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Stakeholders' Response to Population Ageing Statement made by Mrs. Brigita Schmögnerová

(Berlin, 10 September 2002)

Executive Secretary of the United Nations Economic Commission for Europe
at the Pre-Conference event entitled "Ageing Societies -
Challenges for Industry and Society"

Challenges to be addressed

Countries in Europe and North America are experiencing an important demographic transformation: the unprecedented ageing of the population. By 2050 every third person in the region is expected to be at or over the age of 60. This demographic development will have an impact on all aspects of economic and social developments and therefore must be adequately addressed by governments, the corporate sector and NGOs. The collaboration of all relevant stakeholders is vital to effective policy responses to population ageing. I congratulate the organizers that succeeded in organizing this event in which all key players are participating: government represented by the Federal Minister for Family Affairs, Senior Citizens, Women and Youth and the Federal Minister for Economics and Technology, the corporate sector represented by the Confederation of German Employers Associations and the Association of German Chambers of Industry and Commerce and the German Industry Association, and civil society represented by the German Trade Union Federation and Humboldt University.

Each of the stakeholders has an important role to play: Governments in mainstreaming ageing in all policy fields: economic and budget and tax policies, social and employment policies, housing, health and education policies. Governments must ensure that the policies are properly coordinated and that short-term policy is well linked to long-term perspective objectives.

The business sector is expected to respond in fields like the labour market and employment, corporate social responsibility, and adjusting production to changing demand, etc.

Trade Unions have a role to play in better representing the interests of workers and being involved with NGOs involved in discussions on pension reform, labour market reform, etc., or contributing to fields such as increased employability of older persons, etc.

Despite the different roles of stakeholders, it is only through partnership among all of them that commitments like ensuring full integration and participation of older persons in society or ensuring quality of life for all ages can be achieved.

Governments must make commitments

In order to address population ageing, governments must make commitments at national and/or international levels. If the Regional Implementation Strategy (RIS) consisting of 10 principles is agreed tomorrow, it will assist the governments in adopting or amending existing national strategies with embodied strong commitments

(1) in the human rights area for example combating social isolation and marginalization of older persons, combating discrimination of elderly men and women in the workforce and in recruitment, ensuring the right to education in older age, ensuring right to adequate housing, access to health, etc.
(2) in the area of economic development, such as the increased participation of older persons in economic life through employment, participation in the care of family members, unpaid work for the community, etc.

Commitments must be followed by the formulation of comprehensive policy that includes well defined targets and measures to achieve and ensure monitoring of the implementation.

Governments need courage

The primary responsibility in the development of effective policy responses to population ageing belongs to the government. Governments need to have the courage to deal with the population-ageing agenda, namely to take decisions which in the short-term might have some politically damaging implications. Depending on disparities in the region this might include the courage to increase the pension eligibility age, (in transition economies), to lower the income replacement rate of statutory pension insurance (in some developed countries), to develop multipillar pension insurance which in most cases requires increases in the contribution rate. Complementing pay-as-you-go pension insurance by capital funded retirement provisions including pension funds gives existence to a new industry which should be encouraged but at the same time regulated in order to provide adequate protection to thousands of individual investors and to prevent pension-fund crises such as those in the US initiated by ENRON´s case which is a threat to the pension industry itself as it undermines investors' confidence.

The recently adopted EU Pension Fund directive which allows cross-border activities of the pension industry will no doubt boost the pension industry in the EU. This should further stimulate on-going discussions in the EU on reform of the regulatory framework of the market for financial services both at national and international levels. The enlargement of the EU from 2004 will gradually provide an opportunity for further expansion of the pension industry in this region.

Sustainable growth and development

Effective addressing of population ageing requires the achievement of higher rates of economic growth and its sustainability. This is true for all States in the region - both developed and developing. Rates of economic growth are needed that would ensure

(1) fiscal sustainability of social protection of old people
(2) employment of older persons without a negative impact on the employment of younger generations

Sustainable development must be achieved in order to ensure social sustainability with respect to older persons. Social sustainability with respect to older persons aims to prevent social and health degradation of older persons and their full integration into society.

Markets fail to ensure a fully inclusive society; it is the role of Governments, business and NGOs to repair this failure through different policies like social and housing policies, pricing policies, etc. In some economies we witness an important role of the corporate sector in providing affordable access to utility services like transportation, energy, water for older people. This policy is often accompanied by the government's efforts to provide incentives either by subsidies or tax exemptions (less preferable). It is clear that the above policies must not violate economic fundamentals and reduce the competitiveness of the business sector considerably.

Labour market

Older people due to their improved access to health and better environment are physically younger if compared to people of the same age 50 - 100 years ago. In order to be younger in terms of labour productivity, the training of older persons has to be improved. Education should be life-long, ensuring that our knowledge and skills are continually upgraded as we age. This should include "second literacy" - training in ICT. For elderly persons training programmes should be organized. In eliminating age barriers in skills and knowledge the combined efforts of governments at different levels, trade unions, civil society and business are needed.

Nevertheless the responsibility of governments to develop appropriate labour market policies to respond to population ageing is a key to success. It requires a comprehensive approach including demand-side and supply-side policies (i.e. education and health policies, housing and transport policies, government employment schemes etc).

Ageing and business

Business with respect to the labour market and ageing has a considerable role to play: business should be more involved in providing more flexibility in employment schemes: like part-time jobs, temporary employment etc, and be active in re-training, etc.

Globalization is accompanied by growing competition and the business sector must increase its effort in order to cope with it. In this environment companies are forced to minimize their social expenditure, resist complying with ILO conventions, etc. Therefore it is important that a commitment to the international framework of corporate social responsibility is made at the global level. Nevertheless governments have so far failed to make such a commitment at the global level. Various initiatives of business in social responsibility, in social reporting, etc. all over the world might pave the way to breaking the resistance of many governments in this field.

Population ageing is a big opportunity for business: it might boost the pension industry, industries responding to the changing demand for goods for older men and women, respond to demands for environmentally friendly production patterns, etc.

Role of international organizations

Finally I would like to stress the role of international organizations in addressing population ageing. The role of international organizations is to stimulate governments to take commitments to address ageing, to provide policy advice, to assist national institutions to implement policies and to monitor them, to provide a forum for the exchange of best practices, to promote cooperation among the member States, etc.

In concluding: the task to respond to population ageing is enormous and requires a comprehensive, well targeted and coordinated approach of all stakeholders. If well defined and implemented it might ensure a win-win situation across generations, may ensure economic efficiency and social inclusiveness at the same time. This is our goal.

Thank you.