Rising life expectancy and declining natality are, globally, resulting in an ageing population. On top of this general secular trend, the Western world is facing the consequences of the retirement of the sizeable baby-boom generation of the 1950s and 60s. The confluence of these two developments will, in the short term, thoroughly alter the appearance of society. The twofold ageing of the population represents a considerable financial burden, not in the least because an greying society implies an increase in the number of years of ‘dependency’, and thus more spending on social security (which must cover more incapacity risks, i.e. retirement pensions), on healthcare and on social care in general. Moreover, to these purely ageing-related costs, one must add the autonomous cost increases occasioned by, among other things, the nature of our pensions regimes, the explosive growth in healthcare costs, and generational factors whereby younger cohorts - all other things being equal - make more extensive use of available welfare-state provisions. Will these additional burdens need to be born by relatively declining number of healthy life years? Opinion on this crucially important issue is divided. According to some, the recent trend whereby ageing goes hand in hand with a more rapid increase in the number of unhealthy life years than healthy life years will continue, so that the basis of the system will become narrower. Others assert that the number of healthy and unhealthy life years will balance one another out, primarily because coming generations of elderly will be higher-skilled, will have worked less and under better conditions, will take a more preventative approach and will enjoy better medical care. They argue that all these factors will contribute towards enhancing people’s autonomy. In other words, the argument revolves around whether or not the financial basis of the system is shrinking. Be that as it may, it is undeniably so that the nature of the basis will change: the healthy life years will after all become older and increasingly belong to what is presently considered to be the ‘non-productive life stage’. However, the increase in life years also creates great opportunities. After all, an increase in healthy life years in old age implies that an enormous potential of knowledge, experience, skills and means will become available which -if used optimally by society – may be able to absorb the increasing burden associated with old age. For some time now, all Western welfare democracies have been busy implementing indispensable reorganisations. In the Flemish context, the establishment of a care-insurance scheme deserves special mention. However, it is still quite clear that, in view of extremely low participation rates among the elderly combined with growing care needs, future social and economic policy in Flanders will need to face up to three important challenges: an equitable distribution of the burden of population ageing over and between generations, the development of affordable and qualitatively high-standing care for all and investment in the potentialities of the elderly (i.e. to enhance the participation on the part of the elderly in socio-economic and cultural life).
1. Investing in the potentialities of the elderly
If the ‘potential of ageing’ are used optimally – in an economic, social and political sense – then it will be able to absorb part of the increasing burden associated with a greying population. Also, greater investments will be required in order that the talents of (preferably more) children could develop fully. The stronger the next generation, the better it will be able to cope with an ageing society. In view of the low activity rates among the elderly in Flanders, the issue of working at an advanced age will clearly come to the fore. Longer working careers will be necessary, first to compensate for a shrinking active population, and second because the economic exclusion of the elderly implies a loss of knowledge and experience. Working longer is also possible because people stay healthy longer. Finally, it is socially desirable because the concentration of work in the early life years puts too great a burden on households with children. This is the rather obvious conclusion that has been reached throughout the Western world, including in countries where, by our standards, a relatively large proportion of the elderly are in work. It is all the more valid for Belgium, where activity rates among those aged over 50 are particularly low. Experience tells us that the objective of longer working careers is not easily attained. While a number of countries have been successful in this respect (Finland is a case in point), most foreign attempts to ‘activate’ the elderly provide little reason for hope. This is due to a number of factors. First and foremost, reductions in early retirement schemes often result merely in shifts towards unemployment or incapacity benefits. In order to be effective, an activation policy must thus relate to the entirety of the benefit structure, and not just to early retirement. A second reason for the modest success of activation policies lies with industry: as long as companies are inclined (or forced) to use the expulsion of older workers as a cheap HRM-policy tool and are unable or unwilling or not compelled to make use of the potentialities that older employees have to offer, then there remains an important obstacle on the supply side to keeping people in work longer. The third reason has to do with the traditional career path whereby most men and women combine uninterrupted job histories with the raising of children. Exhausted but affluent, they look forward eagerly to ‘more time for themselves’. Partly for this reason, early retirement has developed into a newly accepted manner of life: survey data show that, in just about all industrialised nations, a majority of people are not prepared to work until they reach the age of sixty-five.
2. Distributing the burdens equitably between and within generations
If one wants to maintain or improve the present high level of social protection – i.e. sufficiently high pensions and high-quality care systems – then there will inevitably need to be greater solidarity between youngsters and the elderly and vice versa, and also among the elderly themselves. Even under the most optimistic of scenarios, where the opportunities provided by an increase in the number of healthy life years are used optimally, the ageing of the population will give rise to new needs in relation to pensions, healthcare and care in general. This situation will arise precisely in a period when the means are restricted, in part as a result of economic stagnation and partly because a low fertility rate will reduce the economic and social basis (i.e. smaller active population and weaker familial networks). The crucial question for future policy is therefore how the demographic costs should be distributed among the population, between generations (intergenerational solidarity) and between households belonging to the same generation (intragenerational solidarity, especially within the group of the elderly themselves). Two observations are important here: the strong levelling of intergenerational income distribution and the very considerable (and growing) inequality among the elderly. Due to the increase in recent decades in retirement incomes, the elderly are now on average almost as well-off as the younger generations. In other words, an unchecked increase in transfers from young to old could, in the longer term, result in a skewed intergenerational welfare distribution, to the detriment of youngsters and households with children. Although we believe the basis of intergenerational solidarity to be very solid (see extroduction), it may well come under too great a pressure. Furthermore it is also important not to lose sight of the fact that inequalities are considerable among the elderly (much greater than among the active population) and that the poverty risk among the elderly is still much greater than for the population as a whole. Consequently, attention needs to be devoted to the questions of how we can continue to guarantee income protection for the elderly, how pensions can be improved for the weakest population segments, and how the burden of population ageing should be distributed over the population, both between and within generations.
