EUROPEAN PAPERS ON THE NEW WELFARE » Paper No.9 /2008

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This part of our publication presents texts which are not original. They are motivated and written under various contexts: they provide an insight on the fact that the lenghtening of the life cycle is of greater and greater concern and interest in many different directions. The counter-ageing society is an issue which needs to be perceived on the basis of a true, practical as well as theoretical, multidisciplinary approach. On the basis of this larger vision, the work, activity and research of any specialist can be better appreciated and given value within the framework of a global background of reference.

1. First Empirical Survey Reveals Large Idle Potential for Economy and Society

A recently completed research project from Leuphana University Lueneburg and The Geneva Association, ‘think tank’ of the world leading insurance companies, gives a first empirical insight into the present situation and concrete expectations of paid and voluntarily active retirees (Silver Workers) in Germany.
Research results are based on an extensive survey of approx. 150 active retirees ranging in age from 60 to 85 years. Study participants vary from former board member to former chambermaid. The study highlights crucial conditions for the increased mobilization of this relatively small section of the population of which we know very little. For this reason the study sheds light on the workplace of tomorrow, which makes early allowances for the huge economic and socio-political challenges of the demographic change.
Professor Jürgen Deller, head of the research project, comments: “We broke new ground doing this first empirical study of Silver Workers’ situation. Further research will and has to follow. Our results should encourage a goal-directed redesign of tomorrow’s age-based labor world. We think that this will be one of the crucial challenges for economy, politics and society. Leadership and Human Resources Management will change substantially”.
Patrick M. Liedtke, Secretary General and Managing Director of The Geneva Association, adds: “A better integration of Silver Workers in the working life is much more than just a question of old-age provisions. It’s a matter of substantial questions concerning companies’ competitiveness, stability of national budgets and societal exposure to a dramatically changing age structure of the population. Ultimately, the study at hand addresses the long-term basics of growth and welfare in a leading world economy”.

2. Covering Macroeconomic Growth Potential and Relieving Old-age Pension Systems by Integrating Silver Workers

As a result of the demographic development, there is an increasing understanding of the lack of sustainability of existing pension schemes. Moreover, agencies are forecasting an intensified lack of specialized staff which will noticeably affect the growth of the German economy in the foreseeable future.
As people who are getting older maintain good mental and physical abilities, they decide, in increasing numbers to stay active in retirement and to actively pursue a job. The study shows that currently non-financial motives like seeking appreciation determine retirees’ activities. Due to foreseeable deficits of the existing pension funds, post-retirement activities could become a necessity for an increasing number of older employees.
Against this background, the present study draws a first empirical picture of the current situation and most important expectations of Silver Workers. Its aim is to give an impetus to the creation of a fourth pillar of old-age pension which is based on a combination of part-time work and old-age pension during transition to retirement. Besides the statutory, occupational and private pension scheme, the fourth pillar can contribute to the stabilization of pension systems and therefore of national budgets as well as ensure human capital.

3. Maintaining Competitiveness of the German Economy by Integrating Silver Workers

The impact of a strong fourth pillar goes much beyond relieving old-age pension systems and covering macroeconomic growth potential. German companies have to face up to the demographic change, irrespective of their size. This is also true for many other European countries, e.g. Italy. Those companies that set the course today for reasonable employment of older specialized staff will gain a key advantage in national and international competition tomorrow. They will benefit in the short term in view of a prevalent lack of specialized staff due to a booming economic situation in Germany.
This study provides an informative basis for companies regarding the design of tomorrow’s workforce which we think will become one of the most central leadership tasks. The willingness to start or to continue working in retirement in Germany exists — but companies have to provide adequate general conditions in order to benefit from the experience, expertise and social competences of active retirees: once they have gained a degree of freedom Silver Workers do not want to live without it. Occupation in retirement has to be varied in shape and form and provide meaning to Silver Workers’ life. Concretely, flexible measures which are adapted to a retiree’s individual needs, e.g. part-time work, have to be set up. Furthermore projects and tasks have to be structured in such a way as to accommodate the Silver Worker’s desire for independence and performance in his or her job. Moreover, to have a shot a the future, companies will have to train and provide new skills in order to efficiently employ older workers even after they have retired. The active retirees who were interviewed mentioned these elements and underlined that they are prepared and actually calling for this challenge.
Interviewees also point out their need to be appreciated and valued. The importance of an additional income in some cases seems to serve as evidence for this expressed appreciation. The results repeatedly accentuate the need for a culture of appreciation as a condition for an organizational integration of active retirees.
The following figure gives an overview of the most important expectations Silver Workers have of their employers.

Figure 1: Ideal contitions for an occupation during retirement from Silver Workers’ position

4. Silver Workers as Sociopolitical Challenge

In Germany, Silver Workers still live a shadow existence compared to those in other countries. One decisive reason for this might be that for most German retirees an additional income is not absolutely necessary as the pension scheme is still basically working. But demographic and political developments indicate a different trend for the future where rethinking will be necessary from everyone.
At the moment, most of the interviewees are basically working because they simply like doing it. In the foreseeable future the general framework of old-age pension could change in such a way that income additional to old-age pension will be necessary for an increasing number of people. This will also require more flexibility from the persons concerned. It will be essential to retrain retirees in order to reemploy them, especially lower skilled staff.
A further reason for the still low impact of Silver Workers in Germany is the political framework. An extended working life is not covered in the law and is hindered for certain groups, e.g. civil servants. Employers and Employees still have to pay social security provisions which do not have a positive effect on the annuity rates but rather have a negative effect on the employee’s salary. The inescapable transition to these new working conditions is constrained by the current legal framework in Germany, which has to be extensively reformed.
Finally there is a lack of social acceptance of the mains reasons why Silver Workers want to keep on working, namely the desire to be accepted and to continue to play a continuing active role in the economy and society.

5. Recommended Actions for the Economy, Politics and Society

The following three central recommendations can be derived as a first empirical appraisal of the situation of the Silver Workers:
1. Enlargement of strategic HR management in order to systematically mobilize and integrate Silver Workers: We need flexible structures regarding working time and work design, supplemented by purposive advanced training measures in order to provide an attractive organizational environment for Silver Workers.
2. Promotion of a culture of appreciation for the elderly throughout organizations: The prevalent ‘mania for youth’ is reaching its limits — and not only because of the forecasted changes in the structure of the population. There seems to be a return to the recognition of the elderly’s longtime experience, substantial expertise and superior social competencies. These values have to be firmly positioned in the culture of an organization.
3. Establishment of an attractive legal framework for Silver Workers: The present regulatory vacuum has to be replaced by definite terms which put post-retirement work on a mandatory legal foundation. Due to the aforementioned economic and managerial reasons politicians should create efficient incentive structures which will promote the development of a strong fourth old-age pension pillar in Germany.

The Silver Workers Institute: Active Retirees in Germany: If you are interested in the full research report, please send an email to secretariat@genevaassociation.org.
More information on Silver Workers and the challenges of organizing work for the elderly in order to face the expected demographic development can be found on the website of the Silver Workers Institute in Geneva: www.silverworkers.ch.
Jürgen Deller: Institute of Business Psychology Leuphana University of Lueneburg, Germany.
Patrick M. Liedtke: Secretary General and Managing Director, The Geneva Association, Switzerland, secretariat@genevaassociation.org.

Demographic Ageing and structural Imbalances in China

Manuela Stranges — Fri, 22 Feb 2008 19:48:51 +0000

1. Introduction

In recent years, especially as a result of the growing weight of China in the international economic scenario, the alarms concerning the alleged Chinese invasion of the West are multiplying: this fear is fomented, in particular, by the population consistency of the country, which has already passed 1,300 million inhabitants (in 2005) making it currently the most populated country in the world.
The fear of a Chinese conquest is strong, so much so that the Center for Strategic and International Studies in Washington has even called the Chinese emigration a ‘tsunami on the horizon’. In reality this fear seems to be unsupported by statistical data¹: China represented 22% of the total world population in 1950, while today its share has decreased to 20%. Moreover considering the demographic weight of China, the 34 million Chinese (old and new generation) scattered around the world constitute a very insignificant figure. Furthermore China’s growth has been slowing considerably in recent years, so much so that in 25-30 years the other world demographic giant, India, will surpass it in terms of size. Moreover the country of the Dragon is now facing its own demographic problems, especially the process of demographic ageing (caused by the low birth rate and the increase in life expectancy) and the imbalances that characterize its structure (for example, the disproportions by sex). Both these problems are, as will be discussed further, direct consequences of the policies of birth control, the so called ‘one child policy’, started in 1981.
In the present contribution the main demographic characteristics of China will be presented², as will the figures concerning the ongoing demographic ageing process and the imbalances in the population structure generated by the national policies of birth control. Using data from the United Nations, the population projections under different scenarios will be analysed in order to appreciate what the future of China might possibly be if the current tendencies in mortality and fertility remain steady. Although with some differences, all the scenarios show that China will soon face levels of population ageing (expressed, for instance, as a share of old people out of the total population) higher than the current levels of European countries. Also the ‘one birth policy’ has caused a significant lack of females, because of the selection put into effect in favour of males, and this fact will strongly affect the ‘marriage market’, causing noteworthy social problems for the country.

