Theeconomicdimensionofpopulationageing–From‘silvereconomy’to‘Ageing4.0’

KaiLeichsenring&AndreaE.SchmidtEuropeanCentreforSocialWelfarePolicyandResearch,Vienna(Austria)

ECONOMICCOMMISSIONFOREUROPEWorkingGrouponAgeing

NinthMeetingGeneva |21-22November2016

WhatIwilltalkabout

1. Traditionalapproachestotheeconomicsofpopulationageing• Challengesandopportunities

2. Themultiplelayersofeconomiceffectsinageingsocieties• TheimpactoftheSilverEconomy:increasinginequalities?

3. Takingaradicallifecourseapproach• Agedifferentiationvs.ageintegration

4. Towardsanewwork-lifemodel• Defining“Ageing4.0”

PartITraditionalapproachestotheeconomicsofpopulationageing...andthechangingeconomicandtechnologicalcontext

Whatwetendtotalkabout

• Ademographic‘timebomb’• Rising‘dependencyrates’• Publicexpenditureonageing

policies(pensions,healthcare)• Toolowfertilityrates• Lowerproductivityofagreying

workforce• The‘lumpoflabour fallacy’…

Whatweoughttotalkabout

• Newindividualandsocietalchoicesandopportunities

• Newtechnologiesandproducts:– robotics,sensoring,internetof

things,smarthomes,robotics...

• Newtypesofhealthandcareorganisation anddelivery

• Newpatternsofwork• Newurbandevelopment...

PreconditionsoftenomittedReemploymentafterjobloss:investmentinhealth

andphysicalcapital

Behaviouralchangeofemployersand older

workersWork-lifebalance Investmentinearlychildhoodandcare

Traditional(neo-liberal)remedies

Extendingworkinglives Reducingpublicpensions IncreasingprivatepensionsLife-longlearningand

ActiveAgeing

Directeffects

Changingdemandforpublicgoodsandservices

Savingandlabourmarketeffects:labourproductivity,capitalper

workeretc.

Impactonsocialsecuritysystemsandfiscalrevenues

Theeconomiceffectsofdemographicageing

• ThevalueoftheSilverEconomy:US$7trillionperyear,thirdlargesteconomyintheworld(Merril-Lynch)

• Thespendingpowerofthenowelderly“babyboomer”generationwillreachUS$15trillionby2020globally(Euromonitor)

• Annualage-relatedgovernmentexpenditureintheEU:25%ofGDP– Jobopportunities,inparticularinhealthandsocialservices:

employmentisexpectedtorisefrom2013to2025atamuchfasterrate(+8.1%)thantheoverallEUemployment(+3%)

– 1millionnewhealthcarejobsareprojectedby2020,anadditional7millionjobopeningsareexpectedduetoreplacementneeds

Theimportanceofthe‘SilverEconomy’

Source:EuropeanCommission(2015)

Ageisbecominglessimportantforlabormarketparticipationofsecondaryschoolgraduates…

Source:WorldBank(2015:124)

EmploymentratesamongsecondaryschoolgraduatesinCentralandWesternEurope,2002-2012

Decliningdifferencesinlabormarketparticipationofolderworkers

UK:Oldercohortsinthepoorestgroups(intheUK)showamuchsteeperincreaseinfrailtyovertimethantherichestwealthgroups

Source:Marshalletal.(2015);ELSAdata,UK(reproducedwithpermissionfromNazroo,2016:18)

Frailtytrajectoriesbycohortsandwealth

… butnot everyoneisfitenoughtoworklonger...

Peoplewithhighestlevelofeducationcanexpecttolivesixyearslongerthanpeoplewithlowestlevelofeducation

Source:OECD,SocietyataGlance (2016)

Gapinlifeexpectancyatage30– tertiaryandbelowuppersecondaryeducation,bysex

...andlongerlivesarenotforall

PartIIThemultiplelayersofeconomiceffectsinageingsocieties

• Thestrongimpactoflifeevents• Fertility,mortalityandmigrationrates• Nostandardlifecourse➔ nostandardpredictionoftheeconomiceffectsofageing

Source:ReproducedwithpermissionbyKomp &Johansson(2015:8)