3. Adequate and affordable care for all
Opinions on the consequences of population ageing on healthcare costs are divided. According to some, the ageing of the population is coinciding with a more rapid increase in unhealthy life years than in healthy ones. Others argue that the additional healthy and unhealthy life years will balance one another out, as the coming generations of elderly will be higher-skilled, will have worked less and under better labour conditions, will be more prevention-oriented and will have enjoyed better medical care than their predecessors. There can be no doubt whatsoever that important shifts will occur within healthcare packages (e.g. geriatrics will gain in importance) and that the costs associated with care dependency will rise quickly. Homecare deserves precedence. As the capacity of relatives (often referred to as ‘hidden patients’) to provide care is limited, informal homecare should be complemented with additional extramural and transmural formal care. Moreover, adequate financial support should be provided for formal and informal care providers. And of course sufficient affordable and high-quality intramural provisions should also be created. Attention needs to be focused primarily on the coordination of the ‘personalised’ trajectory that care-dependent elderly persons will need to be able to complete, an area where things have been known to go wrong. There are four policy models available for dealing with the care risk: provision of services, welfare, insurance and (financial) support for care providers. Each of these models is represented in the Flemish care architecture: there is a broad (albeit inadequate) supply of quality care provisions, ranging from homecare to extra-, semi- and transmural care. The welfare model prevails in the system of ‘Assistance to the Elderly’ and in interventions by local public welfare centres (OCMWs). With the new care insurance, Flanders now has at its disposal an insurance tool to deal with the cost of care: irrespective of their personal means, all insured individuals requiring care will be entitled to a cost-covering benefit. Within the frame of general social security, the so-called Time Credit scheme provides an income-replacing benefit to informal care providers. And the system of service cheques, finally, will allow the market of the personal service economy to further develop. In other words, the tools are already in place, but the reality of care is extremely complex, both for policymakers and for care-dependent elderly persons. Planning and coordination are therefore indispensable. Special attention should be devoted to care insurance. The Flemish care insurance scheme provides a significant and additional structural funding channel. Moreover, a care insurance offers the intrinsic value added that the care risk is (at least partly) unlinked from the realm of social assistance. However, it is clear that the newly introduced concept of care insurance has by no means crystallised yet. There are, after all, good reasons to believe that its current form is not financially and socially efficient yet, which explains why regulations have been very labile since its creation. The basic concept of care insurance is founded on the Beveridgean model of social security: lump-sum universal contributions and lump-sum benefits. However, the history of English social security demonstrates that this model cannot work for the simple reason that, in order for everyone to be able to participate in insurance, contributions must be kept very low. Consequently, the system generates modest income that is inadequate to provide comprehensive social protection. Moreover, a blind distribution of lump-sum payments (that only take into account the degree of care dependency) is not very efficient: it disregards the issue of which kind of care is required and its cost (which can vary from case to case), it lacks quality control on the care provisions purchased, and does not provide for government control on the care provision market. Furthermore, the care insurance scheme appears to have got stuck between Belgium (Flanders’ competence in this matter is disputed by Wallonia) and Europe (the EU finds that the insurance, like all other insurances, should be open to everyone working in Flanders and not just to residents. In part for this reason, further consideration is required with regard to the nature of the Flemish care insurance scheme, both on the funding side and on the provision side. Again, a general plan is required to allow the entirety of care arrangements at the various policy levels to evolve coherently.
4. Project Framework
As far as the Flemish policy level is concerned, all aspects of the above mentioned research questions are relevant: policy on formal and informal care for the elderly, including the Flemish care insurance scheme, employment policy, tax policy, housing policy, sociocultural and educational policy and, as a context for all policy domains, the structure of income and expenditure distribution and particularly the position occupied by the weaker groups (who may be targets of specific provisions). Some important research has already been conducted into the socio-economic aspects of population ageing in Flanders, but often this research is insufficiently prospective and informative for policy purposes. Moreover, usually a European angle is lacking, even though Flemish policy can obviously draw lessons from developments in other European countries. We therefore propose to construct an interdisciplinary knowledge platform with a view to:
bringing together available expertise in Flanders in the field of policy-oriented research into the issue of population ageing;
collecting high-quality data for Flanders that allow comparison with other regions and countries in Europe;
developing research instruments and methods to analyse these data in dynamic perspective and to test policy alternatives for their economic and social efficiency.
A recent development is the emergence in all EU Member States of comparable surveys and of comparative research into the efficiency of policy. Unfortunately, Flanders is not well represented, and, when it is, it appears that the data mask the reality of a federal state where, in relation to various sectors, the differences between the constituting regions and communities are very considerable. Consequently, it is impossible to draw policy conclusions for Flanders from such comparative research. We would like to change this and, to this end, propose to unite social scientific expertise on the issues of population ageing and intergenerational relationships. This proposal is constructed around three central axes:
I. The development of databases and analysis tools
a) Representative quantitative data on the inter-and intragenerational distribution of income and wealth in Flanders (SILC)
b) Quantitative data on the living conditions, health, housing, care needs and wealth of European citizens over the age of 50 (SHARE)
c) Dynamic microsimulation models (MISIM)
II. Demographic ageing and projection of healthy life expectancy
III. Policy-oriented analysis in the fields of:
a) The economic consequences of ageing
b) The inter- and intra-generatonal distribution of income, wealth and poverty and the impact of social policies
c) Parameters of care policy in European comparative perspective
d) Trends in formal and informal care networks.