

1950

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

05

101520253035404550

Median Age

EuropeTurkey

1960 1970 1980 1990 2000 2010 2020 2030 2040 205048.0

53.0

58.0

63.0

68.0

73.0

78.0

83.0

88.0

Life expectancy at birth

TurkeyAverage

2010 2020 2030 2040 20500

100002000030000400005000060000700008000090000

100000

Turkey population projection

>8064-7915-640-14

Turkey

Gradually diminishing 0-14 population Increasing population 15-64 (+11 million) In 2050 4 x more people > 65 (4.5 million > 18

million)

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Group assignment What are the Turkish challenges? Are there opportunities for Turkey related to the European

developments? If so, what? Is there a specific role for the Turkish social security to deal

with these challenges and/or opportunities? Please specify Are there other essentials? Please include: participation rate, unemployment,

educational attainment, family life etc. in your considerations.

30 minutes group work 10 minute presentation Concluding discussion

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