Economiceffectsofageingatthemicrolevel

Lifeevents:•Marriage• Childbirth• Death•Migration

SocialNetwork

Socialandpoliticalcontext

Linkedlives

Lifecourse effects

Aggregation

• Fertilityrates• Mortality• Migrationrates

Agestructure

ofpopulation

Macro-level

Meso-level

Micro-level

Individualcharacteristics:• Gender• Generation• Socio-economicstatus• Ethnicbackground

• ‘Linkedlives’(Bengtson etal,2005)

• ‘Livesintimeandplace’(Settersten,1999)• Culture,labourmarketstructuresandwelfarestatedesigndoinfluencelifecourses(Komp &Johansson,2015)

Source:ReproducedwithpermissionbyKomp &Johansson(2015:8)

Economiceffectsofageingatthemeso- andmacrolevels

Lifeevents:•Marriage• Childbirth• Death•Migration

SocialNetwork

Socialandpoliticalcontext

Linkedlives

Lifecourse effects

Aggregation

• Fertilityrates• Mortality• Migrationrates

Agestructure

ofpopulation

Macro-level

Meso-level

Micro-level

Individualcharacteristics:• Gender• Generation• Socio-economicstatus• Ethnicbackground

• Potentialforeconomicgrowth:• Newmarkets:housingforindependentliving;tourism;healthandcare...

• SustainableLTCsystems• Lifecourseandsocialinvestmentapproachtosocialprotectionsystemsandservices

• Potentialforjobcreation• Fastgrowingdemandforhealthandsocialcareprofessionals

• GrowingdemandforICTprofessionals

• BalancebetweenworkandcareSource:http://mopact.group.shef.ac.uk (2015);

Börsch-Supan (2005);smartsilvereconomy (2016)

Thesilvereconomytriggersdifferenteconomiceffectsacrosslevels

(Emerging)Technologiesandthe‘SilverEconomy’

Source:WorldEconomicForum(2016)

NanosensorsTheInternetofthings

Securityandsafety Healthresearch Citymonitoring,prevention

Autonomousvehicles

Easeinliving,workingandleisure Careorganisation

Smartcities

Organsonchips Health,treatmentofbraindisorders ...

ICTandRobotics Dailyliving,smarthomes,smartcitiesGaming,lifelonglearningtools Long-termcare

Geo-location Securityandsafety Guidance

Whowill(not)benefitfromtheSilverEconomy?

• Ageingaffectsinequalitythroughmultiplechannels

• Inequalitiesbetweengenderandsocio-economicgroups

• UnequalchancesforActiveAgeing

Sources:Active Ageing IndexProject(http://www1.unece.org/stat/platform/display/AAI/Active+Ageing+Index+Home);WorldBank(2015:226);Ilinca etal.(2016)

Aframeworkfortheassessmentofinequalitiesinold-age

• Care-givingtoolderfamilymembersinneedofcareiscommonamongolderpeopleandespeciallywomen,but...• Whilericherindividuals(higherincomequintiles)providemorebasiccare(uppergraph)…• ...frequentcare-giving(dailybasis)ismorecommonamonglowincomeindividuals(lowergraph)

Sources:SHARE(2014);Ilinca etal.(2016)

Unpaidactivities:choicevs.chore

PartIIIGoodreasonsfortakingalifecourseapproach

• Europeanwelfarestatesarepro-elderlyoriented:morepublictransferspercapitathanforchildren• Comparisonsneedtoaccountnotonlyforpublictransfers…

Source:Gal&Vanhuysse (2016),reproduced with authors‘permission,based onNationalTransferAccountdata for 10Europeancountries(www.ntaccounts.org)

PercapitapublictransfersinEuropeoverthelifecourse

Intergenerationalexchangerevisited

Privateandpublicfinancialinter-agetransfers,andtimetransfersin10Europeancountries

Source:Gal&Vanhuysse (2016),reproducedwithauthors‘permission,basedonNationalTransferAccountdatafor10Europeancountries(www.ntaccounts.org).Notes:Valuesarepopulationweightedaveragesof10EUcountriesnormalised onthepercapitalaborincomeofpersonsaged30-49oftherespectivecountry.Visibletransfersarepublictransfers;invisibleareprivateandtimetransfers.

