INTRODUCTION i Leaving No One Behind In An Ageing World World Social Report 2023 WORLD SOCiAL REPORT 2023: LEAViNG NO ONE BEHiND iN AN AGEiNG WORLD DEPARTMENT OF ECONOMiC AND SOCiAL AFFAiRS WORLD SOCiAL REPORT 2023: LEAViNG NO ONE BEHiND iN AN AGEiNG WORLD Leaving No One Behind In An Ageing World World Social Report 2023 iii DEPARTMENT OF ECONOMiC AND SOCiAL AFFAiRS The Department of Economic and Social Affairs of the United Nations Secretariat is a vital interface between global policies in the economic, social and environmental spheres and national action. The Department works in three main interlinked areas: (i) it compiles, generates and analyses a wide range of economic, social and environmental data and information on which States Members of the United Nations draw to review common problems and to take stock of policy options; (ii) it facilitates the negotiations of Member States in many intergovernmental bodies on joint courses of action to address ongoing or emerging global challenges; and (iii) it advises interested Governments on the ways and means of translating policy frameworks developed in United Nations conferences and summits into programmes at the country level and, through technical assistance, helps build national capacities. ST/ESA/379 United Nations publication Sales No. E.23.IV.2 ISBN 978-92-1-130458-9 eISBN 978-92-1-001968-2 Copyright © United Nations 2023 All rights reserved WORLD SOCiAL REPORT 2023: LEAViNG NO ONE BEHiND iN AN AGEiNG WORLD iV FOREWORD Our world is changing in fundamental ways. becoming less and less valid. Yet, effective One key trend is the gradual and largely systems of old-age support will continue irreversible shift towards an older popula- to be needed, as will the intergenerational tion, already underway in most countries. solidarity required to sustain them. The number of persons aged 65 years or Not everyone has benefitted to the same older worldwide is expected to double extent from the social and economic im- over the next three decades, reaching provements that drive longevity. 1.6 billion in 2050, when older people will account for more than 16 per cent of the High and rising levels of inequality threaten global population. to become a defining feature of present and future generations. Due to a combination People are living longer, healthier lives. The of acute crises and unfavourable long-term rise in human longevity is a success story trends in employment and wages, successive caused by improved sanitation and medical generations are increasingly unequal and therapies, greater access to education and economically insecure in both developed family planning, and strides towards gender and developing countries despite ongoing equality and women’s empowerment. improvements in health and education. Without swift and bold policy action to This shift in the population age structure counter this trend, future cohorts of older brings into question current arrangements persons may be even more economically of old-age support in countries both young unequal than those alive today. But rising and old. As the health and wealth of so- inequality is not inevitable, and policy makers cieties continue to improve, traditional can influence the future direction of inequal- notions of dependency at older ages are ity as populations continue to live longer. V The World Social Report 2023 explores the will be left behind. Together, we can ad- social and economic opportunities and dress today’s inequalities for the benefit challenges that population ageing pre- of tomorrow’s generations, managing the sents. As Governments come together to challenges and capitalizing on the oppor- mark the twentieth anniversary of the Ma- tunities that population ageing brings. drid International Plan of Action on Ageing, the Report builds on the Plan’s framework Questions of intergenerational equity in of support to national policies to create an ageing world need to take centre stage equitable, fair and inclusive societies for as the world prepares for the Sustainable people of all ages. Development Goals Summit in 2023 and the Summit of the Future in 2024. Now Policies to promote healthy ageing, pre- is the time to plan for the long term, to vent poverty and foster employment and prepare for the challenges ahead and take opportunities for decent work before peo- advantage of the new opportunities these ple reach older ages are vital to enhance demographic shifts bring. It is the time to economic security and reduce inequality strengthen solidarity between younger and among older persons. Taking advantage older people today and between present of the skills, expertise and knowledge of and future generations. older persons, women, and other groups that have traditionally been excluded from or disadvantaged in the labour market can go a long way towards promoting equity and ensuring that old-age support systems are fiscally sustainable. A key message of the World Social Report Li Junhua 2023 is