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Europe: An Age-inclusive Society?

The countries of Europe – including here both Western Europe and the European countries of the former Soviet Union - are relatively homogeneous in many respects that matter for the lives of their older populations. Thirty or forty years ago differences between east and west, and north and south, were more apparent than they are now. Major differences remain, however, and to a European these will loom large. These differences are particularly marked between the Western European members of the European Union and the European countries of the former Soviet Union: Belarus, Moldova, Russia and Ukraine. These countries, together with a handful of others in the east and south-east of the region, are outliers in respect of characteristics such as household income, pension generosity and the quality of health care that have manifest consequences for the well-being of older people. By most measures older people in Sweden are better off than older people in Rumania or Serbia, and even more so in the European countries of the former Soviet Union. The Swedes live longer and in better health, they have higher incomes and are beneficiaries of a mature welfare state with well-funded social care.

The significance of such between-country inequalities and differences for national policymaking is not diminished, however, if we acknowledge that most European countries count as high-income by the World Bank’s definition, and most of them have pension arrangements that are effective in providing income security. The disparity in income between working age households and retired households has been steadily declining across most of Europe over the last 4 or 5 decades, and is now ‘relatively’ small. And although it would be a mistake to identify Europe with the European Union, most countries in Europe do belong to the European Union with all that implies for economic and policy integration. Most of them, with some exceptions among the outlier countries, have also developed a strong infrastructure for policy-relevant research into the precise nature and grounds of what is particular and distinct in the ways their own populations are ageing.

The same degree of convergence or family likeness extends to demography. Multi-generational households are the exception rather than the rule, even in the supposedly ‘familist’ countries of southern Europe. Life expectancy at birth is relatively high – under than 75 years only in a handful of eastern European countries. Total fertility is relatively low: the mean TFR for the region is 1.6 and no European countries (in the UN’s listings) have a TFR above 2. The rate of ageing, moreover, is relatively slow, with low birth rates extending back into the 1970s. Whatever opportunities there were for a first demographic dividend are long gone.

Europe then is a region that has become accustomed to thinking of itself as ageing, and the point applies emphatically to its policymakers. The need for major adjustments and changes across different areas of policy has been acknowledged and aired in policy circles for at least three decades, and the list of age-relevant policy démarches is now long and varied. And even though it bears repeating that Europe is not to be identified with the European Union, the importance of the role played by the European Commission in this respect can hardly be overstated. This is especially apparent in the idea of ‘active ageing’. Although this had its origins in the UN and WHO, it has become increasingly prominent not only in European policy discourse, but also in shaping regional policy responses to the challenges of population ageing.

By the beginning of the century most European finance ministries had thoroughly absorbed the idea that population ageing constitutes a major fiscal challenge, and if we look back 15 or 20 years we can see a very strong policy focus on two connected issues, pensions and early retirement, though it has to be said that not all governments have showed the same determination to push through large-scale reforms and in Russia there have even been proposals to retract the recently adopted increase in the age of retirement. Where pension and retirement rules have been reformed, however, the policy goals and the direction of change have been broadly the same: that is, to improve the sustainability of public pension systems confronting long-term ‘adverse’ change in the age structure of the population; to shift more of the risks and responsibilities for retirement saving away from government and on to the individual (but without undermining pension adequacy); and to encourage longer worker lives. The guiding principle has been that pre-funded occupational pensions and individual private pensions should play a larger part in providing for retirement income – and unfunded public pensions should be scaled back and given a more targeted redistributive function.

If we ask what has been achieved in these policy domains, there can be little doubt that pension reforms have improved the outlook for the sustainability of public pensions for many European governments. For some commentators, however, one of the effects of the measures taken to improve sustainability is that the risk of ‘inadequate’ retirement incomes has been substantially increased for large numbers of people of working age. For those at the lower end of the income distribution this is likely to mean an increasing demand for social assistance to top up incomes that would otherwise fall below the poverty line (which would of course undermine one major goal of the reforms). And for those who do not find themselves with incomes below the poverty line, the risk is that they will have to make uncomfortably large adjustments to their pre-retirement levels of spending.

For the OECD, however, the reforms have not gone far enough, or to put it less tendentiously, it should not be supposed that the policies now in place suffice to deal with the fiscal challenge of population ageing. The scale of the challenge should not be under-estimated. The hope that increased productivity would make everything much easier is looking rather thin and Europe’s populations are continuing to age. A recent report from the OECD makes just this point with a ‘timely’ reminder that the fiscal impact of demographic pressures dwarfs the impact of what they call COVID legacy debt. And to bring us quite up to date, the financial consequences of the Russian invasion of Ukraine, together with the impact on Europe of the sanctions imposed against Russia, have yet to be assessed and taken into account in policy measures.

