G8/G20 Economic Recovery Plans – Aging Populations and Pensions are Under Scrutiny

The recent G8/20 meetings in Toronto and Huntsville, Ontario are already infamous for the excessive budget expenses, violent protests, and police actions. Behind those headlines, the leaders of the biggest economies struggled with how best to recover from the recent recession and address the challenges that aging populations will have on economies around the globe.

Reports from Europe this week suggest that governments are actively seeking ways of ensuring that pensions do not exact a heavy toll on national finances. In the recent past, prohibiting mandatory retirement was the political choice. Now, given demographic challenges and the weakened global economy, politicians are thinking of ways to keep citizens working past “normal” though not necessarily mandated, retirement ages.

Concerns over aging populations are not new. The official report from the 2005 G8 meetings shows how long this issue has been simmering and with the current economic troubles, officials are beginning to express concern that national economies will not be able to accommodate an aging population.

Previous iterations of the G8 meetings focused on ways to keep older workers active longer. On the surface, the “active aging” agenda seems reasonable. The 2005 G8 report reads, “the time has come to reinforce [the active aging] approach by building comprehensive national strategies, within the framework of a life cycle approach, to promote active ageing for both men and women and an inclusive labour market where…older workers are valued for their experience and skills, and their contribution to the economy is fully recognized.”

Few could disagree with such a proclamation, but the rhetoric becomes slightly more contentious when ones reads what follows: “Early, full retirement from the workforce is not encouraged and the average effective age of retirement rises as people enjoy healthier and longer lives and accept and understand the benefits of working longer, for example, through innovative schemes such as gradual retirement where older workers can find a suitable work-life balance.”

This could translate to a variety of policies in different countries, but it does indicate that the current age at which state pensions and other benefits will be available cannot be taken for granted. Indeed, France has already increased its retirement age by two years, from 60 to 62 and other countries are following suit.

A recent publication by the International Monetary Fund and the G20 uses similarly divisive language to argue that more must be done to keep older citizens in the workforce longer. The report, which uses language such as ‘entitlements’ and ‘challenges’, may mean that older citizens are increasingly under the economic microscope.

This is not benign language but has the potential of setting up intergenerational conflict.This year’s G8/G20 summit was relatively quiet on the issue of demographic challenges, but as economic leaders seek ways of imposing austerity measures after a brief period of stimulus spending, they may just look for creative ways of targeting old-age benefits and retirement policies.

Keywords: demographics, seniors