2. Main Demographic Characteristics of China

In 1950 China counted slightly more than 554 million inhabitants; thirty five years later, in 1985, it had already passed a billion, and today it has over one billion, 300 million inhabitants. As a result of this growth, China has today a population density of 137 inhabitants per square km, a value higher than those of western countries (for example, it is 32 inhabitant per square km in the USA and 114 in the European Union), but low if compared with other eastern countries (for instance, India has a population density of 336 inhabitants per square km, while Japan has 344). The median age of the population rose from a value of 23.9 years in 1950 to a value of 32.6 years³.

Table 1: Some demographic structure indicators for China (1950-2005)

(click to enlarge)
Source: United Nations, 2006. * percentage calculated only on the women’s group; all the other percentages are calculated on the total population.

The population sex ratio, which measures (per 100) the number of males for every female was at a comprehensible⁴ high level in 1950 (108.1%), when the population was younger than today, but even today it has an incomprehensible⁵ high value (105.6%), when it should be much lower according to the ongoing process of population ageing. Taking a look at the proportion of population aged 65 years and over (7.6%), and knowing that at the oldest ages females prevail, the population sex ratio should have been much lower than its current level. This disproportion, which will be examined in more detail in a later paragraph, is the result of the unnatural birth sex ratio, which strongly affects the sex ratio at higher ages and that of the total population. The increase in the proportion of the old share of the population caused, of course, a decrease in the other fractions, especially the youngest ones, as a direct consequence of the reduction of the birth rate: the percentage of the population aged 0-15 years fell from 33.6% in 1950 to 21.4% in 2005. Among these classes, the most important decrease is, obviously, that of children aged 0-4 years, where the percentage decreased over the same period from 13.7% to 6.4%.
Table 2 shows some indicators of the natural dynamic (which refers to births and deaths) of the Chinese population for five year intervals from 1950 to 2005. The population growth rate is equal to 0.65% in the period 2000-2005, while it was at 1.87% fifty years earlier. The crude birth rate fell from the value of 43.8‰ in the period 1950-1955 to a value of 13.6‰ today. In the historical series of data a slight recovery can be noticed in the birth rate in the period 1985-1990, during which it reached a value of 22.1‰, while it was 20.4‰ in the previous five years, after which it started to fall again, reaching the value of 18.3‰ the following five years. Also the crude death rate strongly decreased, from the value of 25.1‰ of the mid twentieth century to the current value of 6.8‰. The reduction of the death rate is the result of improved living conditions and the progress in medicine and health care. Despite the strong reduction in the crude death rate, China still shows a very high infant mortality rate⁶, which is equal to 34.7‰ in the period 2000-2005 (it was even at 195‰ in 1950-1955). This aspect of mortality is very important, since the infant mortality rate can be considered a proper indicator of the ‘real’ level of social and economic development of a country⁷.

Table 2: Some natural dynamic indicators for China (1950 – 2005)

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Source: United Nations, 2006.

The simultaneous observation of the evolution of crude birth and death rates allowed us to show the last two phases of the Chinese Demographic Transition, as shown in figure 1. The model of Demographic Transition is a theory used to explicate the long-term growth of a population. It is typically constituted by three phases, the first and the last where the birth and the death crude rates have similar values (high in the first phase and low in the third), and a second phase, which is the real transitional one, in which the distance between the two indicators is higher (with the birth rate at higher levels than the death rate), so the population grows. So the higher the distance between the negative and the positive natural indicator, the higher is the population growth rate: in fact, it is possible to notice that China showed the highest levels of percentage population growth rate in the periods 1965-1970 and 1970-1975 (when it was, respectively, equal to 2.61% and 2.21%), which are exactly the periods, as can be seen in the graph, where the two lines are the furthest apart. The end of the Demographic Transition can be individualised in correspondence to that time when the crude birth rate and the crude death rate have similar values at a low level. It is possible therefore, to affirm that China will conclude its transition around 2020. It is necessary to underline that the forecasts of the United Nations for years after 2005 are based on a constant fertility scenario, which assumes that the level of fertility will not go lower or higher than the current value. Variations in the level of fertility could lead, of course, to a shift in the date of conclusion of the transitional process.

Figure 1: Last phases of the Demographic Transition in China (1950-2050)

Source: own elaborations on United Nations, 2006. * Forecast based on constant-fertility scenario.

As a result of the reduction in the crude death rate, the life expectancy rose from a value of 40.8 years in the period 1950-1955 for both sexes (39.3 for males and 42.3 for females) to a value 71.5 years in the period 2000-2005 (69.8 for males and 73.3 for females). So the life expectancy had a significant rise, but it’s still lower than the values reached by the western countries, where it is around 80 years (in Europe, in 2006 it was equal to 75.4 years for men and 81.5 for women). The increase in life expectancy is one of the two causes of the demographic ageing process (so called ‘ageing from above’), the other is the fertility reduction (‘ageing from below’), which has been extremely considerable in the last fifty years in China: the Total Fertility Rate (TFR), which expresses the number of children for each mother in fertile age (15-49 years) fell from a value of 6.22 to a value of 1.70, not very far from the value of western countries (the average value for UE27 in 2005 was 1.5 children per woman). What is interesting to evaluate is the value of the Net Reproduction Rate (per woman), since it expresses the number of daughters for each mother, and so gives a measure of the reproductive replacement: already in the 90s the Chinese value fell below 1.

Manuela Stranges: Ph. D. in Demography, Department of Economics and Statistics, University of Calabria, m.stranges@unical.it
1 For Italy but also for some general data and figures concerning the whole of Europe, see, for example, the section dedicated to China in the Italian Caritas Immigration Dossier 2006, where the statistical data seem to show that the fear of the ‘yellow invasion’ of the West appears unfounded.
2 A reflection on the consequences of the demographic ageing processes in China can be read in Jackson R. and Howe N. (2006a and 2006b).
3 To make a comparison with a western country and have an idea of the differences between China and the more developed countries of the world, it could be useful to know that, for instance, the median age of the Italian population is currently of 42.3 years.
4 Since males are prevalent in younger ages because the sex ratio at birth is typically 105-106 males for 100 females (but it will be noticed that the Chinese one is far from typical), while females are prevalent in the oldest ages because of their greater longevity, for those populations which are still young the value of the total sex ratio is understandably higher than 100, because the population is more concentrated in the youngest age classes, where males prevail. On the other hand, those populations which are older have a value lower than 100, since the population is more concentrated in the oldest age classes.
5 China doesn’t have a very significant level of ageing today, but still this value of total sex ratio seems to be too high. For instance, in Italy, the population sex ratio was equal to 100.4% in 1861 (the date at which the country was unified), because it was pretty young, while by 1921 it had already reached a value below 100 (exactly at 98.8%) as the ageing process had not even begun yet. At that time the proportion of people aged 65 and over out of the total population was around 7%, even lower than the Chinese proportion of today (7.6%). So the comparison between the two countries shows an evident incongruence.
6 For instance, in Italy it is around 4‰ in 2005. The average values are of 6 deaths every 1,000 live births in the industrialized countries; 27‰ for Latin America and Caribbean countries and for Eastern Europe and countries of the former USSR; 29‰ for East Asia and Pacific countries; 46‰ for Middle East and North Africa countries; 83‰ for South Asia; 131‰ for Southern and Eastern Africa; 160‰ for Sub-Saharan Africa; and 186‰ for Central and West Africa. The world average is 72 deaths every 1,000 live births. So China has a value lower than the world average (which is, indeed, very high), but still very far from the value reached by the industrialized countries.
7 This shows again, if it is necessary, that economic development does not always completely correspond to what is called “human development”. Starting from the 50s, many economists, believing in the absolute association between economic growth and development, began to talk of the so called “trickle down mechanism”, according to which the growth of Gross Domestic Product (GDP and GDP per capita) would be automatically and certainly translated into a growth (at the level of the whole population) in terms of development, more employment, better living standards and reduction of inequality and poverty. So, because of this belief, the GDP began to be the only worry for economists and governments. Later, especially because the statistical data proved this theory to be wrong, attention moved to other indicators, such as “[…] availability of drinking water, sanitation, transport, health care, education, as well as a commitment adequately remunerated for anyone who wants to work […]”(ILO, 1976a; see also, ILO 1976b). In the mid-80s Paul Streeten (e.g. 1981; Streeten et al., 1981) and Francis Stewart (e.g. 1985), both development economists, resumed and revised the theory of “basic needs”, starting from the premise that development is not only the achievement of a minimum threshold of income but the achievement of a state of “full life”, subverting the classical version of the direct relationship between growth and development, arguing that the satisfaction of needs is the basic element for growth. The basic needs, which are considered a prerequisite for a decent life, are usually identified as six: adequate nutrition, primary education, health, hygiene, the availability of drinking water, the availability of a dwelling with infrastructure associated with it.