As for retirement ages, increases in statutory retirement ages and a shift towards DC schemes have managed to bring about a change in retirement behaviour in many European countries. Most Europeans are staying in the workforce for longer; there has been an increase in the average age of exit from the workforce with an increasing proportion of people aged 65 + continuing in employment. Although some of this change can be attributed to the increasing (and policy-led) convergence of pensionable ages for men and women, there is across-the-board change; men are staying in work for longer as well. Although for the most part, this is a seen as a policy success, there are ongoing arguments (and research) about the effects of continuing in employment for different groups of people: people who have no choice but to continue in work for financial reasons are in a very different position from those who have such a choice.

Changes in the financial incentives for continued participation in the workforce have been accompanied in many European countries by the introduction of anti-discrimination legislation (or constitutional rulings) that make it much harder for employers to terminate contracts of employment on grounds of age. In other words, one major obstacle to continuing in paid employment has been (largely) removed. What is required of course for a ‘right’ to continued employment to become a social reality is that the supply of suitable jobs matches the increasing demand – and no-one seriously doubts that increasing numbers of older people want to stay in paid work for various (not only financial) reasons. And over the last 10 or 15 years many European economies have changed in ways that enable people with a diverse range of skills and competencies to continue working into their 60 and 70 s. There is still a digital divide, but it is diminishing by the year as better-educated cohorts move into retirement age. Whether all this can be taken as an indication that most European countries are less ageist than they used to be is another matter. The high levels of visible and active participation by older people in the life of their society can be taken as evidence of real social and cultural change. This is not to say, however, that negative attitudes towards older people belong to the past. There is evidence, not only amongst employers but also in the wider society, of a continuing under-valuation of the actual and potential contribution of older people to families and communities as well the economy. Either way it looks as though policy goals around the idea of an age-inclusive society have become more prominent over the last 15 or 20 years. Adaptation to the challenges of ageing is less dominated by a sense of the impending fiscal issues; there is more awareness of the need for systemic change at all levels and in all sectors, of the importance of bottom-up approaches as well as top-down policy change, and of the need to identify and seize the opportunities associated with population ageing, e.g. the longevity dividend and the growth of the silver economy.

An age-inclusive society is one in which older people remain active and in good health for as long as possible. And even though healthy life expectancy is improving in much of the region, advancing years are still associated with increasing levels of non-communicable disease and disability. Not only has Europe become accustomed to thinking of itself as ageing, but its health care systems are by now very familiar with some of the challenges presented by the health problems associated with individual ageing. This is not to say, however, that they are fully geared up for the prevention and management of complex chronic disease. Although efforts to prevent or delay the onset of non-communicable disease and associated disabilities have been quite successful in some domains, especially cardiovascular disease, most attempts at projections suggest that declining age-specific prevalence rates for major disabling diseases are not enough to offset the epidemiological impact of the increasing size of the older-old population. We can see this, for example, in cancer, which makes a big demand on health services, and also in the increasing prevalence of multi-morbidity and frailty. Arguably this latter phenomenon presents what is in effect a new challenge; as most healthy policy analysts would argue that the management of multi-morbidity and frailty at scale requires considerable system change and innovation. And lastly, it is perhaps especially evident with dementia. Europe, like other parts of the world, will see very large increases in the numbers of people with dementia. As yet there is no cure, and no well-grounded approach to prevention. This means a similarly large increase in the numbers of people in need of long-term care. It also points to a substantial increase in the proportion of people dying with dementia (even if dementia is not counted as the primary cause of death), and this has to complicate palliative care. Europe is hardly unique in the demand for more and better palliative care as well as more and better long-term care, and it may indeed be better placed to cope than less wealthy parts of the world. Still, this is going to be a major challenge, even in those countries whose arrangements for long-term care are among the best in the world. And by no means all European countries qualify for such an accolade.

About the Authors:

Kenneth Howse is a Senior Research Fellow at the Oxford Institute of Population Ageing. He is also a key member of The Oxford Programme on Fertility, Education and the Environment (OxFEE). 

Alexandre Sidorenko, European Centre for Social Welfare Policy and Research, Vienna, Austria

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