EUROPEAN PAPERS ON THE NEW WELFARE

The demographic Situation now and in the Next 10 to 20 Years

2. Demographic structure: consequences of the change

by Benedetta Cassani
University of Rome ‘La Sapienza’

This part of the report concentrates on the demographic aspects of current and future population ageing and its consequences. The radical changing in the population structure represents the new challenge not only for Italy but for all developed countries during future decades. In addition to the growing number of the elderly, a phenomenon already explained in the previous chapter, in the next fifteen years demographic transition will involve an important decline in the group of the active or working-age population (15-64) with significant consequences for the stability of the welfare system including the social, health care, training and employment services. Ageing will be reflected in changes in the relative weights of broad age groups; it will be fundamental to face this deep trasformation and to change the inadeguate traditional definitions in accordance with the new population structure.
The pension system strongly depends on the demographic structure of the population. The first step to achieving the stability of the welfare system is to ensure the intergenerational equilibrium irrespective of the demographic situation. This will be possible only through the introduction of a new vision of the elderly people, viewed no longer as a burden but as an important resource for the development of society. For several years the European guidelines have addressed the increase in the employment of the elderly as the first goal which needs to be achieved in the next few years.
The focus of this analysis will be the identification of a new age threshold for reaching the ageing condition and retirement age. In order to better understand the situation it will be useful to see some hypothetical scenarios. These are only simple exercises but they clearly show how the demographic structure would change by modifing the traditional definitions and the measures of ageing. On this occasion the Italian population will be considered. We could analyze the European population in the same way.
As a starting point it is important to consider the present population structure. Elderly people are defined as those who have overcome a prefixed age-threshold. In fact in the current situation, 65 years is the age limit which generally equates to the pensionable age and represents the threshold beyond which bureaucracy and common sense see the beginning of senility. The consequences of maintaining the value of the ageing threshold constant are noted. We notice that the percentage of the elderly has quickly increased in recent years and will do so even faster in the near future reaching 23.5% in 2020.

Table 6: The invariance of the ageing threshold at the age of 65
cassani-tab6.gif
Source: own calculations based on the ISTAT (Italian National Statistical Institute) database.

We will witness an increase in the absolute value of the number of elderly people at that time, while life expectancy will be increasing considerably in the course of the coming years. In other words it is possible to affirm that the population is ageing in demographic terms, but at the same time is rejuvenating in the biological sense. That is, we can hope to live more years in comparison to the past. It is important therefore to verify the conditions of life during the years gained; good health and independence in the daily life should progress along with long life expectancy.
If we modify the previous scenario by adopting a dynamic threshold in accordance with life expectancy the situation changes considerably. We hypothesize that to qualify as ‘elderly’ people are thought to be identified within a temporal horizon (the average years that the population is meant to live) equal to a mounting number of years. We maintain constant the life expectancy up to the values of 12.6 for men and 13.7 for women, values surveyed during 1951. In this case the number of elderly people surviving to an advanced age, living under the same conditions, will increase less in comparison to the previous scenario, the same as the old age index, and it would be possible to limit the weight of the elderly to the value of 11.3% for men and 13.7% for women. In this case there will be a slight demographic ageing, without biological ageing since life expectancy1 in the hypothesis is constant.

Table 7: Dynamic threshold in accordance with life expectancy keeping constant at 12.6 years for men and 13.7 years for women
cassani-tab7.gif
Source: own calculations based on the ISTAT database.

Table 8: the absolute number of elderly people is maintained constant at the level of 1951
cassani-tab8.gif
Source: own calculations based on the ISTAT database.

In confirmation of the inadequacy of the usual definiton of elderly people in the following scenario we could consider as constant the percentage of the population over the ageing threshold. In this case, compared to 1951 we could achieve the same value moving the ageing threshold from 65 to 78 in 2020. As a result people over 78 years old would be considered elderly. In this scenario the population would not be ageing from a demographic point of view (population ageing indicated by the increases in the proportion of the elderly in the total population) but it would be biologically ageing in the sense of a decrease of the life expectancy.

Table 9: the percentage of population over the ageing threshold is maintained constant at 8.2%
cassani-tab9.gif
Source: own calculations based on the ISTAT database.

1 Technically, it is the average number of years of life remaining to a person at a specified age, assuming current age-specific mortality rates continue during the person’s lifetime.


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