Caring for a Family Member with Dementia: Evidence from a Cross Sectional Comparative Study on Caregiver Burden and Psychological Well-being

Cristian Balducci, Maria Gabriella Melchiorre,Sabrina Quattrini, Giovanni Lamura — Fri, 22 Feb 2008 19:16:04 +0000

Abstract

Background and aims: Previous research is not entirely consistent with regard to whether dementia caregivers are more adversely affected by their role than non dementia caregivers.
The present study further explored this hypothesis by comparing 84 dementia dyads and 53 non dementia dyads in terms of caregiver burden and psychological well-being. Methods: Dementia and non dementia dyads were initially described in detail to evaluate the comparability of the two sub-samples. Five multiple regression analyses were run to see whether patient dementia status significantly predicted the criterion variables (caregiver objective and subjective burden, stress, anxiety and depression), once the effect of potentially confounding factors has been taken into account. Results: Patient dementia status emerged as a significant predictor of caregiver stress and depression, as dementia caregivers reported higher levels of stress and a more depressed mood than non dementia caregivers. Moreover, it was also found that spouses of care recipients, rather than children or other relatives, reported the most negative consequences to themselves. Conclusions: These findings support the view that caring for a dementia patient may be a particularly troublesome experience and that dementia caregivers — especially if they are spouses — are in need of more support from formal care services.
Keywords: caregiving spouses, dementia, burden, stress, anxiety, depression

1. Introduction

Providing care to a dementia patient is a highly demanding task. This activity, which in the great part of cases is carried out by informal caregivers (Kneebone and Martin, 2003; Stone et al., 1987; Wiles, 2003), often causes them high levels of burden and distress, which in turn may lead to appreciable physical as well as psychological consequences (Barinaga, 1998; Di Gregorio et al., 2002; Macdonald and Dening, 2002; Marshall, 2001; Pinquart and Sorensen, 2003; Schulz, et al., 1995), especially when an unfavourable physical and psychological status characterises the caregivers (Onishi, et al., 2005). In this respect, spouses of care recipients appear as those reporting the most considerable burden, given that they were repeatedly found to be more distressed and depressed than other relatives (Pinquart and Sorensen, 2003; Schulz, et al., 1998, 2004). Furthermore, in the case of spouses the emotional strain resulting from caregiving has been found to be an independent risk factor for mortality (Christakis and Allison, 2006; Schulz and Beach, 1999).
A question that is receiving increasing attention in this research area is whether caring for a dementia patient is comparatively worse than caring for a patient with other debilitating and chronic conditions, but a sufficient level of mental lucidity. It has been suggested (Light, et al., 1994) that there may be something unique about caring for a demented person, independently of caregiver characteristics and level of caregiving involvement. This may be related to the fact that dementia, contrary to other chronic conditions, progresses by erasing judgment, memory and the sense of self, thus finally compromising the bases for any form of interaction between the caregiver and the care recipient (MacRae, 2002), so that the severity of cognitive impairment has been clearly linked with depression in carers (Ballard, et al., 1995). Moreover, the behavioural changes associated with the onset of the disease (Hooker, et al., 2002) often render the care recipient much more difficult to look after. As a consequence, the caregiver may no longer manage to find benefits in his/her role.
However, while it appears understandable that the (cognitive, behavioural and affective) losses associated with the progression of the disease make dementia caregiving comparatively more stressful and burdensome, empirical evidence remains inconclusive on this. Clear-cut differences between dementia and non dementia caregivers emerged in some studies (Clipp and George, 1993; Holmen, et al., 2000; Ory, et al. 1999), with dementia caregivers reporting worse consequences in terms of self-rated health, emotional health, social life and financial status. Furthermore, dementia caregivers were also found to make use of more psychotropic agents than carers of cancer affected relatives (Clipp and George, 1993), suggesting that coping with the cognitive and behavioural decline of a person with dementia may be a particularly difficult task for his/her carer(s).
Such striking differences between the two groups of caregivers, however, were not replicated in other studies. For example, in a comparison between Alzheimer disease caregivers and Parkinson disease caregivers without coexisting dementia (Hooker, et al., 1998), it was found that while the former reported worse mental health consequences (anxiety, depression and a combination of positive and negative affect) than the latter, the pattern of results was inverted with respect to physical health consequences (perceived health and number of reported chronic conditions). In another study, which compared mild dementia caregivers with stroke and Parkinson disease caregivers (Tommessen, et al., 2002), no differences were found across the three diagnostic groups with respect to the psychosocial burden (perceived stress) experienced by the caregiver. Few, if any differences between caregiving groups emerged in a series of other studies (Canadian Study of Health and Ageing Working Group, 2002; Cattanach and Tebes, 1991; Draper, et al., 1992; Rabins, et al., 1990), and evidence has been also provided of an advantage of caregivers of cognitively impaired patients compared with caregivers of physically disabled patients (Yu, et al., 1993), as well as for lower levels of depression in spouses of demented Hispanic elders compared to spouses of cognitively impaired but not demented ones (Hinton, et al., 2003).
Despite these controversial results, this research area is an important one and deserves further attention: while most caregivers provide care to functionally disabled patients, forecasts for EU countries indicate that the number of people aged 65 and older with dementia disorders will increase substantially in the near future, growing from about 4 million in 2000 to about 4.8 million in 2015 (Berr, et al., 2005; Eurostat, 2003; Lobo, et al., 2000), and a similar trend is expected to affect all main regions of the world (Cleusa, et al., 2005). Therefore, dementia caregiving will increasingly become one of the central facets of the caregiving phenomenon. If resources need to be directed to informal caregivers — not only to improve their own quality of life, but also to slow down deterioration in the cared-for (Leung, et al., 2007) or delay institutionalisation, which is much more frequent among demented people in all age groups (Jagger, et al., 2000), thus contributing to reduce the costs of health care (Bernabei, Landi and Zuccalà 2002; Michel et al., 2001; Stuart et al., 2005) — it is important to know under which circumstances a caregiver reports the worst consequences from his/her care activity, since this has relevant implications in terms of resources allocation.
In the light of the above considerations, the main aim of this study was to explore in depth the hypothesis that dementia caregiving has a stronger impact on caregivers than non dementia caregiving. We focused on caregiver burden, stress, and psychological well being. We reasoned that the inconsistency of previous findings in this area may be due to the existence of influential socio-demographic differences between dementia and non dementia caregivers which have not been appropriately taken into consideration. For example, as discussed earlier, caregiving spouses often show a higher level of distress than other relatives (Pinquart and Sorensen, 2003; Schulz, et al., 1995, 2004); therefore, if significantly more spouses are included among dementia caregivers in comparison to non dementia caregivers, the former will show a higher level of distress that may be unrelated to the patient’s dementia status. The reverse — with consequent results — is also possible. In the same way, evidence exists for the effect of caregiver gender and age, with female and older caregivers reporting higher levels of depression than, respectively, male and younger caregivers (Baumgarten, et al., 1992; Russo, et al., 1995). Care recipients’ characteristics may also play a role in this respect. To give an example, it was found (Miyamoto, et al., 2002) that caregivers of mobile demented patients report a greater burden than those of non mobile demented patients, thus suggesting that, when investigating differences between dementia and non dementia caregivers, patient functional status should be included in the model. Most previous research doesn’t seem to have paid enough attention to all these factors, which may explain why in some studies dementia caregivers reported greater strain than non dementia caregivers, while in others few (if any) differences emerged between the two groups.
On this background, we decided to further explore the comparative impact of dementia caregiving by using a three-step procedure of data analysis. We first developed a detailed description of the dyad caregiver-demented/non demented care recipient, to evaluate the extent to which the two chosen sub-samples were comparable. We then performed multivariate regression analyses, in order to determine whether patient dementia status significantly affected caregiver burden, stress and psychological well-being, once the effect of potentially confounding factors has been taken into account. Finally, by using a multivariate analysis of variance we sought support for a second hypothesis, namely that spouse caregivers would report worse consequences from caregiving than non spouse caregivers. This would bring further evidence for the particularly critical position of this group of carers.

