Challenges for sustainable social security

2 Subjects Important trends from the past Individualism & diminishing solidarity Graying society Concepts for development

Important trends from the past Societal:  Less marriages  More divorces  Smaller families  And…. Labour market  Growing average income  Higher participation rate  More temporary employment  More self-employed  More part-time employment  End of one-employer careers  More flexibility  Greying work force 3

Marriage & divorce 4

Average household size

More societal characteristics (Western-Europe) Single parenthood increased Age segregation:  Culture  Housing  Care Criteria for “ageing” remained unchanged, despite increased life expectancy and health Age discrimination (labour market) Orientation on individual rights, rather than on households 6

Growing average income 7

Employment related indicators 8

More on flexibility Life Long Learning widely accepted Employability widely applied End of “one-employer careers”  Example from my family Future end of one-occupation careers Growing self-employment Self-employed pay a high price during crises… Some occupational pension schemes (based on outdated concepts) hinder development of employability (military services, firemen etc.) 9

Ageing Europe 10

Dependency ratio 11 Dependency ratio: Number of people aged 0 to 14 and 65 years and older Number of people aged X 100

“Real dependency ratio” 12

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People in EU are getting older (life expectancy)  Number and share of people > 64 increases  In particular people > 80 Population EU is growing older (median age) Population decreases Substantial cost effects arise:  Labour market shrinks  Less productive workforce  Rising sick leave, unemployment benefits & disability pensions  Number of old-age pensions  Duration of old-age pensions  Health care costs  Long term care costs  Participation rate of older workforce is lower 14

Age related expenditures for Pensions, Health Care, Long term care, Unemployment benefits and Education – % GDP - no change scenario 15

Population Labour force - Participation - Employment - Unemployment Labour productivity Real interest rate GDP Pensions National models Health care Long-term care Education Unemployment benefits Total age- related spending Measuring the ‘cost of ageing’: common long-term budgetary projections

Measures to consider Preventive measures:  Increase participation rate  Increase average working hours (decrease part-time rate)  Immigration  Reduce sick leave, age-related unemployment and disability pension  Retirement age (relate to life expectancy)  (make babies?.... Fast!) 17

Measures to consider Defensive measures:  Reduce pension & social benefit levels  Stop occupational pension schemes  Reduce (social) benefits duration  Reduce health care benefits  Close (instead of build) long-term care facilities  (Reduce health care innovation)  (Stop resistance against voluntary euthanasia) 18

Measures to consider Investments:  Culture change: re-value family  Health promotion (smoking, alcohol, weight, exercise,)  Culture change: really life-long learning and changing  (modular) education & training  (assistive) technology  Flexibility rewarding social security systems 19

Group assignment What can be done to deal with the possible higher expenditures due to an ageing society? What kind of investments are thinkable to deal with the effects? Are there other measures to consider?  Assess the suggested measures and consider whether they can be a solution for: (current) EU countries Turkey  Motivate your answers 25 min. group discussion, 10 min. preparation report, 5 min. plenary report, 20 min. plenary discussion 20

Examples of possible cost-reduction / awareness 21

Examples of possible cost-reduction / awareness 22

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Turkey Gradually diminishing 0-14 population Increasing population (+11 million) In x more people > 65 (4.5 million > 18 million) 24

Group assignment What are the Turkish challenges? Are there opportunities for Turkey related to the European developments? If so, what? Is there a specific role for the Turkish social security to deal with these challenges and/or opportunities? Please specify Are there other essentials? Please include: participation rate, unemployment, educational attainment, family life etc. in your considerations. 30 minutes group work 10 minute presentation Concluding discussion 25