EUROPEAN PAPERS ON THE NEW WELFARE

Mobilising the Potential of Active Ageing and Silver Economy in European Countries

Introduction

This paper discusses the policy measures required to promote the employment and social activities of older population, and to tap the potential of the Silver Economy. It provides the latest evidence on the contributions made by older people across the EU countries, as active participants in the workforce, as family carers and volunteers. It also discusses how adaptation of the economy to the ageing society can influence positively the opportunities for greater economic growth. All of these points argue a need to come up with solutions which embrace the needs of the older cohorts.

The problems linked with population ageing become alarming only if we assume a world of static policy and institutions, and continuing trends involving unchanged age-specific behaviours and labour market outcomes. Under such presumption, the doomsday scenarios of workforce shortages, economic growth slowdowns, the financial collapse of pension and healthcare systems, and mass dependency and financial insecurity are not entirely far-fetched. The thought of inertia in policies is frightening, even in situations where there is only a lag in reforming public policies and institutions to match with the pace of changes in life expectancy and other similar societal changes. However, there is also an optimistic side of this demographic transition. If the societies respond adequately to realise the immense potential of older people, the population ageing trends would offer new opportunities for social and economic development, by making use of older people’s contributions as family carers, volunteers and as active participants in the workforce.

Another important context is the recent financial and economic crisis. The shocks to economic systems caused by the crisis have now begun to regress, but their effects are likely to linger with us in the decades to come. Many European economies are now saddled with structural debts, partly as a result of implementing the unavoidable and for the most part effective stimulus packages during 2009/2010. Although signs of economic recovery are visible, as most European economies are now returning to positive economic growth, it is as yet not clear how steady this development is. Most noticeably, the effects on employment are lagging behind, as unemployment is persisting at around the 10% mark for the EU on average. Moreover, most EU countries embarked on various budgetary consolidation measures (starting during late 2010, and taking on a momentum of their own during 2011 and 2012) and the impact of cutbacks required for fiscal consolidations on the vulnerable groups of society, particularly children and pensioners, and on economic growth could run deep.

The idea of silver economy offers a solution to the current economic problem of stagnant growth in many of the European economies by untapping the potential of a rising share of older people in the society. By silver economy it is meant here that the rising share of older consumers represent a potential for additional demand for new types of products and services, such as personalised care, technological products that enable people to maintain healthy and independent lives as they age. Furthermore, the new cohorts of retirees are also expected to be wealthier than their predecessors, and thus generate more and specialised demand in the economy. The term ‘silver economy’ also sometimes encompass the fact that there is a rising segment of older workers who ought to be considered a resource for their employment potential for longer careers and for their other social contributions (such as transfer of skills towards younger workers) in bringing economic growth.

The opportunities
Specific policies and programmes need to be designed to yield the full potential of the rising segment of older population in the society. The proactive policy actions are required, involving innovative new approaches, multiple-stakeholders working in partnership with each other, taking a life course perspective in bringing out lasting longer term solutions, and by putting focus on gender. In line with the topic of the Peer Review Seminar, the public policy actions are required in three broadly defined areas:

  1. Mobilising the potential of ageing workforce by extending labour market careers and also enhancing the labour productivity growth through the transfer of experiences, skills and expertise from younger to older generations of workers, and vice versa;
  2. Promoting social participation of older persons, in particular in activities involving social interactions that are cooperative and mutually beneficial for both older and younger generations, contributing to easing of childcare and health and social care challenges arising from population ageing and participation of older people on activities leading to political participation and further education and training; and
  3. Advance entrepreneurial and investment opportunities in the economy for new waves of growth and job creation emerging from higher demands for products and services catering the needs of the growing group of older consumers.

The critical point is that while population ageing presents serious challenges, it also presents enormous opportunities to allow generations reaching older age to experience and express their full potential. Policy makers need to understand the changed landscape and come up with new social policy measures and encourage innovations in technology, education and policy.

The key elements to make these measures successful are:

  • Education and lifelong learning of older people;
  • Society to appreciate andactivate the aspirations and potential of older persons;
  • Promote social, economic and technological innovations in bringing about comprehensive changes that make age-friendly the future living environment, workplaces and markets (for both products as well as services) and;
  • Continuation of reforms in social policies and institutional changes that facilitate realising the full benefits of life expectancy gains and the potential of active and healthy ageing.

