Policies for ageing societies: Some Challenges relevant to the East Asian Dimension

Awkward title to indicate: I am concerned about the way the ageing societies debate is distorted by extreme statements. I am concerned about the way the ageing societies debate is distorted by extreme statements. I am not an expert on East Asia, my concern is to raise issues not to try tell you what is happening. I am not an expert on East Asia, my concern is to raise issues not to try tell you what is happening. I will use some data to illustrate my points and this will be mostly from European societies. I will use some data to illustrate my points and this will be mostly from European societies. I do not use that data to suggest the issues are the same West/ East but just to raise points to think about using examples I understand. I do not use that data to suggest the issues are the same West/ East but just to raise points to think about using examples I understand.

Extreme statements Exaggerated estimates of the so called ‘problem of dependency’. Exaggerated estimates of the so called ‘problem of dependency’. Using misleading statements about resource exchange between the generations. Using misleading statements about resource exchange between the generations. Disregarding the many options for the adaptation of family life. Disregarding the many options for the adaptation of family life. I will examine each of these points in more detail in my presentation.

OECD data from Casey et al., 2003 Policies for Ageing Society Country Over 65s/ s 2000 Over 65s/ s as a % of 2000 Germany Japan S. Korea Sweden UK USA

In the UK in 2000 there were 7.7m. economically in-active people over working age (15) and below pension age as shown below. MalesFemales (59 for women)

The ‘dependency ratio’ in the UK 2000 in terms of economic activity The 7.7m. economically inactive under pension age plus 9.0 m. over pension age = 16.7m. The 7.7m. economically inactive under pension age plus 9.0 m. over pension age = 16.7m. The economically active under pension age of 29.5m. plus about 0.8 million over pension age = The economically active under pension age of 29.5m. plus about 0.8 million over pension age = Implies a ‘dependency ratio’ of about 55 compared with 26 when calculated in demographic terms. Implies a ‘dependency ratio’ of about 55 compared with 26 when calculated in demographic terms. But it is even higher if over 1 m. unemployed people are defined as ‘inactive’. But it is even higher if over 1 m. unemployed people are defined as ‘inactive’.

Implications of looking at dependency in terms of labour market participation. Substantial reserve of prime age males who have left labour force early. Substantial reserve of prime age males who have left labour force early. Substantial reserve of female labour. Substantial reserve of female labour. Potential for greater labour market contributions from students. Potential for greater labour market contributions from students. So if we are managing with these levels of dependency now we can raise participation from these sources to cope with demographic change. So if we are managing with these levels of dependency now we can raise participation from these sources to cope with demographic change. But above all it raises questions about the extent to which it is labour demand not supply that is crucial. But above all it raises questions about the extent to which it is labour demand not supply that is crucial.

Arguments about enhancing female labour market participation Obviously a crucial issue about women’s rights to choose here. Obviously a crucial issue about women’s rights to choose here. Problems about female work as low cost alternative. Problems about female work as low cost alternative. Implications of limited participation carrying limited social rights (particularly to pensions). Implications of limited participation carrying limited social rights (particularly to pensions). Does the enhancement of female labour market participation have a negative impact on birth rates (European evidence suggests ‘no’ if backed by good child care policies). Does the enhancement of female labour market participation have a negative impact on birth rates (European evidence suggests ‘no’ if backed by good child care policies). Some questions here about extent to which men take on care roles. Some questions here about extent to which men take on care roles.

Problems about looking at dependency in terms of labour market participation Economistic thinking that treats only paid work as work. Economistic thinking that treats only paid work as work. No attention given to non-monetary economic transactions. No attention given to non-monetary economic transactions. No attention given to work within the family. No attention given to work within the family. Important to bear in mind that the elderly give as well as need family support. Important to bear in mind that the elderly give as well as need family support. No attention given to voluntary work of all kinds. No attention given to voluntary work of all kinds. In any case why treat what is paid for as necessarily productive work. In any case why treat what is paid for as necessarily productive work.

Key issues about resource exchanges between generations Pension payments are charges on the work force even if they are ‘funded’. Pension payments are charges on the work force even if they are ‘funded’. Funding principles favour the economically active. Funding principles favour the economically active. Trade offs between economic transfers outside the family and those within need attention. Trade offs between economic transfers outside the family and those within need attention. Accumulation and transfer of assets disregarded in most analyses of inter- generational transfers. Accumulation and transfer of assets disregarded in most analyses of inter- generational transfers.

Cannot disregard the ‘care’ issues related to ageing, but: Need to see this as particularly an issue about the growth in numbers of very old people. Need to see this as particularly an issue about the growth in numbers of very old people. Need to analyse the implications of links between pension issues and care issues: well protected pensioners can pay for much of own care. Need to analyse the implications of links between pension issues and care issues: well protected pensioners can pay for much of own care. Much care is spouse care. Much care is spouse care. Formal care options are diverse. Formal care options are diverse.

Family care versus institutional care a false dichotomy European data does not support the view that institutional care will be highest where family care is lowest. European data does not support the view that institutional care will be highest where family care is lowest. Growth of new forms of domiciliary care very important (note actual evidence of fall in amount of residential care in the UK). Growth of new forms of domiciliary care very important (note actual evidence of fall in amount of residential care in the UK). Extensive patterns of family care evident even without co-residence. Extensive patterns of family care evident even without co-residence. Value of income enhancement to facilitate choice (including choice of family care). Value of income enhancement to facilitate choice (including choice of family care).

Summing Up The demographic dependency thesis disregards issues about jobs. The demographic dependency thesis disregards issues about jobs. In any case there may be many unmeasured contributions to society. In any case there may be many unmeasured contributions to society. Effective income enhancement for the elderly helps to solve care problems too. Effective income enhancement for the elderly helps to solve care problems too. Care policies may be developed (particularly with cash transfers) that have no negative impact on family care. Care policies may be developed (particularly with cash transfers) that have no negative impact on family care.