OECD REPORT PREVENTING AGEING UNEQUALLY Release Seminar OECD report Preventing Ageing Unequally FEDEA Madrid 26 October 2017 OECD REPORT PREVENTING AGEING UNEQUALLY Monika Queisser Head of Social Policy Division OECD

OECD REPORT PREVENTING AGEING UNEQUALLY The OECD report PREVENTING AGEING UNEQUALLY It is part of the OECD’s inclusive growth agenda It reviews ageing and inequality trends and assesses how they have been interacting within and across generations It shows that inequalities compound along the life course It puts forward a policy agenda to prevent, mitigate and cope with unequal ageing

UNEQUAL AGEING IS A MAJOR SOCIETAL CHALLENGE

Number of people aged 65+ per 100 people of working-age (20-64) Population ageing will be fast in all OECD countries, which will have major economic and societal impacts Number of people aged 65+ per 100 people of working-age (20-64) Selected countries Source: OECD (2017) - Preventing Ageing Unequally based on United Nations World Population Prospects: The 2017 Revision data.

Ageing is not an equal process Ageing is not an equal process. Many different types of inequalities exist and compound over the life course. Life expectancy gaps between high and low educated groups at ages of 25 and 65 are large Males, around 2011, in years Selected countries Source: OECD (2017) - Preventing Ageing Unequally based on OECD estimates.

Income Gini index by cohort and age group Inequality at a given age is higher today than in the past in most OECD countries Income Gini index by cohort and age group OECD average by birth decade Income inequality has increased over the last decades among young and working-age groups Non-standard forms of employment have developed Financial pressures have led to reduced future pensions in many countries People born after the 1960s have incomes which are not higher at the same age than those born ten years earlier Risks of increasing inequality among future retirees are thus building up Source: OECD (2017) - Preventing Ageing Unequally based on Luxembourg Income Study data.

Related OECD work OECD Centre for Opportunity and Equality (COPE) In It Together: Why less Inequality Benefits All Divided We Stand: Why Inequality Keeps Rising The Pursuit of Gender Equality: An Uphill Battle OECD Centre for Opportunity and Equality (COPE) www.oecd.org/els Twitter: @OECD_Social

POLICIES TO ADDRESS unequal ageing

COPE WITH INEQUALITY AT OLDER AGES MITIGATE ENTRENCHED INEQUALITIES OECD Recommendations on Policies to Address Unequal Ageing Need for life-course policy packages based on 3 pillars PREVENT INEQUALITIES BEFORE THEY BUILD UP AND COMPOUND POLICIES TO ADDRESS UNEQUAL AGEING As inequalities compound in different areas over the life course, policies to prevent unequal ageing have to start early in life To be effective, policy packages have to prevent inequality as early as possible, mitigate entrenched inequalities and cope with inequality that persists in old age. There are strong policy complementarities and synergies. A whole-of-government approach is likely to be much more effective than a series of separate inequality reducing policies. To ensure a better retirement for all, policies have to be coordinated across family, education, employment, social ministries and agencies. COPE WITH INEQUALITY AT OLDER AGES MITIGATE ENTRENCHED INEQUALITIES Source: OECD (2017) - Preventing Ageing Unequally

1. Prevent inequalities before they build up and compound  Place early-life interventions at the top of the policy agenda  Promote a good start in working; ensure a smooth school-to-work transition  Break the links between socio-economic disadvantages and health In Spain: There is nearly full enrolment in early childhood education and care (95 and 97% for 3- and 4-year-olds), well above the OECD averages (78 and 87%). But childhood poverty has increased during the Great Recession and remains very high (above 30%). The share of 15-29 year olds that are not in employment, education or training is at 22%, which is 6 p.p. more than before the crisis. Youth unemployment is currently at 45%. A life course approach is needed. Important to focus on early interventions at key transition periods and turning points. Health prevention policies are critical. They are cost effective, yet the share of health spending allocated to prevention is limited. Not all prevention policies are effective at reducing SES- related health inequalities Not all prevention policies are effective at reducing SES-related health inequalities : There is some evidence that “upstream”, i.e. more environmental in nature interventions (e.g. taxation of unhealthy goods) reduce SES inequalities in health, while person-centred interventions (e.g. dietary counselling) may increase them.

2. Mitigate existing inequalities  Promote healthy ageing by developing a multi-sectoral active ageing strategy and through equal access to health care  Limit the impact of job loss and combat long-term unemployment  Provide equal opportunities for workers to upgrade their skills  Remove barriers to retain and hire older workers In Spain: While life expectancy at age 50 has increased between 2005 and 2014 (for men from 29.5 to 31.9), healthy life years have remained stable (for men, at 19.3-19.7). The proportion of 80+ showing depressive symptoms is very high among women (62%). Employment rates at older ages fall steeply with age and are below the OECD average for all education groups. Similarly, average exit ages from the labour market are low, especially for the low educated

3. Cope with inequality at older ages Target adequate levels of retirement income through a combination of safety nets, mandatory pensions, private schemes and pension credits Place more emphasis on redistribution objectives of pensions to account for inequality in life expectancy Reduce inequalities in long-term care by making come care affordable for all In Spain: There is a large pass-through from wage to pension inequality, while there are no strong safety-nets which redistribute pension income, contrary to many other OECD countries. Latest pension reform improved the financial sustainability of the public pension system by linking initial pension benefits to average life expectancy at retirement age. The majority of over-50s providing informal daily care are women. Old-age pensions Strengthen first-tier and low earnings-related pensions in some countries; avoid large impact of career breaks by striking the right balance between length of leave from work and pension benefit entitlements. Place more emphasis on redistribution objectives of pensions to account for inequality in life expectancy: earnings-gradient of accrual rates, of contribution rates, of mortality tables used to compute annuities Long-term care Strengthen support for informal carers – who are most likely to be low-SES women

Summary Insufficient income and larger old-age inequality among future retirees are major challenges in Spain Population ageing will magnify these challenges Inequalities start early in life and compound over the life course A life-course approach to policy is needed to address unequal ageing Policies must prevent inequalities before they build up, mitigate existing inequalities and cope with inequalities at older ages.

OECD REPORT PREVENTING AGEING UNEQUALLY monika.queisser@oecd.org www.oecd.org/els Twitter: @OECD_Social