2. Subjects and Methods

2.1 Sample

The overall sample was constituted by means of a random extraction from the lists of users of the ‘Scheduled Home Care’ (SHC) service provided in six National Health System districts of Central and North Eastern Italy (Ancona, Camerino, Fabriano, Senigallia, Bologna-Sud and Ferrara), which all granted ethical approval to the study. The SHC is a service targeted at patients who have been assessed by the local Health District’s Multidimensional Assessment Unit and officially classified as “unable to reach the doctor’s general practice”, so that the general practitioner is granted a supplementary allowance to visit them at home, up to four times per month. This criterion of SHC eligibility allowed therefore the inclusion in the overall sample — represented by 413 older people (mean age: 84.44 years; range: 65-105) and their primary family carers (mean age: 60.07 years; range: 20-87 years) — of only caregivers of older people presenting at least a moderate degree of functional disability.
In this article we focused on two subgroups of this general sample: dementia and non dementia dyads. We identified dementia dyads as those in which the care recipient both suffered from one of the following illnesses (identified by means of dichotomous ‘yes/no’ items in the care recipient’s questionnaire): Alzheimer disease, Parkinson disease, dementia or senile dementia and reported a severe impairment (i.e., highest cognitive disability) as scored by the Short Portable Mental Status Questionnaire (SPMSQ) (Pfeiffer, 1975). We considered as non dementia dyads only those in which no formal diagnosis of any of the above mentioned illnesses was reported, and in which the care recipient showed no impairment (intact cognitive abilities) at the SPMSQ. We adopted this classification of the dyads, which is more stringent than that used in other studies (e.g. Ory, et al., 1999), to avoid misclassification of patients with mild and moderate cognitive disability, who might actually be affected by dementia or pre-dementia despite the lack of a formal diagnosis (Galluzzi, et al., 2001; Honig and Mayeux, 2001; Ravaglia, et al., 2003), whose disclosure is by many carers often not wished (Corner and Bond, 2004; Fahy, et al., 2003). By means of this procedure, we obtained two clearly distinct groups of dyads, to better show possible differences between dementia and non dementia caregivers. Moreover, since 22 care recipients attended a local Alzheimer day care centre on a more or less regular basis, we decided to exclude them and their caregivers from our analyses, in order to avoid possible bias due to the potentially positive effect due to the support received by using such service. This left data available for 84 non dementia dyads and 53 dementia dyads.

2.2 Methods and Statistical Analysis

Questionnaires: data have been collected by means of two semi-structured questionnaires, administered separated to the care recipient and to the caregiver by trained interviewers. Wherever possible, data were collected in a single meeting with the members of the dyad, during which the care recipient and caregiver were successively interviewed. In many cases, the caregiver attended the care recipient interview and, if appropriate, gave her/his support whenever the latter was not able to respond personally.
Care recipient questionnaire:
• In addition to basic socio-demographic measures, a module of 17 items from the EASY-Care questionnaire (Philp, 2000; Richardson, 2001) assessing patient functional disability was included. These items concern the ability to carry out activities of daily living (ADL) and instrumental activities of daily living (IADL), assigning a score to each response according to the relative weight of the explored activity in determining the overall functional disability. A total score of disability is obtained, which ranges from 0 to 100, with higher scores indicating higher functional disability. Cronbach’s alpha for this scale was .89 in the present study.
Patient cognitive impairment was measured by administering the Short Portable Mental Status Questionnaire (Pfeiffer, 1975). We chose this tool because of its brevity (which prevented a possible drop out by the least cognitively fit), for it can be correctly administered by persons without formal neurological training (Welch and West, 1999), and because its scores are less easily affected by education, age and social class than for instance the Mini Mental Status Examination (MMSE), even though the MMSE has better sensitivity and specificity (McKenzie, et al., 1996; Yeh and Liu, 2003). The SPSMQ is made up by ten items assessing patient orientation and general/personal information. Its total score is determined by counting the number of errors made by the patient (with scoring taking into account the patient’s educational level), and this is used to distinguish between four categories of cognitive functioning: intact, mild impairment, moderate impairment and severe impairment. Cronbach’s alpha for this tool was .93 in this study.
In addition, a measure of patient chronic conditions was used as an indicator of care recipient health status. This was accomplished by administering a checklist of 20 of the most relevant chronic pathologies reportedly diagnosed in the Italian population (heart diseases, diabetes, cancer, arthritis etc.), for each of which a ‘yes/no’ response was requested. The illnesses reported by the patient were added up in a new variable indicating the total number of chronic conditions affecting the patient. Alzheimer disease, dementia and senile dementia were excluded from the computation, since these were employed as inclusion criteria for the categorization dementia/non dementia dyads. On the other hand, Parkinson’s disease was included in the computation, since not all of the patients affected by this disease are dementia patients.
• Caregiver questionnaire:
Caregiving circumstances. In addition to standard socio-demographic characteristics, the caregiver was asked about his/her relationship to the cared-for relative, and his/her place of residence in relation to the cared-for. Caregiving involvement was estimated in terms of duration (‘How long have you been caring for your relative?’) and of intensity (‘How many hours per week do you dedicate to the different caregiving activities?’). An indication of the social support available to the caregiver was also obtained, by asking him/her the following question: ‘How many persons may you rely upon, in case of necessity (please indicate up to a maximum of ten)?’. The total number of persons indicated by the caregiver was the measure of social support used in this study.
Health condition. Caregiver health status was estimated by asking the ‘yes/no’ question: ‘Are you currently suffering from any particular illness?’. The total number of illnesses the caregiver was currently affected by was used as a health indicator, which was integrated by items indicating whether the caregiver had been hospitalised in the last year (‘yes/no’), as well as the total number of medications currently used by him/her. Two further questions explored caregiver smoking and drinking habits, while a final, summarising item asked: ‘On the whole, how do you judge your current health condition?’ (1 = very good; 5 = very bad). This last question may be a powerful predictor of patient health, since self-reported health questions have been found to predict morbidity and mortality even better than physicians’ ratings (Ferraro, et al., 1999; Spiers et al., 2003).
Caregiver Burden. The caregiver was administered the Montgomery Burden Inventories, which investigate the two constructs of objective and subjective burden (Montgomery et al., 1985). We used seven items from the objective burden subscale, to explore how the caregiving activity has influenced seven different spheres of caregiver personal life (time to oneself, privacy, personal freedom, etc.). Responses for this tool are given on a five-point scale (-2 = improved a lot, +2 = worsened a lot, in this study). A Cronbach’s alpha of .81 was obtained here. With regard to the subjective burden measure, we used 11 items assessing how often the caregiver experiences particular feelings (usefulness, depression, guilt, etc.) in the relationship with the assisted relative. Responses are given on a five-point scale (1 = almost always, 5 = rarely or never). Cronbach’s alpha was .58 for this tool.
Stress. Caregiver stress was measured by the Relative’s Stress Scale (Greene, et al., 1982), which consists of fifteen items assessing the amount of stress and upset experienced by family caregivers of elderly relatives. Responses to items are given on a five-point scale (0 = not at all, 4 = considerably). Cronbach’s alpha was .88 for this instrument.
Anxiety. The Zung Self-rating Anxiety Scale (Zung, 1971) was used to obtain a measure of caregiver anxiety. This scale is made of twenty items and responses are given on a four-point scale (1 = none or a little, 4 = most or all of the time, for 15 items; the reverse for the others). Cronbach’s alpha was .86 in the present study.
Depression. The Zung Self-rating Depression Scale (Zung, 1965) was used to measure caregiver depression. Twenty items make up this psychometric tool and responses are given on a four-point scale (1 = rarely, 4 = almost always, for 10 items; the reverse for the others). In this study, a Cronbach’s alpha of .85 was obtained for this measure.

Caring for a Family Member with Dementia: Evidence from a Cross Sectional Comparative Study on Caregiver Burden and Psychological Well-being: This study is based on data collected for a project co-funded by the Italian National Research Council (CNR grants n. 96.01583.CT10, 97.01296.CT10 and 98.01504.CT10) and the European Union (contract n. BMH4-98-3374).

Cristian Balducci: Department of Cognitive Science and Education, University of Trento, Via Matteo del Ben, 5, I-38068 Rovereto (TN), Italy, cristian.balducci_1@unitn.it.
Maria Gabriella Melchiorre: Corresponding author: Maria Gabriella Melchiorre, Department of Gerontological Research, I.N.R.C.A. (Italian National Research Centre on Aging: www.inrca.it), Via S. Margherita 5, 60124 Ancona, Italy, Tel: +39-071-8004887; Fax: +39-071-35941; e-mail: g.melchiorre@inrca.it.
Sabrina Quattrini, Giovanni Lamura: Department of Gerontological Research, I.N.R.C.A. (Italian National Research Centre on Aging: www.inrca.it) Via S. Margherita 5, 60124 Ancona (AN) – Italy.

Ageing in Slovenia and Sustainability

Aleksander Zidanšek — Thu, 21 Feb 2008 10:28:28 +0000

Abstract

According to the Statistical Office of the Republic of Slovenia there were 2,019,406 people living in Slovenia at the end of June 2007. In the first half of 2007 the population of Slovenia grew by 0.4%. The population had been slowly increasing since the census of 1991 at an annual rate of about 0.2%. In 2005 this rate increased to close to 0.3% and in 2006 to close to 0.4%.
The rapid increase in population in 2007 is thus a continuation of the trend that started in 2005. While most of this increase is attributed to foreigners with temporary residence, the number of newborn babies has also been increasing steadily since 2003, when it reached its lowest number in its history since Slovenia’s independence — 17,160. The estimate for 2007 is about 19,900 newborn babies. Nevertheless the long term predictions are not so good, as the number of females between 25 and 35 is expected to decrease in about ten years, so the number of births is also expected to decrease in that time. These expectations are in agreement with a recent study on ageing population in Eastern Europe and the former Soviet Union, which anticipates Slovenia becoming the oldest country in this region, in the percentage of population above 65 and in the percentage of population below 14 and the average age. While in June 2007 the average age has grown to 41.0, it is expected to grow further to over 48 by 2025. Some predictions related to this demographic transition will be discussed.

