Vladimir Spidla

English

Research Papers in Economics

Keynote Address by 
VLADIMIR ˘ SPIDLA
EU Commissioner for Employment, Social Affairs
and Equal Opportunities
Mr. Chrobog,
Professor Sinn,
Ladies and Gentlemen,
Many thanks for the invitation and the opportunity
right at the start of your conference to spread what I
hope is a positive mood regarding demographic
change.
Nowadays when people think about the demograph-
ic future it is usually a gloomy prospect involving
topics such as crisis,a superannuated population and
a demographic time bomb. Anyone reading the
headings in our conference programme is even at
risk – and you will permit me this little joke – of
falling into a deep depression. We read there
“Europe heading for a gerontocracy”, “Difficulties
for the social insurance systems” and “Europe’s
childless societies”. It seems to me as if the organis-
ers want these headings to cause both alarm and
provocation.
My colleagues and I in the European Commission
have a somewhat different approach,and I hope that
by the end of my speech this approach will allow us
all to take a slightly more positive view of the demo-
graphic future.
Ladies and Gentlemen,
All the rhetoric of catastrophe often obscures the
fact that demographic ageing is actually a success
story. For our grandparents, reaching the grand old
age of 80 usually remained but a dream,but for those
of us gathered in this hall it almost goes without say-
ing. The forecasts up to 2050 anticipate a further
increase in life expectancy of five years. Never
before have Europeans been able to get as old as
they do now! As a result European society as a
whole is ageing.
Even an explosive increase in birth rate coupled
with large-scale immigration would scarcely achieve
a constant ratio between people of a working age
and the over-65s. But a population explosion like
this is just as unrealistic as the often feared migra-
tion flows.
As I said before, the ageing of the population – and
I find “ageing” a more appropriate word than
“superannuation” – is primarily the result of a con-
stant increase in life expectancy.And then there are
the baby-boom years of the 60s and 70s. As from
2020 the baby-boomers will be “reaching a certain
age” and increasing the percentage of old people in
the population.
The ageing of the population is at the same time
linked to the low birth rate in the EU. Statistically,
each woman in the European Union brings 1.5 chil-
dren into the world – far below the sustainability fig-
ure of 2.1. This figure furthermore conceals enor-
mous differences between the member states.Whilst
in my home country, the Czech Republic, there is
currently a ratio of 1.2 children to each woman, the
ratio for Germany is 1.4, whilst for the frontrunners
France and Ireland it is about 2.
Currently 16 percent of the European population is
over the age of 65.Assuming there are no changes in
birth rate and immigration, by 2050 the proportion
of old people will have almost doubled. But it is also
to be expected that by 2050 people will be far health-
ier at the age of 65 or 80 than is now the case. The
‘perceived ageing’ of society might thus turn out far
less marked than the statistical predictions might
suggest. Judging by a glance around the hall, we
doubtless all look far younger than our grandparents
did at our age!
Demographic ageing naturally displays major differ-
ences in scope and speed between the individual
member states and regions. It has nevertheless now
become a Europe-wide phenomenon, and all the
member states rightly see it as a major challenge.
One thing is clear. Because of this major change in
social reality our states will have to change. For a
CESifo Forum 3/2007 12
Keynote AddressCESifo Forum 3/2007 13
long time the member states were on their own with
their strategies for demographic change. It was
important to me to encourage a European debate,
thus immediately after taking up my post at the
Commission in March 2005 I published the Commis-
sion’s Green Paper on demographic change. The
results of this public exchange were compiled in the
October 2006 communiqué “The demographic fu-
ture – from challenge to opportunity”.
