Intergenerational fairness: which challenges, which solutions? – report of joint EP event

Do people of different ages feel they are treated fairly by public policies? Which are the choices public finances need to make in the process of demographic change? These were the topics of a lunch debate organized in the European Parliament on 21 June 2018 by AGE and the European Youth Forum and hosted by the Intergroup subgroup on Active Ageing and Solidarity between Generations. (You can view the agenda of this event here). The background was the release of a report by the Commission showing the impact of demographic change on public finances until 2070 and a survey conducted by the professional body of chartered accountants ICAEW.

MEPs call for better dialogue on intergenerational issues

Mr Heinz Becker, MEP (EPP/Austria) and Co-chair of the Intergroup subgroup on Active Ageing and Solidarity between Generations declared that, despite what is often said, there is no conflict between younger and older people: solidarity between generations already exists between grandparents and grandchildren. He proposed that impact assessments of all legislation should systematically look at the effect on older and younger people.

Mr Brando Benifei, MEP (S&D / Italy), Vice-chair of the intergroup subgroup, said that the challenges linked to demographic change have to be solved by building trust between generations. He explained that the European Parliament’s work on youth unemployment or European personal pensions aim to build this trust, and that it is important to maintain dialogue between generations.

Mr Lambert Van Nistelrooij (EPP/Netherlands), Co-Chair of the Intergroup subgroup, emphasised that the European Parliament must continue to build strong results to improving intergenerational fairness, supported by the economy.

EU study: demographic change will mean rising pension and health care costs, but will be contained in the long term

The European Commission, represented by Mr Santiago Calvo Ramos, presented the outcomes of a study conducted together with member States from the Economic Policy Committee. The ‘Ageing Report’ tries to predict the evolution of public finances in light of demographic change until 2070, mapping the costs for education, health and long-term care, pensions and unemployment benefits. He explained that while public expenditure will rise strongly until roughly 2040, it will probably fall again afterwards to lead to an about 1.7 % (of GDP) increase of public budgets by 2070. The reality might even be a bit better, if pension reforms that have been announced and planned will be implemented. Some costs are however difficult to predict, as health care costs can evolve with technological developments. For long-term care, costs are presently quite low, because there is a strong reliance on informal (unpaid) care. With more people in need for care, the development of infrastructure will mark a very strong increase in this domain.

Survey: All generations have the same distrust in governments, but no competing priorities

Dr Susanna Di Feliciantonio presented a survey conducted by the Institute of Chartered Accountants for England and Wales, a professional body. The survey, covering 10,000 respondents from 10 European countries, addressed perceptions of intergenerational fairness of public policies. Alarmingly, only ¼ of Europeans trust their government to take the financial impact of policy decisions on future generations into account – a view shared by all age groups. ICAEW also asked respondents which policy areas should be prioritised, and different age groups largely agreed to a set order of priorities – the most important being to fight poverty and unemployment, followed by financing pension systems and care, education, fair taxation, acting for the environment and, as the lowest priority, reducing public debt. The results were broadly similar across countries. Respondents agreed that these priorities should be the responsibility of governments, not of individuals. For Dr Di Feliciantonio, the study highlights the importance of trust and transparency in policy-making, and indicates the need to better explain possible trade-offs to European citizens.

Young people: more representation needed, disadvantages in housing and care policies

Anne Widegren, Secretary General of the European Youth Forum, presented the perspective of young people. The welfare system should be based on intergenerational solidarity and bring responses to demographic change. It is important to enhance confidence of Europeans into their lives and futures, and that is a role of EU social policy. Ms Widegren supported the call for generational impact assessments in policy-making. She emphasised that there is a tendency to pit generations against each other – but this should be resisted. Generations need to come together to be stronger. Young people are under-represented in politics and therefore also in policy. As the population of the European Union is ageing, discrimination and ageism increasingly goes against young people. Housing is an important example, as they cannot own their housing, cannot afford to live alone in big cities. Especially those who do not have the help from their parents clearly face discrimination in the housing market. Age discrimination also happens to older people, acting differently, however.

When the welfare system fails to adapt to the changes in society, there is more pressure on generations. This is the case in informal care. Many carers are young people who are close to their older relatives, and many of them are women. To tackle this injustice, proper investment in care systems and work-life balance policies are all the more important.

To avoid pitting generations against each other, Ms Widegren called for a new social pact to pay more attention to intergenerational fairness.

Common challenges for older and younger people: ageism, learning, pensions, care

Philippe Seidel, AGE Policy Officer, spoke for AGE Platform Europe, highlighting the shared concerns across generations, and the shared problem with trust. AGE supports the new approach to the Justice and Values fund, as it is clearly – amongst others – dedicated to fight age discrimination, an issue for both the young and the old. Another common call is the Erasmus programme: it is good news for younger people and older adults that the funds are doubled in the European Commission’s proposal, but adults are not taken into account as learners, only their teaching staff is included in the mobility programmes.

When reforming pension systems, all generations need to participate in the debate, which is often not the case. Citizens do not trust governments for ensuring their pensions – if they were asked whether they trusted banks, the answer would probably have been worse, though. It is an important message that government have to urgently address. Another common area is precariousness and access to social protection. Both younger and older people find themselves in atypical employment, in particular younger people. This reduces their future pension rights and leads to an erosion of incomes of social protection systems. We should be together addressing this. Supporting those who need care should be seen as a societal task. The burden for long-term care, education and childcare should be supported by society and not fall only on the shoulder of families.

Anne-Sophie Parent, AGE Secretary General, added that there is a missing European Pact on Intergenerational Fairness. This would allow different units and the European Commission’s directorates to work together to get a larger view. For example on pension adequacy, we often look at what people receive, not at what they have to pay for – including long-term care. All EU institutions – Commission, Parliament and Council – have to understand that they have to rebuild trust to reconcile older and younger voters.

For further information on this event and on AGE related work, please contact Philippe Seidel at philippe.seidel@age-platform.eu

Recent background documents:

• AGE Platform Europe and European Youth Forum: Joint Press release on EU Day of Solidarity between Generations: More intergenerational dialogue and participation are still needed, 24/04/2018
• European Commission, The 2018 Ageing Report: Economic and Budgetary Projections for the 28 EU Member States (2016-2070)
• ICAEW, Intergenerational fairness. A survey of citizens in 10 European Countries
• European Commission Pension Adequacy Report 2018. Current and future income adequacy in the EU
• European Commission, Economic and Social Developments in Europe Review 2017; chapter 2: Intergenerational fairness today and challenges ahead
• European Commission, The 2018 Ageing Report. Underlying assumptions & Projection methodologies