EUROPE - By 2050 there will be only one employed person for every retiree, placing pensions at risk and increasing tax pressures on the working population, the OECD has warned.
According to the head of the employment division of the OECD, Raymond Tourres, retiree levels will sour to well over 100% in southern and eastern European countries with Italy being posited as having the highest ratio of retirees.
However the averages are levelled out to a 50:50 split when demographics in northern Europe, Scandinavia in particular, are taken into consideration. One factor for this, Tourres believed, is higher fertility rates.
He said: “The fertility rate is a reason why there are differences between these countries. You are going to have relatively large cohorts of young workers getting into the labour market rather than in Southern Europe or Eastern Europe.”
In a forum held in Brussels on ageing and employment policies, Belgium’s minister for pensions Bruno Tobback concluded the incentives to keep older people in employment were not sufficient. Instead they are preferring to retire or take early pathways out of the labour market, he said.
According to Tobback, early retirement was seen as a way “to make room for younger workers” however, the reverse has occurred, since unemployment rates of young workers remain high and early retirement remains common practise.
Tobback believed disability pensions, unemployment benefits combined with exemptions from job search requirements have sidelined a substantial number of workers, many of whom could have continued to work.
Minister have agreed therefore to focus on stopping such practises. Instead of subsidising such activity, policies should, on the contrary should enhance the employability of older workers.
This week's edition of Professional Pensions is out now.
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