If we are to meet the demographic challenge we
need a broad approach that allows people to remain
active in their work and in society – a kind of “main-
streaming” of the demographic factor. This ranges
from infrastructure, compatibility of family and
career, crèches and re-entry into the labour market
through to an active labour market policy.If we want
a stable social system we need people who are pay-
ing in. Not only is the group of people of a working
age shrinking, but in many member states there is
also an increase in jobs that do not create any social-
insurance contributions. If less and less money is
being paid in, there has at some stage to be a transi-
tion to financing of social insurance through taxa-
tion,and more incentives have to be created for jobs
that are subject to social-insurance deductions. The
service sector will greatly change and will adjust to
the Silver Economy. Millions of jobs will be created
in this field over the coming years.
So what do we think has to happen to bring all
these factors together, enable the member states to
deal with the demographic challenge and ensure
financing of social security systems permanently
and in a person oriented fashion? If sustainability
were the sole criterion payments could simply be
halved and financing would then be guaranteed. In
Europe, however, we require social systems to be
humane – the focus must be on people and not just
finances. That sounds a little simple, but it consti-
tutes the core of our system.This is why the reforms
currently taking place in many member states are
so important!
Allow me to briefly describe the results of the
October 2006 communiqué and our May 2007
report:
– Firstly: a Europe that favours demographic
renewal.
– Secondly: a Europe that raises the value of work.
– Thirdly: a more productive and more efficient
Europe.
– Fourthly:a Europe that is prepared to take in and
integrate immigrants.
– Fifthly: a Europe whose public finances have a
viable future.
But what do these recommendations mean in detail?
Well, firstly a Europe that favours demographic
renewal is a Europe in which Europeans can imple-
ment their ideas of family. Please do not misunder-
stand me. The decision to have children is a private
matter and must remain so, but surveys show that
many women and men want more children than they
actually bring into the world.This is often because of
unfavourable social and economic conditions.
Potential parents are afraid that looking after chil-
dren would be a problem,or that they would have to
decide between career and time with their children,
or that it would be too expensive. All of these are
factors that frequently lead to women and men not
realising their actual wish to have children.
It is thus imperative that we improve the social and
economic conditions for families and children – not
only to strengthen our social insurance but also so
that people who want children can also realise this
wish! It just will not do that after devoting 30 years
to her career a woman still receives inferior pay
because she was at home with her children for two
eight-month periods 25 years ago!
The compatibility of career, family and private life is
crucial in this context. People should not have to
choose between children and career! Encouraging
experiences have already been made in this area.
Germany has made impressive use of its EU presi-
dency to demonstrate what is possible in countries
such as France and Sweden, and it is now in the
process of doing an about-turn.That is very positive.
The “European Alliance for Families”, which the
Council recently brought into being, was also a very
welcome initiative on the part of the German
Families Minister Ms. von der Leyen.
The Alliance will be a platform for an EU wide
exchange of thoughts and experiences regarding
family-friendly policies. The Commission supports
the “Alliance for Families”, and in May it made con-
crete proposals regarding organisation of the ex-
change of information and experiences in a commu-
niqué. Under the heading “Promote solidarity
between the generations”, in this communiqué we
Keynote Addressare also addressing the issue of how demographic
renewal of Europe could be furthered.
We are emphasising three areas which jointly play an
important role, in order to facilitate the compatibili-
ty of professional and family life:
– Financial support for family-related costs,
– High-quality care services for children and
dependent elderly people, and
– Flexible working hours with appropriate timeta-
bles and regulated holidays.
In this context, might I remind you that as many as
five years ago the member states undertook im-
provement of child care services at the European
summit in Barcelona. The EU-wide target is avail-
ability of places in child-care facilities for a third of
children under the age of three by 2010. Next year I
will be presenting a communiqué in order to take
stock of the situation.
Secondly, we want a Europe that raises the value of
work. We will no longer be able to afford to simply
leave our talents and potential unexploited. By inte-
grating more women and more young and elderly
people into the work process we will be able com-
pensate for the drop in the number of people of a
working age for about 10 years. Already, the
increased jobs development in Europe is mainly
thanks to the growing number of women and the
elderly taking on work. For example, of around
8 million newly created jobs in the EU since 2000,
around 6 million were filled by women.