1. Introduction

A recent World Bank study1 on the Third Transition of Ageing populations in Eastern Europe and the former Soviet Union showed that apart from Macedonia the population in all the countries without a majority Muslim population is expected to decrease, and in the countries with a Muslim majority the population will increase by 2025 (Figure 1). In most countries the increase in average age will be even more dramatic than the decrease in population (Figure 2). Since these countries were experiencing a communist government less than 20 years ago, the authors of the World Bank study call this demographic transition ‘from red to gray’¹. Thus a comparatively short time after a relatively painful transition from a planned economy to a market economy the observed countries are expecting another potentially painful transition to an old society with a quarter of the population over 65 years old within about two decades. Ono and Maeda² analyzed the effects of population ageing on economic growth and the environment in a two-period overlapping generations model of growth, ageing, and the environment. They showed that ageing may be beneficial to economic growth and the environment under perfect annuitisation, while possibly harmful under imperfect annuitisation².
In the following chapters we analyze the consequences of this ageing red to gray transition in Slovenia on various aspects of sustainability.

2. Economic Consequences of the Red to Gray Transition

Since independence in 1991 and after the initial economic shock the GDP in Slovenia has been steadily increasing with rates moving between 2.5% and 5.5%. In 2007 the economic growth was the fastest in Slovenia’s history with 6.5% in the first nine months of 2007 (Figure 1).
While the population transition to gray started in the early 1980’s with about a 40% decrease in the annual number of births from about 30,000 to about 18,000³, the largest number of annual births was in 1902 with about one half of today’s population and about 45,000 annual births. The number of births fell to 17,321 in 2003 and has started to increase slowly since 2003, however it is expected to decrease again after 20153. This means that the number of births is well below the simple reproduction level, and immigration is needed to maintain the workforce necessary for economic development. Nevertheless in the long term the GDP growth is expected to decrease because of this population ageing until about 2030⁴.

Figure 1: GDP growth in Slovenia between 1995 and 2007. The last point for 2007 is the estimate from period January — September 2007

Aleksander Zidanšek: J. Stefan Institute, Ljubljana, Slovenia and Jožef Stefan International Postgraduate School, Ljubljana, Slovenia, e-mail: aleksander.zidansek@ijs.si
1 Chawla, M., Betcherman, G., Banerji, A., Bakilana, A.M., Feher, C., Mertaugh, M., Sanchez Puerta, M.L., Schwartz, A.M., Sondergaard, L. and Burns, A. (2007): From Red to Gray: Third Transition of Aging populations in Eastern Europe and the former Soviet Union, The World Bank.
2 T. Ono and Y. Maeda (2002): “Sustainable Development in an Aging Economy”, Environment and Development Economics, 7, p. 9-22.
3 Statistical Office of the Republic of Slovenia, accessed on January 13, 2008. See also: www.stat.si/.
4 Verbič, M., Majcen, B. and van Nieuwkoop, R. (2005): “Sustainability of the Slovenian Pension System”, Working Paper, No. 29, Institute of Economic Research, see also: www.ier.si/files/Working%20paper-29.pdf

Changes in European Welfare: New Forms of Citizenship in Europe

Bjørn Hvinden and Håkan Johansson — Thu, 21 Feb 2008 10:13:14 +0000

1. Introduction

In this paper we ask what consequences on-going changes in European welfare states have for social citizenship. These changes include greater economic openness and scope for cross-border mobility, shift in governments’ role from redistribution to social regulation of markets, neoliberalism and individualisation, the growing significance of human rights and anti-discrimination and new transnational channels for citizens’ participation.
After a review of these changes in contemporary welfare states we will outline an analytical framework to capture the implications of these changes for social citizenship. We expect shifts in the relative weight of different dimensions of citizens’ relations to the welfare state, as well as new hybrid forms of citizenship. Finally, we will illustrate these implications on the basis of a comparative study of citizenship in a number of European countries and within the European Union. Many of the implications can be summarised as a move toward active citizenship.

2. Challenges to Contemporary Welfare States

Many observers believe that the ‘stateness’ of contemporary welfare states is challenged ‘from above’, whether ‘above’ is called globalization, Europeanization or denationalization. They believe that this condition limits the de facto sovereignty of national governments, requires stricter budgetary discipline and new regulative measures, narrows the range of legitimate policy options and instruments at the state level, and shifts the balance between politics, markets and international courts as sources of material advantage, security and protection against risks.
But, arguably, national welfare states also face pressures ‘from below’. Citizens are challenging long-established bureaucratic or paternalistic modes of administration, rigidity and inflexibility — as well as the arbitrary exercise of discretionary powers. People have become more knowledgeable, self-confident and conscious of their rights when dealing with front-line agency staff and professional helpers. They expect to have the option of influencing decisions relating to their own welfare, whether these options are expressed through co-determination, user involvement, informed consent, group consultation or freedom of choice. The emerging regime of international human rights, along with the more particular development of institutions in the European context, gives more force and legitimacy to these expectations.
The outcome of these processes is complex and sometimes paradoxical changes in the relations between state and citizens. Citizens are expected (and themselves expect) to play more active roles in handling risks and promoting their own welfare. In some respects the move towards active citizenship corresponds to a more active role for the state; in other respects, it involves a more passive role for the state. Increasingly limitations of the scope for encompassing and redistributive welfare states (like the Nordic ones) leave more to the agency of citizens. Individual responsibility for achieving self-sufficiency, protection against risks, and the active use of available opportunities in the market becomes more important.

3. Economic Openness and Europeanization

With a more open and globalized world market, stronger competitive pressures, and economic integration in Europe, national governments have the impetus to take steps to prevent further growth or even reduce public spending. Many argue that ‘large’ encompassing and redistributive welfare states in particular have become too expensive — and therefore unsustainable — in a more competitive world, including the emerging single European market. Governments attempt to reduce costs and increase the effectiveness of existing public services, in combination with changing labour market conditions. Even in countries where public authorities have for a long time been the main provider of services, governments attempt to leave more to markets and private providers (e.g. by putting services out to open tender) and to encourage citizens to take greater individual responsibility for social risk protection (e.g. by offering partial tax exemption for personal pension plans).
With regard to these processes, scholars like Majone have argued that we will see a gradual shift of emphasis from redistributive welfare provision to promoting welfare objectives through ‘social regulation’ (Majone, 1993). Social regulation involves public efforts to influence the behaviour of non-governmental players, especially players operating in the market, in order to promote the realization of social objectives. Generally speaking, social regulation has the potential to strenghten citizens’ scope for exercising active citizenship through their participation in the market as workers and consumers.
Examples of social regulation include non-discrimination legislation and the setting of what the European Union defines as binding standards for universal design, meant to promote participation and equal opportunities for people with impairments (disabilities). Such regulative measures help to correct market imperfections or the undesirable consequences of unrestricted market competition, even if the need for correcting market failures is not necessarily the main impetus for introducing these measures (Majone, 2005). Compared with the introduction of new tax-financed redistributive provisions, social regulation is more compatible with an opening and liberalization of international markets (Hvinden, 2004). The existence of observable significant weakening of the redistributive effects of national welfare schemes or of increased inequalities after taxes and social transfers resulting from European integration is a complex issue that falls outside the scope of this paper.
In the on-going Europeanization process, the European Court of Justice (ECJ) has become an important player. The ECJ has taken on an active role in clarifying and eliminating the implications of common EU regulations for social policies (Leibfried 2005; Pollack 2003). The ECJ has made many decisions (under the single-market regulations) that have had substantial impact. For instance it has effectively extended EU citizens’ rights to have the authorities in their own country reimburse the costs of medical treatment in other member states (Ferrera, 2005; de Burca, 2005).
The European Commission is another significant player within the field of European welfare policy, as it has the authority to propose new European legislation. The Amsterdam Treaty of 1997 gave the European Union power to combat discrimination on a number of different grounds and the Commission later proposed two related directives in 2000, complementing earlier EU legislation against gender discrimination. The first directive implements the principle of equal treatment between persons irrespective of racial and ethnic origin (Council Directive, 2000/43/EC). The second directive establishes a general framework for equal treatment in employment and occupation, covering discrimination on the grounds of religion or belief, disability, age or sexual orientation (Council Directive, 2000/78/EC). Member states are introducing laws — new or amended — and administrative provisions necessary to comply with these directives. The Commission supervises and monitors this ‘transposition’ of the two EU directives.
The Commission also has the power to initiate joint action programmes in the social field (EU, 1997). An ambition of several of these programmes has been to achieve greater similarity or convergence in the objectives of the social protection of member states, through what is now known as ‘the open method of coordination’. Although member states should agree on overall joint objectives, especially regarding the future direction of their schemes, they are free to choose the means necessary for accomplishing these objectives. The European Union has for instance developed programmes based on the open method of coordination in the areas of employment, pensions and social inclusion.
Following earlier initiatives from the OECD, the employment and inclusion programmes of the EU have emphasized the need to shift from ‘passive’ to ‘active’ policies. the primary goal of social protection schemes should be to promote labour market participation among people of working age. Only for those who cannot work at all should the main objective be to provide adequate and secure income support. A key goal is to make social protection schemes more ‘employment-friendly’, including to ‘make work pay’ and to ensure that the conditions, level and duration of benefits do not create disincentives to work. Similarly, the EU and the OECD declare that national governments should improve the ‘employability’ (skills, knowledge, etc.) of those who are at risk of becoming permanently excluded from economic activity and self-sufficiency. Likewise, governments should make continued payment of benefits for people of working age conditional on their accepting offers to take part in employment training measures, training courses, etc. Thus various forms of ‘activation’ of protection schemes, as well as of recipients of cash benefits or of citizens out of paid work should play a key role. As we will see, reforms of this kind are highly relevant for what we call active citizenship according to a socio-liberal understanding (Chs 4, 5 and 6).
In the case of old age pensions, achieving ‘sustainability’ means ensuring that the working population will not face disproportionate and unrealistic financial burdens resulting from the design of ‘pay as you go systems’, combined with populations ageing and insufficient economic growth. One way or the other, people must downscale their expectations of the level of their future pension, whilst shouldering a greater individual responsibility for securing the purchase power of the pension.
Many researchers see the aspects of EU economic integration, legislation and action programmes that we touch upon here as exemplifying new constraints on national governments’ freedom to design and change their systems of welfare provisions as they would like (e.g. Leibfried, 2005; Ferrera, 2005). Yet we do not wish to overstate the degree to which ‘Europeanization’ has diminished the decision-making capacity of member states (Cowles, et al., 2001; Olsen 2002). Moreover, ‘social issues’ or ‘social policy’ are still marginal within the common policy-making of the European Union and secondary to the complete establishment of a single (and now enlarged) European market. The focus of the European Union’s involvement in the ‘social dimension’ has mainly been to ensure that national schemes of social protection do not impede the free movement of goods, services, capital and labour within the single market. Member states have been reluctant to give up control over their redistributive schemes like social security, employment, health and social services and have referred to the subsidiarity principle of the Maastricht Treaty. At the same time, several scholars have suggested that decision-makers at national level have not fully realized the consequences of the greater economic openness resulting from European integration (Leibfried 2005; Ferrera 2005).