that population ageing and policies implemented in response to this historic Under-Secretary-General for Economic global trend can be harnessed to uphold and Social Affairs the pledge contained in the 2030 Agenda United Nations  for Sustainable Development that no one WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD Vi ACKNOWLEDGEMENTS The World Social Report is the flagship University of Southern California. A publication on major social development group of graduate students from the issues of the Department of Economic Edward J. Bloustein School of Planning and Social Affairs (DESA) of the United and Public Policy of Rutgers University, Nations Secretariat. under the guidance of Prof. Hal Salzman, also prepared a background study for The 2023 report was prepared by a team the report as part of a studio project. led by John Wilmoth of the Population Division, Daniela Bas of the Division The team is particularly grateful to Jen- for Inclusive Social Development and nifer Ailshire, Deborah Carr, Carlos Gra- Shantanu Mukherjee of the Economic din, Emily Grundy, Teresa Munzi, Jorg Analysis and Policy Division, under the Neugschwender, Warren Sanderson and guidance of Navid Hanif. The report’s Andrew Scott for their review of early core team included Lina Bassarsky, Jorge drafts and for their guidance and advice Bravo, Danan Gu, Kristinn Sv. Helgason, during the preparation of the report. The Zhenqian Huang, Ismael Issifou, Kenneth team would also like to thank Amal Abou Iversen, Maren Jimenez, Yumiko Kamiya, Rafeh, Hoi Wai Jackie Cheng, Julia Ferre, Daisuke Maruichi, Jonathan Perry, Julie Nicole Hunt, Alex Julca, Cornelia Kalde- Pewitt, Marta Roig and Karoline Schmid. wei, Marcelo LaFleur, Tim Miller, Wenyan Yang, and other DESA colleagues for their The analysis contained in the report substantive contributions to the report benefited from background papers and for commenting on drafts during the prepared by Peter Lloyd-Sherlock, internal review process. Sang-Hyop Lee, M. Mahmud Khan, Renu- ga Nagarajan and Jean-Marie Robine. The report was skilfully edited by Gretchen A background paper and data analysis Luchsinger. Blossom provided the cover were also provided by the Gateway to design and final layouts for all text, tables Global Aging Data team based at the and figures. Vii CONTENTS FOREWORD IV ACKNOWLEDGEMENTS VI EXPLANATORY NOTES XI EXECUTiVE SUMMARY 2 iNTRODUCTiON 10 CHAPTER 1. AN AGEiNG WORLD 17 A. Older populations are rapidly growing everywhere 18 B. The population age distribution is shifting steadily upward 21 C. Better measurement improves understanding of ageing societies 25 1. Comparing chronological and prospective measures of old-age dependency 26 2. Measuring ageing from an economic perspective 27 D. Demographic transition stems from longer lives and smaller families 29 CHAPTER 2. TOWARDS LiViNG LONGER, HEALTHiER LiVES 35 A. A longer lifespan is a success story 36 B. Women have a survival advantage – but it may not last 40 C. Many factors determine healthy ageing 41 D. Longer lives are not always healthy, especially for women 42 E. Disparities in health and life expectancy intersect with multiple inequalities 44 F. Premature deaths have declined but the future is uncertain 46 CHAPTER 3. WHAT POPULATiON AGEiNG MEANS FOR ECONOMiES 48 AND iNTERGENERATiONAL EQUiTY A. Ageing opens doors and poses challenges 51 1. Two demographic dividends can drive greater growth 52 2. Ageing has an impact on productive capacity 53 3. As people grow older, consumption patterns change 56 4. Financing old-age consumption depends on reallocating resources 60 5. Adapting to sustain economic growth over time 64 B. Keeping up with ageing calls for shifting consumption and production strategies 67 1. Women and older workers add value in labour markets 67 2. Greater labour productivity depends on investing in skills 69 3. Harnessing the potential of the technological revolution 72 4. Pronatalist policies show mixed results 73 5. Beyond borders: impetus for new investment flows 73 C. Carefully timed policies can steer a successful transition 76 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD Viii CHAPTER 4. AGEiNG, POVERTY AND iNEQUALiTY, NOW AND iN THE FUTURE 76 A. Poverty, inequality and exclusion in old age: a snapshot 77 1. Poverty risks can rise with age 77 2. Inequality need not increase in old age 83 3. Saving for old age stumbles over multiple obstacles 84 4. Gender disparities make older women poorer 85 5. Other dimensions of old-age exclusion 87 B. Inequalities over the course of life add up 90 1. Health disparities among older people often start early: education is key 90 2. Employment can support or damage health 94 C. The future of ageing: more unequal 95 1. The employment crisis will be felt across generations 95 2. Inequality is rising 99 3. COVID-19 altered prospects for education and labour markets 101 D. Reducing inequality and providing security – 102 without breaking the budget 1. Cutting the