We must support “active ageing”and make sure that
in companies employees are no longer pushed off
into early retirement as from their late 50s. They
should instead remain integrated into operations
through constant further training, a flexible work
organisation and work conditions that are beneficial
to health. Since the 90s Finland has been demon-
strating to us how far more elderly people can thus
be kept in the working process. Equivalent projects
can incidentally also be supported in Germany
through the European Social Fund.
This brings me to my third point, because our
future also depends on a more productive and
more efficient Europe. Europe’s economic growth
is becoming more and more dependent on its
increasing productivity and its innovative capacity,
and thus on its investments in training, research
and development.
However, much remains to be done with regard to
promoting our human capital. For example, the
European Union has set itself the target for 12.5 per-
cent of all people of a working age to be participat-
ing in measures for life-long learning – above all con-
tinuing and further education – by the year 2010.The
current figure is about 10 percent, and progress
towards the target figure is so slow that we are at risk
of not achieving it.
The situation is similar with regard to higher educa-
tion and success at school. We have too few young
people gaining qualifications at Secondary Level 2,
i.e.Abitur in Germany (and A-level GCE in the UK)
or apprenticeship,and too many leaving school with-
out any qualifications.In this context a joint effort on
the part of all interested parties from the fields of
politics, commerce and society is required.
A more productive and efficient Europe will ulti-
mately depend on companies’ ability to open up
markets that meet the needs of the ageing popula-
tion.Companies are thus being encouraged to devel-
op the desired services and products for the “silver
economy”. A DIW study in April, for example,
shows that the over-60s already account for a third of
consumption in Germany, and by 2050 this propor-
tion could rise to 40 percent. In Bavaria, with its
huge automobile industry, the findings of the Dublin
based European Foundation for the Improvement of
Living and Work Conditions will doubtless be of
interest. The foundation estimates that car sales
could increase by about five to eight percent if they
better targeted the needs of pensioners!
At the same time we,of course,have to be prepared
for growing demand for social care and for health-
care provision.It is thus important to invest in train-
ing people who offer these services and to improve
the reputation of these professions and the quality
of these services. Anyone wanting a secure liveli-
hood in 2030 should concentrate on services for the
elderly.
Fourthly,we need a Europe that is prepared to take
in and integrate immigrants. Immigration is of
course neither a patent solution nor the main way
of resolving demographic problems. However,
excepting the dark years of the past century – the
period of the Iron Curtain – there has always been
migration in Europe. And immigration is already
helping to bridge bottlenecks on the European
labour market.
CESifo Forum 3/2007 14
Keynote AddressCESifo Forum 3/2007 15
What is more, these bottlenecks will in future tend
to increase rather than decrease.It is thus not a mat-
ter of choosing between a Europe with immigrants
and one without.It is far more a question of whether
Europe regulates immigration well or poorly.
Neither is it a matter of either immigration or get-
ting people already living in Europe qualified. As I
have said before, we should resolutely develop our
human capital and simultaneously facilitate immi-
gration.
Permit me a somewhat daring hypothesis. Perhaps
there will soon be a lack of immigration in Europe.
We should ask ourselves when immigration has
existed over the past century. There have usually
been two reasons. Firstly, immigration from previ-
ous colonies or historically linked countries –
Pakistanis went to Great Britain, North Africans to
France and Indonesians to the Netherlands.