Changes in European Welfare: New Forms of Citizenship in Europe: The paper builds on the project “Active citizenship and marginality in a European context” (p. no. 149819/599), funded by the Welfare State Research Programme of the Nordic Council of Ministers, 2002-2005. We give a more detailed presentation of the results in the book Citizenship in the Nordic Countries: Dynamics of Choice, Duties and Participation in a Changing Europe, Routledge 2007.
Dr. Bjørn Hvinden: Head of Research, Professor, NOVA Norwegian Social Research, P O Box 3223 Elisenberg, bjorn.hvinden@nova.no
Dr. Håkan Johansson: School of Health Sciences and Social Work, Växjö University, 351 95 Växjö, Sweden, Hakan.Johansson@vxu.se

Active Ageing and Pension Policies in the Context of the European Employment Strategy

Martin Hutsebaut — Thu, 21 Feb 2008 09:32:54 +0000

1. Introduction

Europe is ageing and the european workforce is ageing too. Between 1950 and 2000 the percentage of people over 65 years of age in the EU25 increased from 9.1% to 15.7%. By 2025 this group will represent 22.7% of the entire population. Between 2010 and 2030 in the EU25 the EC expects a drop in the number of (Source: Demographic Green Paper of the EC of 2005):
• children (0-14): by 8.9%
• young people (15-24): by 12.3%
• young adults (25-39): by 16%
• adults (40-54): by 10%
and an increase in the number of
• older workers (55-64): by 15.5%
• elderly people (65-79): by 37.4%

The Reasons for these demographic shifts are known:
1. continuing low birth rates.
according to the Demographic Green Paper of the EC of 2005 the low fertility rate in the EU is the result of: late access to employment, job instability, expensive housing and lack of incentives (family benefits, parental leave, child care, equal pay).
2. Continuing increase in longevity.
important gains in life expectancy have been realised in the EU between 1960 and 2002: life expectancy for males at the age of 60 increased from around 16 to around 19 years; for females from around 18 to around 24 years. The most recent Eurostat projections see life expectancy in the EU25 at 65 to increase by another four years from 2004 to 2050 (4.4 years for men and 3.9 years for women).

Table 1: Evolution of life expectancy at birth in some EU-countries

Source: Eurostat.

While these demographic shifts were taking place, we noted a fall in the average effective retirement age in the EU in the 1970s and 1980s, a trend which ran contrary to the significant rise in life expectancy for the same period.
This drop in effective retirement age was mainly due to the development of pre- and early retirement systems in an effort to combat youth unemployment — a strategy that did not subsequently prove effective. In this way the number of contribution years decreased while the number of years in receipt of pension benefits was growing. This of course created a huge pressure on the pension systems and made reforms unavoidable.

Table 2: Average exit age from the labour force

Source: Eurostat, European Commission, OECD — * 2004.

Table 3: Average exit age from the labour force

Source: AXA.

Table 4: Support Ratio: number of contributors relative to the number of pensioners in public pension schemes

(click to enlarge)
Source: E.C., European Economy, Special Report n° 1/2006, The impact of ageing on public expenditure. Projections for EU-25 Member States on pensions and health care.

The ETUC believes that the challenges resulting from these demographic changes must be taken seriously because they could cause a dramatic fall in annual economic growth rates in Europe from 2 — 2.25% today to 1.25% in 2040. This reduction in economic growth could affect the sustainability of our social systems in general and of the pension and health systems in particular. Since the 1990s EU governments have followed a two-track approach: reforms of the pension systems went hand-in-hand with policies intended to push up the employment rates of older workers (55-64 years). These two policy fields are strongly interlinked.
The Lisbon Strategy, based on four pillars — growth, employment, social cohesion and sustainable development —, is highly relevant and extremely useful in the discussion on demographic change because it gives responses to these challenges.

Martin Hutsebaut: Secretary to the Directors’ Committee of the ETUI-REHS, Brussels.

Company Measures for Retention and Reintegration of Workers at Risk of Exclusion: European Experience with Older Workers

Jorma Karppinen — Wed, 20 Feb 2008 17:30:55 +0000

1. Introduction

Over the years, the European Foundation has conducted extensive research on workers at risk of exclusion. The reasons for exclusion are manifold, among them are most prominent:
• Low skill levels,
• Poor health,
• Disability,
• Age,
• Gender,
• Working conditions,
• Employment contract,
• Being migrant workers.

Very many of these workers at risk of exclusion do, however, want to find, remain in or return to employment. In many countries exclusion is not found only in ‘unemployment’ but in other forms of ‘inactivity’. Currently people with disability or long-term health problems are a particularly important group.
Poor health and disability increase the likelihood of both unemployment and early retirement: according to figures from the Labour Force Survey of 2002, 52% of people with disabilities are economically inactive compared with 28% of non-disabled people. A majority of workers with a disability have developed this during the course of their working life. As many of these disabilities are not visible, public awareness of this phenomenon is not very strong.

2. Policy Initiatives

But, there are, at different levels, policy initiatives which try to redress the situation. The following highlights some of the measures taken at the level of the European Union:
• 2002 — Joint Report on Labour Force Participation and Active Ageing.
• 2003 — Resolution of the Council on promoting employment of people with disabilities.
• 2004 — Joint Report on Social Inclusion.
• 2005 — Report on the contribution of health to the economy of the EU.
• 2005 — Disabled people: European Action Plan 2006-2007.
• 2005 — Green Paper on Promoting Mental Health.

Additionally, the European Foundation, as a policy advice body, has conducted its own research in this field, resulting in documentation of good practice, real-life examples from companies across the EU. Based on these, but also taking into account the accumulated knowledge of other reliable sources which have documented practices inside and outside of companies, a disability management model has been developed, based on these main pillars:
• Promoting employee health to create a healthy working environment.
• Managing identified risks through proactive responses to emerging conditions.
• Intervening early when an employee suffers an injury.
• Case managing or coordinating return to work for long-term absent employees.
The main thrust of these measures is trying to stem exclusion from work as a result of illness, injury or impairment. This process can be graphically illustrated as in Figure 1.

Figure 1

The main purpose of this wide range of initiatives and services both inside and outside the workplace lies in contributing to:
• access to,
• reintegration into
• retention of
employment by people with illness or disability.

