The world has woken up to population ageing as a major issue, but it still tends to be seen as something negative. Terms such as ‘age-quake’, “cataclysm”, “threat, ‘burden’ and ‘grey tsunami’ are bandied about. One journalist said:
The ramifications (of ageing) could be serious as the elderly become an additional burden to the traditional scourges of poverty and disease.
It sounds scary – as if poverty and disease (and not forgetting climate change) were not enough, now we have old people as part of the apocalypse. The implication is that older people are going to eat up more than their fair share of resources, thus depriving oncoming generations. The scene is set for conflict and competition between the generations. Intergenerational solidarity, which was in one of my blogs in early 2013, is under threat.
Younger workers, it is argued, face a large and growing tax burden to pay for superannuation and health care. Although reforms in many developed countries have slowed the growth of expenditure, age-related costs are projected to grow faster than national income in the next few decades.
The New Zealand Treasury expects that, by 2060, there will be four people aged 65 plus for every ten aged between 15 and 64, which is the usual definition of “working age”. That ratio compares with two to ten today. Bringing in dependent children under the age of 15, demographers expect that there will be seven “non-workers” to every ten people aged 15 to 64. Of course, 15 to 64 is not a realistic “working age group” even now, when the school leaving age is 16, much less in forty years’ time, when workforce participation after age 65 will certainly have grown. But the point is worth considering.
New Zealand Superannuation spending is almost 5% of GDP (Gross National Income) now. This percentage is expected to reach 7-8% by 2060, depending on which estimate you choose. The same kind of increase is projected for health service spending, including residential care. Put another way, today, around 25% of the government’s annual spending goes on services for 13% of the population which is aged 65 plus. By mid-century, 40% of spending may be for this group, which will then account for 25% of the population.
These estimates raise important questions, especially about inter-generational equity. New Zealand compares favourably with other OECD countries in combating poverty among older people, but our poverty rate among children is higher than the OECD average. How can we reach a balance? How do we make the right choices for the future?
Political and journalistic rhetoric tends to pit the generations against each other, pointing out the growing tax burden and an unenviable legacy of mounting debt or higher taxes.
Perhaps we should think about more intra-generational sharing of the costs of an ageing population. Could the wealthy, younger retired contribute more to the costs of care for the older, low-income and often less healthy, retired? By doing so, the pressure on the working age population could be reduced and intergenerational equity enhanced.
While the very old will continue to need care services, should we think about how the costs of care be shared more equitably? Could advances in information and communication technology help to keep people in their own homes longer, with a mix of family, commercial, voluntary and public sector support?
How can governments maintain income support to provide a good quality of life in retirement without jeopardising financial sustainability? A key solution is longer working lives. Half of the OECD countries are already increasing pension eligibility ages or will do so in the coming years, this being a powerful way to encourage longer working lives (as was the case when eligibility for NZ Superannuation was raised from 60 to 65). Around half of OECD countries’ pension reforms involve greater targeting. How would we react to moving away from the universality of New Zealand Superannuation?
Our policies should aim to ensure adequate income, health care and support for caregivers across the generations. Older people have an interest in seeing that all children are given good education and health care as this will impact on the society in which their grandchildren will live. Young people have an interest in the availability of good care for their own parents and grandparents.
Policies work in a multi-generational context. We pay taxes to support older people’s superannuation and healthcare costs, but also education systems and maternity services. Governments invest in roads and electricity supply, economic development, job promotion and environmental protection, which help everyone. This works well when the age groups are balanced. This balance looks likely to disappear in future.
There are certainly challenges, but is intergenerational conflict inevitable? May it be more in the mind than in reality? A large-scale survey in OECD countries asked, “Are older people a burden on society?” 85% of people strongly disagreed or somewhat disagreed with the question. Interestingly, it was people aged 55 and over who were most likely to agree!! But this study did not find that conflict between the generations was increasing. The authors concluded that intergenerational conflict is weaker when older people actively participate in the political life and are visible in society. This suggests that policies to promote Active Aging could mitigate intergenerational conflict.
One of our few growing natural resources is older people. How can we provide opportunities for them to make a greater contribution? How can we combat ageism which acts as an obstacle to this aspiration? Action is urgently needed to ensure a fairer re-distribution of resources, responsibility and participation and to develop greater cooperation between generations in all social and economic spheres.
 Hess, M, Nauman, E. and Steinkopf, L. (2017) Population Ageing, the Intergenerational Conflict, and Active Ageing Policies – a Multilevel Study of 27 European Countries. Journal of Population ageing. Vol.10, Issue 1, P.11-23.