ISSN 2330-717X

Economic Dependency Ratio, Not Retirement Age, To Determine Pension Funding

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“By far the most effective response to an ageing population in Europe is to make full use of available employment potential”, noted Leila Kurki at an informal meeting of the ministers for labour and social affairs held on Thursday. Kurki is president of the Section for Employment, Social Affairs and Citizenship of the European Economic and Social Committee.

Kurki pointed out that boosting employment among older people by making changes to pension systems, tightening pension conditions, weakening pension rights or raising the statutory retirement age would simply not work.

“It has to be borne in mind that future pension funding needs will not be determined by the demographic ratio (ratio of older people to people of working age); the decisive factor is rather trends in the economic dependency ratio, or in the ratio of people receiving benefits to people in employment.”

“If the labour market participation rate of people of working age can be effectively increased across the EU over the next few decades, then it will be possible to contain the increase in the economic dependency ratio”, said Kurki.

She pointed out that employment potential existed not just among young graduates, but also notably among the unemployed, older people, people with disabilities or health problems, migrants and underemployed people.

“Thus the issue with the employment market concerns not so much the supply of labour, but rather the lack of appropriate or adequate professional skills among workers and the negative attitude to certain categories of job-seeker, as well of course as the most serious problem of a lack of jobs.”

Women represented considerable employment potential in many EU countries. “Flexible, personalised working-time arrangements would allow both women and men to more effectively reconcile work and family life”, noted Kurki.

If the aim was to raise the retirement age, it was necessary to ensure that people were able and willing to work for longer.

“Jobs must be designed so that people are able to work at least up to the statutory retirement age.” Kurki pointed out that this would entail radical changes in working life.

Work and management would have to be organised in a way that accommodated ageing at every stage of a person’s career. Working conditions and the working environment must be adapted to suit workers of different ages. Discrimination and negative value judgments against older workers must be combated.

Updating of professional skills and preventive healthcare were of key importance.

The informal meeting of labour and social affairs ministers organised by the Polish presidency is held on 7 and 8 July in the Polish town of Sopot.

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