The aim of such initiatives would be to:
• promote active rather than only administrative responses;
• develop awareness of the issue and an explicit ‘disability management’ focus;
• enhance coordination between services, and between services and the workplace;
• provide incentives for workers and employers to promote insertion and retention.
One of the main reasons why the concern about the ageing workforce has moved even higher on the European social policy agenda is its direct implication for employment, pensions, productivity and equal opportunities:
• From just another vulnerable group to core resource for mobilisation — these are key elements of economic and social strategy.
• From external phenomenon to integrated element in comprehensive EU policies, e.g. anti-discrimination policies and legislative efforts.
• From primary focus on tax/benefit structures to practices of age management in workplaces and labour markets.
This development has been going on for a fairly long period, some key steps having been:
• 1994 Essen Council conclusions first mentioned ‘older workers’ as a high risk group for exclusion from employment.
• EU Directive against discrimination in employment is being implemented, albeit slowly; there is also, as yet, relatively little experience in companies.
• Concerted EU-attempts, emphasising the joint role of companies and the social partners in fostering working conditions conducive to job retention in order to arrive at an approach that could be called ‘active ageing’ policy.
• Further, finance and other ministers in EU Member states have become aware of the implications for pensions and health care costs — and also for employment.

Jorma Karppinen: Director, European Foundation for the Improvement of Living and Working Conditions, Dublin.

Pension Reforms in EU Member States: progress and Challenges

Ruth Paserman — Wed, 20 Feb 2008 16:33:17 +0000

1. Introduction: The Pension Challenge

Pension systems are one of the great achievements of the welfare States in Europe in the last century and remain a key element of our social model(s) also in this century. The fact that poverty is no longer the status quo for people who stop working and that many are able to maintain their standard of living after retirement are key achievements of social protection policies.
Public provision plays a central role in national pension systems, which are very diverse among the EU27, highlighting that there is no one-size-fits-all solution. While the basic goals of access, adequacy and financial sustainability are universal to all systems, there is a considerable degree of variation in design at the national level, notably as a result of historical differences regarding preferences for redistribution or individual choice.
The dominant proportion of total pension provision in almost all EU27 Member States is organised within the general government sector. Pension systems in Europe are generally built on a general statutory social security scheme, functioning on an unfunded basis (pay-as-you-go — payg — where current resources are providing the funds for paying out current benefits).
Benefits provided by those schemes are the major share of pension income for older people. The financing can be based on social security contributions (like for instance in DE, FR, ES or IT) or alternatively on taxes from the general budget (like in DK). Those schemes can nevertheless be designed in various ways, depending notably on the earnings — benefit link, for instance including flat-rate universal benefits (like in NL) or notionally defined contributions schemes where benefits are strongly related to former incomes (like in SE).
These schemes include (or are complemented by) minimum benefits for those who did not accrue sufficient pension rights. These schemes are also often complemented by funded schemes, be they statutory, occupational or voluntary: the first two categories include funded tiers of statutory schemes and all occupational schemes (where membership has a direct link to employment, be they mandatory or voluntary), while the third category includes individual schemes (voluntary where membership does not have a direct link to employment).
In spite of differences, one can depict the European general pension provision within four main clusters:
• Earnings related payg pensions, marginally complemented by occupational or voluntary pensions (notably PT, CY, CZ, MT, EL, ES, FR, LU, AT, SI, FI, RO). A number of Member States are also building reserves for their unfunded schemes (notably FI, but also BE, ES, FR or IE);
• Earnings related payg pensions increasingly complemented by statutory funded pensions (PL, HU, EE, LT, LV, SK, BG, and SE);
• Mainly flat rate public payg pensions traditionally complemented (sometimes increasingly) by funded occupational pensions (notably IE, UK, NL, DK);
• Earnings related payg pensions complemented (traditionally and sometimes increasingly) by occupational or voluntary pensions (notably BE, IT, DE, SE).
In essence the pension challenge lies in the growing gap between two decisive parameters for any pension system: life expectancy and retirement age. The former increases continuously and the latter has declined. While it was normal to retire well after the age of 60 during the 1960’s, employment of older workers declined in the 1970s and 1980s in many countries. Despite recent increases, average ages of leaving the labour market remain well below the levels of the late 1960s (Figure 1).

Figure 1: Activity rates by gender in the EU 1970 and 2005

Source: Employment in Europe (2007), forthcoming.

The decline in average effective retirement age (accompanied by an increase in the age of entering the labour market) runs contrary to the substantial increase in life expectancy during the same period. Life expectancy at 60 for EU25 has increased by about 4 years from 1960 to 2000. The most recent Eurostat projections see life expectancy in the EU25 at 65 increasing by a little more than another four years from 2004 to 2050.
In most Member States, people are now used to retiring at the average age of 60 after having started to work at around 20. In 2004, the related dependency ratio (population over 60, as a percentage of population in the 20-60 age brackets) amounted to a bit less than 40%. According to demographic projections, this ratio would increase in 2025 to almost 60% and in 2050 to 80%. To illustrate this one can notice that in 2025, the ratio of 65+ compared to 15-64 would be around 40%, but one would need to raise the age ceiling to 70 in 2050 to maintain this ratio.
The ageing challenge is common to all pension systems as all pension systems need to compensate for the decline in employment of older workers and the continuous increase in life expectancy. Pay as you go systems are directly affected by an ageing population as their future contribution base is shrinking while the number of beneficiaries is increasing. Hence, if people retire at the same age, they will benefit from a pension for a longer period. This will need to be financed by future active populations or benefits would necessarily be lower. Funded systems may be safe in terms of contribution base, but the increase in life expectancy also implies some imbalance: if contributions are not increased and/or people do retire later, benefits would be lower. In the absence of reform, defined benefit (DB) systems would be unable to maintain their promises, while defined contribution (DC) systems would result in benefit levels well below what was foreseen when people paid in. In general, potential effects of ageing and a shift in the balance between active population and retired people on rates of returns and productivity affect both systems as well. Rates of returns affect future benefits in funded systems, while productivity affects contribution levels in unfunded systems.

2. The Open Method of Coordination in the Field of Pensions in the Context of the Lisbon Strategy

Pension reforms require long-term strategies. The process of reform itself is lengthy as pensions reforms are usually built on broad consensus as they are a fundamental part of our social protection systems and of social cohesion. Furthermore, States dedicate significant amounts of public expenditure to old age provision, which in light of demographic trends is set to grow significantly. Therefore reforms of pension systems should be seen both in the context of ensuring adequate and sustainable retirement provision, and in the context of sustainable public finances as a whole and sustainable growth across the EU.
The Laeken European Council of December 2001 recognised that there could be significant benefits by enhancing dialogue and co-operation on issues related to the reform of pension systems. It endorsed common objectives of adequacy, financial sustainability, adaptability, and a working method based on the open method of co-ordination (hereafter OMC).
The basic structure of this coordination process is as follows: Member States and the European Commission have agreed to work within the open method of coordination on social inclusion and social protection. The open method of coordination works through the common setting of objectives by the European Commission and the Council of Ministers, the reporting by the Member States on the basis of these objectives, and the Commission synthesising the findings in a report which is subsequently endorsed by the Council. Then, at the EU level, overall progress, challenges and arising areas of future concern are reported on, as are the type of action to be taken.

Common objectives for pensions
The common objectives of the OMC in the field of pensions are to provide adequate and sustainable pensions by ensuring: (g) adequate retirement incomes for all and access to pensions which allow people to maintain, to a reasonable degree, their living standard after retirement, in the spirit of solidarity and fairness between and within generations; (h) the financial sustainability of public and private pension schemes, bearing in mind pressures on public finances and the ageing of populations, and in the context of the three-pronged strategy for tackling the budgetary implications of ageing, notably by: supporting longer working lives and active ageing; by balancing contributions and benefits in an appropriate and socially fair manner; and by promoting the affordability and the security of funded and private schemes; (i) that pension systems are transparent, well adapted to the needs and aspirations of women and men and the requirements of modern societies, demographic ageing and structural change; that people receive the information they need to plan their retirement and that reforms are conducted on the basis of the broadest possible consensus.

