The Century of Aging
Wonders How to Pay Its Pensioners
decades the Catholic Church's pleas asking governments to defend and
support family life have often fallen on deaf ears. Now, in the midst of a
birth dearth and a graying population, European governments are finally
wakening up to the looming crisis in their pension plans.
This week Italian Prime Minister Silvio Berlusconi announced proposals to
reform the pension system. During a televised speech he admitted that the
current system is not sustainable. Yet implementing the plan will prove
difficult, as evidenced by the decision of labor unions to stage a
national strike later this month on the issue.
Demographers gathered at a recent meeting of the International Statistical
warned of problems due to population aging, Reuters reported Aug. 15.
"While the 20th century was the century of population growth, we can
already say from a demographic perspective that the 21st century will go
into the history books as the century of aging," said Wolfgang Lutz
of the International Institute for Applied Systems Analysis in
The United Nations predicts the percentage of the global population aged
65 or over will soar to 16% by 2050 from the current 7%. In some
countries, more than a third of the population will be 65 or older by
Lutz said that
's population was likely to start
shrinking, though the aging would mean an increase in the number of
single-person households. This in turn would increase energy consumption
and the emissions of greenhouse gases blamed for global warming -- a
scenario that contrasts sharply with the hopes of zero-growth advocates
who contend that fewer people would mean less pollution.
"Fertility is the engine of demographic growth and we don't see it
going up," commented Joseph Chamie, director of the U.N. Population
Division. He said most politicians were failing to address the challenges
posed by their aging populations.
The latest demographic data from Eurostat, the official statistics body
for the European Union, is not comforting. An Aug. 8 press release noted
that the total fertility rate in the European Union last year remained
virtually unchanged at 1.47 children per woman, compared with 2001 and
2000. Guaranteeing a stable population requires around 2.2 children per
Coming in under-average are countries such as
at 1.25 each; and
at 1.26. Eurostat also reported that the downward trend in the number of
marriages continues, falling from 2.2 million in 1980 to 1.8 million in
2002, a 19% drop. Divorces increased by 42% in the same period, to
715,000. Overall, the EU population is estimated to have increased by 0.3%
in 2002, compared with 0.4% in 2001. Around three-quarters of the increase
was due to immigration.
The entry of more countries into the European Union will not solve the
problem. According to a Eurostat report dated
the enlargement of the
will increase its population by
28%, to about 482 million. But "due to a dramatic and continuing
population decline in most of these 12 candidate countries, instead of
reversing the population decline of the EU expected over the coming
decades, their accession would, on the contrary, hasten it," warned
According to Eurostat the share of the population above age 65 in the
current 15 members of the EU will grow from around 16% in 2000 to about
21% in 2020, perhaps attaining 28% in 2050. From around 2010 onward, the
share of the population of working age is expected to decline from around
two-thirds to about 58% in 2050. The new entrants will do little to
improve matters. Even though they have a younger population, this will
only slightly slow down the overall aging in the expanded European Union
in the short and medium term.
Rough road for reform
The Economist in its Sept. 27 issue published an analysis of state
Opposition to reducing pension entitlements caused a nationwide strike in
France on June 3, and the same day more than a million people in Austria
marched in the streets to protest reform proposals.
So far, leaders in
have only been able to avoid strikes by means of cosmetic reforms, the
British magazine noted. The leaders may not be able to avoid conflict for
much longer. In
advisory panel recommended last August that pension payments be cut by as
much as 10% in real terms over the coming years, and that the retirement
age be raised to 67 from 65.
The fundamental flaw in European state pension systems is that they are
financed on a pay-as-you-go basis: Taxes on workers' pay finance the
pensions of retirees. But an aging population, combined with longer life
expectancy and few children, means the old system no longer works.
According to a Eurostat report dated
overall expenditure on pensions in the current 15 EU members was 12.5% of
gross domestic product. In
this expenditure amounted to almost 15% of GDP, while the figures for
fell between 13% and 14%. Of this amount, expenditure on old-age pensions
topped the list of pension expenditure in every country, accounting for
75.8% of the total, or 9.6% of GDP. In real terms, expenditures on old-age
pensions in the EU-15 rose by 32% between 1991 and 2000.
Some governments --
have shifted much of the pension burden onto employers. Yet this move may
only shift the responsibility without resolving the underlying problem,
Newsweek reported in its Oct. 6 issue.
Many companies in the
where employer-financed pensions are more common, are running into
financial difficulties because of pension burdens. According to Newsweek,
companies now face a $350 billion deficit in pension plans. Financing
these pensions could well damage the country's economic recovery as
resources flow into pensions rather than into new business investment.
Beneath the economic data the real problems are related to the state of
the family and public morality during the past few decades. Last June
11-14 the presidents of the European bishops' commissions for the family
and life examined the situation in the continent. The Pontifical Council
for the Family organized the meeting held in
The participants concluded that a number of factors have damaged family
-- Marriage is being questioned, and a growing number of young people live
together before getting married.
-- The prevailing culture favors separation and divorce as solutions to a
-- Countries increasingly give legal recognition to cohabitating couples,
even though these relations often do not imply an enduring commitment.
Some European countries have given legal status to same-sex unions.
-- There is a tendency to relegate the family to the private sphere,
ignoring the fundamental service it offers to society.
-- The use of contraception has increased steadily, and in almost every
European nation, abortion-on-demand is available up to the 12th week of
John Paul II, in his postsynodal exhortation "Ecclesia in Europa"
(No. 95) dated last June 28, commented on the falling birthrate and aging
population. He observed that it "is in fact symptomatic of a troubled
relationship with our own future. It is a clear indication of a lack of
hope and a sign of the 'culture of death' present in contemporary
society." Governments and pension reformers might overlook the advice
of the Pope, but they won't long be able to overlook their graying
© 2002 Global Action on Aging
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