Publications
Partners
THE baby boom has been an ever-increasing headache to many European governments, and the chickens are now coming home to roost.
As might be expected, the Second World War caused the birth rate to plunge. But in the aftermath of the war, couples rediscovered the joys of the bedroom, and so a huge number of babies were born until about 1955, when the wave passed.
The problem is that this has skewed the natural demographics of the continent. The baby boom has flowed like a giant wave through the decades since, and the front end is now reaching the age of retirement.
However, this is causing huge problems.
Let us begin by stating that the retirement age of 65 was originally very arbitrarily chosen; it is certainly not written in the stars that you must stop working after becoming 65.
Apparently German Chancellor Otto von Bismarck, wanting to neutralise the Social Democrats in his country, asked his officials what the average life expectancy of a man (women did not count) was. The answer came back: 66.
Okay, Bismarck said, a year should be about enough for a man to get his affairs in order. Let us introduce a retirement age for 65. This means that we will not have to pay out pensions for too long.
And that was it.
The problem is that the average life expectancy in the First World has increased drastically. In the European Union (EU) it now stands at 78.82, which includes 75.7 for men and 82.1 for women.
This is expected to increase even further in the future, as the generation now reaching retirement age does not feel as old as previous generations at this age, nor do they act like it. Many 65 year olds now feel and act like the 50 year olds of a generation ago.
In other words, their pensions will have to be paid out far longer than previously. Take into account that most EU member states have some form of state pension, and one can see that this poses a financial problem.
This is exacerbated by the lower birth rate in many countries. According to official EU figures, the number of children per woman averaged 1.58 in 2012, far below the 2.1 needed to keep the population stable.
In Germany, the most populous EU country, the birth rate was 1.38 and in Greece, at the bottom end, it was as low as 1.34.
Simply put, this means that an ever-shrinking number of working people have to contribute the means to pay the state pensions of an ever-increasing number of retirees. Although the negative results are already being felt, the culmination of the problem will be reached in about five years.
That is not a lot of time to correct a problem which could have been foreseen, but about which everybody resolutely closed their eyes till fairly recently.
Some countries, like the Netherlands, have chosen to increase retirement age by a month per year until it reaches 67. Germany did something similar, But this has caused a huge outcry by a pampered population, especially on the left, who see retirement at 65 almost as an immutable human right.
In fact, in the Netherlands this has given birth to a party which caters exclusively for the interests of those over 50.
In Germany it has led to a reverse of the trend. There, the general election earlier this year led to a new government coalition: The old one, consisting of Christian Democrats and liberals, was replaced with Christian Democrats and Social Democrats.
Under pressure from the Social Democrats, the government has now decided to abandon the raising of retirement age and to lower it to 63, and in certain cases even to 61.
This may be good for attracting votes, but it does not solve the problem, which will only become bigger. The British news magazine The Economist and its German
counterpart Der Spiegel have criticised the German decision rather sharply as being bad for Europe’s strongest economy.
Der Spiegel even devoted a series of articles, showing a new trend among the country’s elderly. Many of them do not want to retire at 65 and sit behind the daisies, looking at the cars in the street to pass the time. They want to live a meaningful life, and for that they want a job of some kind.
The magazine quotes a futurology researcher, Matthias Horx: “Sixty-year olds are often as fit as 50-year olds used to be; 70-year olds make plans like 60-year olds”. He calls it “down-aging”.
What this boils down to, is that employers – and this certainly applies to South Africa as well – must stop viewing 60-year olds as doddering, expensive old fools, not able to innovate.
Several European studies have shown seniors to have lots of experience and to have a higher work ethic than the youngsters.
An American saying is: “How long does it take to get 20 years’ experience?”
’Nuff said!
- Fin24
* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.
As might be expected, the Second World War caused the birth rate to plunge. But in the aftermath of the war, couples rediscovered the joys of the bedroom, and so a huge number of babies were born until about 1955, when the wave passed.
The problem is that this has skewed the natural demographics of the continent. The baby boom has flowed like a giant wave through the decades since, and the front end is now reaching the age of retirement.
However, this is causing huge problems.
Let us begin by stating that the retirement age of 65 was originally very arbitrarily chosen; it is certainly not written in the stars that you must stop working after becoming 65.
Apparently German Chancellor Otto von Bismarck, wanting to neutralise the Social Democrats in his country, asked his officials what the average life expectancy of a man (women did not count) was. The answer came back: 66.
Okay, Bismarck said, a year should be about enough for a man to get his affairs in order. Let us introduce a retirement age for 65. This means that we will not have to pay out pensions for too long.
And that was it.
The problem is that the average life expectancy in the First World has increased drastically. In the European Union (EU) it now stands at 78.82, which includes 75.7 for men and 82.1 for women.
This is expected to increase even further in the future, as the generation now reaching retirement age does not feel as old as previous generations at this age, nor do they act like it. Many 65 year olds now feel and act like the 50 year olds of a generation ago.
In other words, their pensions will have to be paid out far longer than previously. Take into account that most EU member states have some form of state pension, and one can see that this poses a financial problem.
This is exacerbated by the lower birth rate in many countries. According to official EU figures, the number of children per woman averaged 1.58 in 2012, far below the 2.1 needed to keep the population stable.
In Germany, the most populous EU country, the birth rate was 1.38 and in Greece, at the bottom end, it was as low as 1.34.
Simply put, this means that an ever-shrinking number of working people have to contribute the means to pay the state pensions of an ever-increasing number of retirees. Although the negative results are already being felt, the culmination of the problem will be reached in about five years.
That is not a lot of time to correct a problem which could have been foreseen, but about which everybody resolutely closed their eyes till fairly recently.
Some countries, like the Netherlands, have chosen to increase retirement age by a month per year until it reaches 67. Germany did something similar, But this has caused a huge outcry by a pampered population, especially on the left, who see retirement at 65 almost as an immutable human right.
In fact, in the Netherlands this has given birth to a party which caters exclusively for the interests of those over 50.
In Germany it has led to a reverse of the trend. There, the general election earlier this year led to a new government coalition: The old one, consisting of Christian Democrats and liberals, was replaced with Christian Democrats and Social Democrats.
Under pressure from the Social Democrats, the government has now decided to abandon the raising of retirement age and to lower it to 63, and in certain cases even to 61.
This may be good for attracting votes, but it does not solve the problem, which will only become bigger. The British news magazine The Economist and its German
counterpart Der Spiegel have criticised the German decision rather sharply as being bad for Europe’s strongest economy.
Der Spiegel even devoted a series of articles, showing a new trend among the country’s elderly. Many of them do not want to retire at 65 and sit behind the daisies, looking at the cars in the street to pass the time. They want to live a meaningful life, and for that they want a job of some kind.
The magazine quotes a futurology researcher, Matthias Horx: “Sixty-year olds are often as fit as 50-year olds used to be; 70-year olds make plans like 60-year olds”. He calls it “down-aging”.
What this boils down to, is that employers – and this certainly applies to South Africa as well – must stop viewing 60-year olds as doddering, expensive old fools, not able to innovate.
Several European studies have shown seniors to have lots of experience and to have a higher work ethic than the youngsters.
An American saying is: “How long does it take to get 20 years’ experience?”
’Nuff said!
- Fin24
* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.
