The demographic ageing the population is a recorded statistical reality on a global scale. However, the focus of the problem is not on the statistical models of demography, but on the political choices to manage this phenomenon.
Government strategy towards demographics leads to a reduction in benefits and an increase in age limits
In recent years, changing the age pyramid has often been used to promote policies that alter the character of the social state, gradually shifting budgetary burden on workers and citizens.
According to OECD and World Bank data, presented in paper analyses such as The Economist, the dependency index – the proportion of pensioners to the active economic population – is steadily increasing.
The demographic issue directly threatens the sustainability of public insurance
Based on these data, governments in most western countries are promoting a specific management framework: shrinking public benefits and horizontally increasing retirement age limits, avoiding implementing measures that would ensure additional resources for insurance funds through taxation of high incomes or corporate profits.
The choice of increasing age limits
At the heart of government planning is often the shift of the retirement limit from 65 or 67 years to 72 or even 75 years. This strategy is based on the argument of increasing life expectancy, however ignoring quality living and health conditions in the elderly. Instead of seeking alternative sources of financing for the distribution system – such as strengthening employer contributions, exploiting technological progress that increases productivity per employee, or fair redistribution of wealth – the solution to the extension of working life is chosen. This approach leaves public funds underfunded and carries responsibility for securing income to the citizen himself.
The class dimension of work in the elderly
The application of horizontal increases in age limits creates serious inequalities as it does not take into account the nature of professional activity. While for office workers staying at work at an older age is often possible, for workers in industry, construction, focus or agriculture is practically unsupported. A worker in heavy manual work rarely has biological endurance to meet the requirements of his profession at the age of 70. As a result, much of the population is led either to early retirement with reduced earnings or to unemployment during the last period of their working life.
The weakening of the social contract
The unwillingness of States to shield the public insurance system results in consequences for the intergenerational contract. The younger generations are invited to pay high insurance contributions throughout their professional course, while facing increased housing and living costs. At the same time, the policies implemented strengthen the uncertainty about the height and adequacy of their future pension. The degradation of the public system necessarily pushes those who have the financial potential for private insurance, leaving the majority of citizens exposed.
The need for structural solutions
Economists and social policy experts point out that the issue of pension sustainability is primarily a question of redistribution and social justice. The refusal of governments to adapt the tax and insurance framework to modern economic conditions – where wealth is concentrated in fewer hands and productivity increases – is a political choice. The maintenance of social cohesion requires the search for resources from taxation of the total wealth generated and not exclusively from reduced contributions from workers. Without these interventions, the pressures on the social state will continue, with citizens bearing the highest costs.