Consideringprivate(financialandtime)transfers

• Isthedifferentiatedlife-coursemodelstillapplicable?

• Theassignmentoftasksandactivitiestodefinedagebracketshasbecomeoutdated

• Theage-integratedmodelconceivesofactivitiesastakingplacesimultaneously,ratherthansubsequently

Source:Riley&Riley(2000:267)

Fromagedifferentiationtoageintegration

Education• BUT• Extendededucation

• Extendedtransitiontowork

Work• BUT• Unemployedperiods• Careperiods• Otherleavesfromemployment

• Re-training• Unpaidwork

Leisure/Pension• BUT• Risinglife-expectation

• Staggeringhealthylife-expectancy

• Informalcare• Careneed• Volunteering

Thecontinuousdisintegrationoftraditionallife-coursepatterns(agedifferentiation)

Source:inspired by Riley&Riley(2000:267)

ConclusionsTowardsanewwork-lifemodelinasustainableeconomy:Ageing4.0

• Facilitatingtransitions• Betweenpaid/unpaidwork• Betweeneducation/training• Betweenfamilyobligationsandwork/leisure

• Incentivesfor‘re-training’,‘upgradingcourses’,‘careleaves’• Everyxyearswithrightsandobligations

• Facilitatinginter-generationalequity• Providing‘secondchances’

Anticipatingfuturelife-coursedevelopments:Ageing4.0

Sociali-sation Education Paidwork

CareW

ork

Paidwork

(Re-)Training

(Re-)Training

Paidwork

Unpaidwork

(Anticipated)‘pension’payments

Ageing4.0:Integratedlife-courseperspectivesinasolidaristic society

‘Second,Third…Chances’?

Goodpracticeforaddressing’transitions’alreadyestablishedinanumberofcountries,butstreamliningandamoresystematiclife-courseorientationwithrights(andobligations?)isneeded!

• Addressingthe‘newsocialrisksintransitionsoverthelife-course’:• Solidaristicriskdistribution,ratherthanindividualised riskinequality• Reductionofgenderedlife-courseperspectives:• Acknowledgement ofunpaidreproductionwork

• Adaptationtotechnology-inducedchallenges• Skillsdevelopmentand increasedproductivity

• Equalizationofdemandandsupplypatterns(consumerandlabour markets)

• Adaptationofwelfaresystemstonewrisksoverthelife-course• Facilitatingtransitions(schooltowork,caretowork,worktotraining)• Facilitatinganew‘generationalcontract’

• Behavioural change– also towardshigherreproductionrates?

Ageing4.0:Economicandsocialdimensions

• Employmentatallagesandlife-longlearningfacilitated

• Productivitygains•Moreappropriatelyskilledworkforce

• Fosteringmoreequallife-chances•Gender• Socio-economicstatus

Sources:www.weforum.org;Komp (2014)

Ageing4.0:Economicandsocialdimensions

• Microlevel(individuals):– Flexibilityandopennessforchangerequired– Gainsthroughoutcareersfrombetterqualificationandwork-lifebalance

• Meso level(companies):– Family-friendlypoliciesincreaseproductivity,jobsatisfactionand

motivation,reduceabsenteeism(Stutzer,2012;Brandon&Temple,2007)– Flexiblesolutionsfor(planned)absencesforleavesareneeded

• Macrolevel(society):– Socialinvestmentsrequiredtoprovideincomesecurityandsupport

during(educational)leavesandperiodsof‘unpaidreproductionwork’– Increasingproductivityandmotivation,facilitatingworkathigherages

Ageing4.0:Cost-benefitconsiderations

• Embarkingintotheparadigmchange– Changingnarratives:combiningeconomics,demography,social

gerontologyandsocialpolicy,ratherthanplayingagainsteachother– Includingbothpaidandunpaidlabour– Shiftingvalues

• Tackleold-agepovertyandinequalities– Alife-courseperspective

• Designingsocialinvestmentandnewwelfare– Preventative,participative,inclusive,creatingvaluesfortheindividual

andthecommunity:from‘ego’to‘eco’

Actionneeded

Contact:leichsenring@euro.centre.org

Thankyouforyourinterest!