In particular, the future competitiveness of our economies depends, to a large extent, on how we continue to develop skills, in particular of older people in keeping them employable and maintain their productivity and also catalyse their potential for social contributions and their consumption power in developing new products and services. The successful implementation of these measures requires that an effective partnership of key stakeholders is formed between state, business sector and the civil society organisations. Thus, the strategies to be adopted will have to be comprehensive and multilevel, taking into account the needs of older people as well as profit and productivity motives of enterprises and financial and social sustainability of public policy institutions.

Moreover, it cannot be emphasised enough that a life course perspective must be adopted for these measures to bring about genuine sustainable improvements in the labour market. Thus, in my view, the limited resources available in the public purse during current austere times should not go all out to force the current generations of inactive older workers back into employment. Instead, the need is that the labour market becomes more age-friendly, principally through age-management policies of enterprises, so as to generate a level playing field for old and young workers to compete for (scarce) jobs. Thus, with life course perspective emphasised, the focus should therefore be on those who are now reaching the age of 45-50 (like my own self), and introduce measures that will make them more employable and productive as they age. The time for such interventions is now so as to enhance the working careers and also social contributions of future older workers. Such early interventions will prepare counties to be more prepared for the population ageing challenges of the future.

Also, it is important to focus on specific categories of workers and also identify specific policy measures appropriate for their activation. For instance, highly skilled workers are well-remunerated and their concerns are mainly the financial implications of retirement. Thus, the reforms towards making public pension systems actuarially fair, and in offering tax incentives to delay retirement in private pensions, will continue to be the most effective policy tool for this specific subgroup. The real concern in most countries is how to increase activity among the group of low skilled workers, especially in sectors that are fast progressing (e.g. in the health and social care industry). The policy tool appropriate for this subgroup is new lifelong learning programmes, in developing skills most suitable for the sectors in which these workers have the highest chance to be employed in the future, late in their working careers. Specific policy solutions also needed to be sought for older workers with disability.

In fact, there will be reinforcing benefits in improving and sustaining the activity of older people. In terms of economic benefits, their labour market involvement will raise their purchasing power, which in turn would generate additional demand for products and services more often consumed by older people. Moreover, given reduction in their duration of retirement time, the taxes required to finance pensions will not increase (over the long run), which will encourage employment in general but also for older workers.

Moreover, the skills offered by older people are very often distinct and cannot always be fully replaced by younger workers. For instance, patients tend to prefer older carers; older retail assistants often are more knowledgeable and also more likely to be patient. It cannot therefore be expected that the early retirement will generate more jobs for new young job entrants. In fact, it can be expected that a well-functioning labour market, one that make use of the full potential of older workers and reap the benefits of the demographic shifts in the demand of products and services will create more jobs, both for old and young. Development of sectors for products and services specific to needs and aspirations of older people will also have an export market, which in turn would give a boost to further growth potential of the European economy.

Outline of the paper
In accordance with the three areas of actions mentioned above, this discussion paper has three distinctive parts in addressing these interlinked issues.

  • Section 1 discusses the labour market participation of older workers in EU countries at present. It also discusses what policies and initiatives are currently being introduced by the state, employers and social partners to mobilise the potential of a rising share of older workers in the workforce and in countering the shrinking labour force problem (e.g. removing employment obstacles, improving employment conditions, addressing premature exits from the labour market, fighting against discrimination and investing in lifelong learning).
  • Section 2 highlights the social contributions that older people make in society, through their involvement in volunteerism, in providing care to their own children and grandchildren and to adult members of their families. It also discusses what measures are introduced in peer countries to promote the recognition of social contributions in seeking greater solidarity between generations.
  • Section 3 discusses how the demographic change can influence positively the opportunities for greater economic growth? What conditions and actions may be necessary to unlock the growth potential of demographic shifts in demand (of products and services), arising from the rising share of older consumers in the economy (the so-called silver economy phenomenon)? How the development of the silver economy can generate opportunities to create new, decent jobs for all working age groups as well as to improve the competitiveness and growth potential of the whole European economy?


Asghar Zaidi: Centre for Research on Ageing, University of Southampton and European Centre Vienna


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