Today, the OECD publishes Help Wanted? Providing and Paying for Long-Term Care. In this post, Maxime Ladaique, Manager of statistical resources in the OECD Directorate of Employment, Labour and Social Affairs looks at the question of intergenerational solidarity. Promoting Solidarity is the theme of a panel discussion on 24 May at the OECD Forum session on “Life After the Babyboomers”.
It’s an issue most of us will have to deal with sooner or later, if we’re not doing so already – as parents, grandparents or children of ageing parents.
First, I’d like to define what we mean by “intergenerational solidarity”, before looking at the actual extent our populations are ageing, and what the consequences might be regarding the demographic and social challenges looming ahead of us in the coming decades, and of the solutions for policy makers, so that all generations live together, as united as possible.
Intergenerational solidarity can refer to help across generations, either via cash transfers within a family – between parents and children for example, or via time spent to care for children, grandchildren, or for parents.
But intergenerational solidarity can also mean that generations have a positive view of one another, or that there is consensus across generations on the way forward.
Measuring such a broadly-defined concept isn’t easy. Nevertheless, relations between generations today appear to be positive, according to attitudinal surveys. For example, the Eurobarometer conducted in 2009, asked the provocative question “Are older people a burden on society?”. In 21 European countries that are members of the OECD, 62% of people strongly disagree that older people are a burden, with a further 23% somewhat disagreeing. Only 14% agree with the statement to either degree.
The problem is that this exchange across generations works well in times of demographic balance, but less so in the current context of population ageing.
You can see one change due to ageing in the fact that nowadays, families are often made up of four generations: children, parents, grandparents and great grandparents. This is thanks to what is first and foremost good news: we live longer. In 1961 when the OECD was created, citizens of OECD countries lived until 69 years of age on average. Today, that has risen to 79.
A second reason for population ageing is what many regard as not so good news: fewer children are being born. Fifty years ago, women had on average just over 3 children in OECD countries. Today, they have on average just under 2.
Some people fear that this demographic imbalance has set a social time bomb ticking.
First, because of pensions. Did you know that in 1961 there were 7 persons of working age per person of retirement age on average across OECD countries? This ratio is currently 4, and it drop to 2 in 2050.
Without reforms, spending on public pensions will double in the next 40 years. Governments will not be able to cope. We know the solutions, but they are not easy to put in place. Governments could postpone retirement age, so we’d have to work longer. Or give financial incentives to employers to keep older employees at work so that they contribute longer. Or introduce greater diversification of sources of retirement income, giving a greater role to private arrangements.
Caring could also pose problems. The share of those aged 80 and over will more than double in the next 40 years, from 4% to 10% of the population. And today, most care for older people is informal. Typically, between 70% and 90% of people providing care for older people are family members. But as populations get older and more and more people need care, families are not going to be able to cope any longer. Governments need to help them by providing either financial subsidies to help them to get some professional care at home, or by investing in the creation of retirement homes, which are already desperately needed in many countries.
I’m sure we all agree that there is an urgent need for governments to react to population ageing in order to keep our generations united, but whether you’re from my generation or not (I’m 41), I’d be interested to hear your ideas.