Secondly, immigrants came – often as refugees –
following catastrophes: after WW1 and WW2 from
West to East, after 1956 from Hungary, after 1968
from Czechoslovakia and in the 90s from the for-
mer Yugoslavia. Africans are fleeing to Italy, Spain
and Malta, etc. The only exception seems to me to
be the Turks, who came to Germany in the 50s and
60s. The colonial era is past, and we will hopefully
be spared catastrophes such as the above. We will
thus rather have to create incentives to pave the
way for well-trained immigrants and legal, regulat-
ed immigration in line with the needs of the
European labour market.This is to be accompanied
by an efficient integration process. As part of the
integration we must above all make sure that immi-
grants and their children get the appropriate train-
ing and labour-market opportunities, so they can
realise their potential once they are here.Migration
will thus increasingly become the remit of the
Labour Minister and less that of the Justice
Minister – not that I would wish to question the
competence of anyone in this context!
Finally we must develop a Europe whose public
finances have a viable future and that can guarantee
adequate social welfare and a balance between the
generations. Demographic ageing will entail higher
expenditure for care for the elderly,health and long-
term care. Long-term financing of adequate social
welfare for the elderly is in many member states not
yet assured. The first four recommendations will
already contribute towards increasing revenue for
social security systems. But modernisation of the
actual social security systems is also necessary in
order to attain the goals of growth, employment and
social cohesion in Europe. The efficiency and sus-
tainability of the organisation of these systems can
often be further improved.
Rational use of resources is a crucial factor for a sus-
tainable health service and can simultaneously serve
to guarantee high standards. Better coordination,
promotion of a healthy way of life and prevention
are sensible strategies for everyone. They improve
people’s state of health and furthermore prevent
costs for welfare systems from rising.The recent pen-
sion reforms in several countries will reduce the
imbalance in the pensions systems.Nevertheless,fur-
ther reforms will probably be unavoidable in many
countries.They would primarily have to aim at rais-
ing the effective retirement age.
The European Union can support the national
reform processes, above all by promoting mutual
learning with the aid of the so-called open method of
coordination. As part of this coordination mecha-
nism the member states set themselves joint goals,
report on their realisation and present to each other
examples of tried-and-tested practices.
We at the European Commission offer the member
states our support in coping with demographic
change. As previously explained, we are initially
promoting the exchange of experiences between
the member states as part of the open method of
coordination. Every two years we will also be hold-
ing a demography forum at which member states
will be able to exchange successful strategies and
set their own targets, which will then be analysed
every year. Last October’s forum constituted a
highly successful start. The Commission has also
deployed a high-powered group of government
experts who are in future to advise us on demo-
graphic matters.
Ladies and Gentlemen,
Even though the pressure to change is considerable
and we must not let time pass unused, I am firmly
convinced that we can meet the challenges of demo-
graphic change and that it does not represent a
threat to our European social model. Above all, we
must give people confidence in the future. We have
to grasp the demographic challenges as a task for the
whole of society, realise the opportunities of this
development and renew the solidarity pact between
the generations.
Keynote AddressTherein, in my opinion – in the renewal and stability
of the contract between the generations – lie the real
opportunities of the demographic challenge. Over
the centuries the middle generation has brought up
young people and cared for the elderly.This situation
will basically remain unchanged, but new opportuni-
ties are opening up through the presence of a new
generation of active old people.
One field for renewal of the contract between the
generations might, for example, comprise the com-
mitment and work of the older generation contribut-
ing towards all children and young people getting
the best possible education. This means creating
equal opportunities in the field of school and post
school education. But it equally means greater
efforts in the field of early education, above all by
creating crèches and kindergarten places of a high
educational level. This would then also bring about
improved compatibility of career and family for
women and men of the middle generation.And ulti-
mately it would also readjust the distorted picture of
old age as a fallow and static period – because old
people are actually very active.
If we achieve a new pact between the generations
based on full utilisation of the potential of the elder-
ly and massive investment in the future of young
people, our societies can continue to age with confi-
dence. If we now approach the challenge of demo-
graphic change resolutely we will also benefit from
its opportunities – regardless of our actual age. Our
European society is strong enough for this.
Thank you for your attention.
CESifo Forum 3/2007 16
Keynote Address

Keynote Address by Vladimir Spidla

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Keynote Address by Vladimir Spidla

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