There is agreement that the key objectives of pension reforms, adequacy, financial sustainability and adaptation of systems go together: pension systems should provide adequate retirement incomes in a financially sustainable way while adapting to societal and economic change. Member States presented a first round of National Strategy Reports in 2002 and a second in 2005. These have been synthesised in 2006 by the Commission in the Joint Report on Social Protection and Social Inclusion, endorsed by the European Council and by the Commission Services Paper, ‘Synthesis Report on Adequate and Sustainable Pensions’ and its annexes (country summaries and horizontal analysis).
The Synthesis Report noted that Member States had made substantial reforms in recent years, partly to address key sustainability issues presented by ageing populations, but also to ensure that reforms provided adequate pensions for all citizens. The report also confirmed that the reform of pension systems cannot be conducted within a vacuum and must be considered alongside labour market reforms and overall public spending plans.
The Synthesis Report identified a number of key issues requiring careful monitoring:
• A key challenge is to promote more and longer working (in particular the mobilisation of previously less active members within paid work, such as women and older workers).
• There is a need to promote adjustment of systems for the management of changes in life expectancy and the introduction of a life-cycle approach in their design.
• Pension systems should modernise and take better account of the changing and more flexible nature of careers (reflecting the role of carers, periods of training and education and job mobility).
• There is a need to ensure future adequate minimum pension provisions, which will probably gain in importance notably as regards indexation rules and possible disincentives to work or save.
• A fifth key issue is the financial sustainability of public pensions systems and monitoring of the effect on government budgets (including the impact private pension systems may have on public finances).
• The evolution and development of occupational and private funded pensions was also emphasised reflecting Member States’ efforts to reform existing structures, or develop funded provisions for the first time.
• It is important to enhance transparency and to promote better education and understanding of pension issues among the public.
• Regular review and adjustment mechanisms are important innovations not only for adapting systems over time but also to promote a better understanding of the need for reform in the face of demographic challenges.
In 2006 and 2007 the OMC concentrated on deepening knowledge and policy exchange on issues highlighted by the Synthesis report. The following sections summarises work on incentives for working longer, minimum income for pensioners and private pension provision.

Pension Reforms in EU Member States: progress and Challenges: The findings and conclusions expressed are solely those of the author and do not represent the views of the European Commission.
Ruth Paserman: European Commission, Directorate General for Employment, Social Affairs and Equal Opportunities

Comments on Working Longer: Comprehensiveness, Timeliness and Gradualness of Reforms

Paolo Sestito — Wed, 20 Feb 2008 16:16:26 +0000

Working longer is an essential ingredient of the adaptation of our societies to the challenges posed by increased longevity. Working longer as a response to living longer trends is both feasible and optimal. This is because to a large extent the increase in longevity has also implied a postponement, over the life cycle, of many health impediments. Moreover, preventing those defects over the life cycle is potentially much more fruitful than reacting to them through early retirement policies or the provision of disability allowances.
So, increasing the time span of the working life — vis-à-vis the increase in the overall life span — allows as to increase the resources available during retirement. The alternatives to this would be rather pauperistic, as one would have to either reduce the yearly income flows during a (lengthened) retirement period or put aside a larger amount of yearly resources during the working life. The nature of the pension system — a pay-as-you-go system financed by ad hoc labour income taxes or a system based upon the financial returns upon invested funds, a defined contribution system or a benefit defined system — does not change the intrinsic logic of what has just been said. So, whatever the details of the pension system, engineering a working longer response is a key ingredient of any sensible policy response to the demographic trends of the forthcoming decades.
While a quite natural and obvious response — actually working longer would tend to be the response, vis-à-vis a scenario of enhanced longevity, which would be selected by a hypothetical Robinson Crusoe making his life plans knowing from the outset that his life expectancy is longer than that of his predecessors — accomplishing such a working longer response is not so easy in the real world. To a large extent this is due to the need to engineer comprehensive, timely and yet gradual changes over many social and economic dimensions. The presence of traditional and institutionally determined rules and habits may lead to difficulties as changing those rules may not be easy — as many individuals will have made their own life plans on the basis of those rules. So, adapting the rules to a changing world, one in which a longer life may be enjoyed, is a difficult task, as rules needs to be well enshrined, in order to ease people’s lives and plans, and flexible enough in order to take account of the evolving circumstances.
As just said the changes need to be comprehensive as many different aspects of our lives have to be considered. The rules concerning retirement decisions, and those relevant to the amount of the pension incomes enjoyable when retired, are not the only relevant aspects. In the following I will briefly touch upon them but also on the broader changes needed in the functioning of the labour market in order to prevent the elderly, while physically able to work (and here there may also be the need to take preventive steps in order to avoid a deterioration of the health conditions over the life cycle), from being at a disadvantage vis-à-vis their younger competitors in the labour market. The changes need to be timely, as in many cases preventive steps have to be taken: besides health conditions, the life long learning area is another example in which — because of the learning begets learning principle — only timely interventions may allow elderly workers to remain competitive in the labour market. Finally the changes need to be gradual as abrupt changes would not allow people to make their own decisions and adaptations. In what follows I will briefly touch upon some broad areas. I do not have the time to provide for a complete picture. So what is said here is not to be interpreted as an overall policy package plan. My intention is to touch upon some controversial issues widely discussed over recent years. The choice is partly due to what I know best. To some extent the intention is also to provide a vivid example of the comprehensiveness, timeliness and gradualness just advocated.
A first relevant area is that concerning the retirement rules, and the link between them and the rules governing the pension amounts granted by the first pillar pension schemes. As said, it would be incorrect to assume that either the retirement rules or the rules governing pension amounts (or both) are the only relevant factors which still induce people to retire too early. Nonetheless they surely matter a great deal (and here Italy is a good example, as it is clear that most of the increase in the average age at retirement experienced over the last decade is linked to the postponement of the minimum retirement age thresholds gradually imposed for the seniority pensions). The double challenge here is to allow for some flexibility in the retirement decision to be made by the individual while insuring that, over time, the decisions are responsive to the increased longevity trends. In principle, the 1995 reform provided for such a compromise, with its provision of an age window within which retirement was flexibly possible, the pension’s amount being positively tied to the postponement of actual retirement. The challenge would appear to be to fully adopt those principles envisaging a gradual and continuous over time raising of that age window. So one would keep the advantages of the presence of such an age window, adapting it to evolving demographic trends. Informing the individuals far enough in advance of such a raise would allow them (and firms as well) to adapt their behaviour in the labour as well as in the financial market. Unfortunately, the 1995 reform had postponed those principles too far into the future. indeed, while the 57-65 boundaries envisaged for that window were possibly reasonable values given the mid 1990s demographic picture, they are much less so given the demographic picture, expected for the forthcoming decades. Furthermore, the subsequent policy interventions made in 2004 and in 2007 were quite confused and to a large extent contradicted the age window principles.
All too often the flexible retirement principles — and the age window discussed above in line with which individuals may decide to postpone retirement so accumulating further pensions rights — have been assumed to imply an absence of redistribution in the pension first pillar schemes. On the other hand, such an absence of redistribution may often imply that workers accumulating too few pensions rights — because of their low skills and their reduced employment and earning chances — risk ending up with inadequate pensions. The risk envisaged by many observers is that, in the future, too many retired people may become poor (in absolute or at least in relative terms), or that massive transfers will have to be arranged, ex-post jeopardizing the financial stability of the system as political pressure would mobilize additional resources (the financial stability now forecast for the system in the future decades is actually based upon a politically unpalatable reduction in the average pension amount). To a large extent the way-out of these risks is again in engineering an extension of the working life along the lines advocated above. An additional reflection is that there is no reason at all to rule out the possibility of some redistribution even in a notionally defined contribution system (such as the one introduced in Italy by the 1995 reform and later on, and more coherently, by Sweden and other countries). Actually, in those systems the insertion of some redistributive components — provided they are framed in such a way that, on average, the link between future pensions’ rights and longevity (and macroeconomic) trends is maintained — might take account of the fact that low income individuals have on average a higher mortality risk.
A third remark concerning the first pillar pension scheme is that its transformation along the lines described above — towards a notional defined contribution nature with a moving over time retirement age window — would suggest the dismantling of the historic links between disability and old-age schemes. Such a separation — already made in countries like Sweden — does not imply that an ‘activation’ approach — so as to foster the labour market participation of disabled people — has to be neglected. Quite on the contrary, there is a risk that people impeded from retiring may be pushed towards the use of disability benefits (and countries like Sweden are a vivid example). The solution however is in fostering the correct labour market behaviour.
Activating elderly workers, after they may have been disenfranchised in the labour market, is however not enough. A preventive approach is often necessary, with respect to health conditions as well as to human capital and skills. A broader reflection on labour market functioning is needed.
A big issue concerns the link between the working longer approach and labour market flexibility. Quite often firms fear the working longer principle because of the presence of seniority pay regimes and because of the two tier labour market reforms of the last two decades, reforms which have eased the entrance into the labour market of low paid, flexible (and often temporarily engaged) youths. Here there is the need to adapt both workers’ and firms’ habits. A two tier market actually risks being the worst labour market environment for the elderly unemployed as firms may tend to prefer hiring youths while older people may find it extremely difficult to find new job opportunities once they have been dismissed. Over-protecting older workers from dismissals would risk exacerbating such a segmentation.
While working longer may not mean having a longer career in the same firm — actually many forces seem to operate in the opposite direction — firms will have to realize that elderly workers are increasingly a resource. Demography works in this direction as in the next decade there will be abundance of elderly people and lack of young recruits. Organizational changes need to be implemented. Health and human capital accumulation policies need to be implemented in a timely fashion. Again, pension rules and labour market functioning interact since having pensions rights linked to the whole working life contributions may help in this process, avoiding segmentation and non-linearity risks.

Paolo Sestito: Banca d’Italia, Economic Research Area, Department for Economic Structural Analysis. The opinions expressed here are those of the author alone and do not necessarily reflect those of the institution to which he belongs.