roots of old-age disadvantage and ill-health 102 2. Improving the lives of older persons through adequate pensions 104 3. The potential of progressive taxation 109 CHAPTER 5. A CRiSiS OF CARE 113 A. As populations age, care has not kept up 115 1. Care needs are growing 115 2. Care needs are changing 117 B. Providing better care: determinants, status and challenges 119 1. Ageing in the right place 119 2. Living arrangements define care provision 120 3. Demand for care outstrips the supply of caregivers 121 C. COVID-19 cut a devastating swathe through long-term care 131 1. Clustered in facilities, older people were more vulnerable 131 2. Long-term caregivers paid a high price, many times over 133 D. More equitable care centres on what people need – and decide 133 1. Regulating improvements in care quality and conditions 134 2. Investing in long-term care 135 3. Helping people age in place 136 4. Creating an environment that fosters better care 137 iX BOXES 1.1 Defining replacement-level fertility 31 1.2 International migration can both slow and add to population ageing 32 1.3 From tax credits to baby bonuses, countries concerned about low fertility offer support 33 for bearing and rearing children 2.1 COVID-19 has disrupted steady gains in global life expectancy 39 3.1 Accounting for unpaid care informs policies equipped to manage an ageing society 66 3.2 How to amplify economic growth during the demographic transition 70 3.3 In Japan, ageing is reorganizing industry and advancing the digital economy 74 4.1 Challenges in measuring old-age income poverty 79 4.2 COVID-19, isolation and discrimination against older persons 88 4.3 Disparities in disability signal unequal ageing 93 4.4 The building blocks of old-age pension systems 105 5.1 Acute end-of-life vulnerabilities require specialized care 118 FiGURES 0.1 Age patterns of labour income and consumption, averaged across 41 countries, based 11 on data between 1994 and 2016 1.1 Number of people aged 65 years or over in millions, world and regions, 1980, 2021 21 and 2050 1.2 Percentage of people aged 65 years or over, world and regions, estimates for 1950–2021 22 and projections for 2022–2050 1.3 Distribution of the global population in broad age groups and total dependency ratios, 24 estimates for 1950–2021 and projections for 2022–2050 1.4 Traditional and prospective old-age dependency ratios, world and regions, estimates 27 for 1990–2021 and projections for 2022–2050 1.5 Economic old-age dependency ratios, world and regions, estimates for 1990–2021 and 28 projections for 2022–2050 1.6 Population distribution by age and sex, crude birth and death rates, and total 29 population size at different stages of the demographic transition 2.1 Number of deaths by sex and age in Denmark, 1835-2020 37 2.2 Life expectancy and health-adjusted life expectancy at age 60, by sex, selected 43 countries, 2000–2019 3.1 Years marking the beginning and end of the demographic dividend (upper panel) and 53 average duration of the first demographic dividend (lower panel), both by region 3.2 Global labour force participation rate by age and sex, 2019 55 3.3 Labour force participation rate by region and age group (in years), 2019 57 3.4 Per capita consumption by age relative to the consumption level among those aged 30 57 to 49, latest year available, 2005–2016 3.5 Structure of consumption expenditure by age, European Union countries, 2015 58 3.6 Total annual expenditure on health as a share of GDP in OECD countries 59 3.7 Sources of income by age group 61 3.8 Per capita taxes and social contributions across the life course, selected countries in 63 Europe, Asia and the Americas 3.9 Changes in the fiscal burden due to pension promises in 32 OECD countries, percentage 64 of GDP, 2018–2060 3.10 Projected contributions of three factors to achieving the annual average labour 71 productivity growth required for income growth targets, regional averages, 2020–2050 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD X 4.1 Share of the population living in relatively poor households by broad 81 age group, late 2010s (or latest year with data) 4.2 Differences in relative poverty rates between older and working ages, 82 selected countries, 2018 (or latest year with data) 4.3 Gini coefficient by age, selected developed and developing countries, 83 2018 (or latest year with data) 4.4 Household wealth by age, selected developed countries, 2019 (or latest 85 year with data) 4.5 Share of the population living in relative poverty by age and sex, late 86 2010s (or latest year with data) 4.6 Share of older persons living in relative poverty by level of education, 91 2019 (or latest year with data) 4.7 Share of adults 50 and older with a functional disability by education 92 level, selected countries, around 2018 4.8 Effect of working in physically demanding jobs on functional disability, 94 adults aged 50 or older, selected European countries and Israel, around 2018 4.9 Estimated unemployment rate by age and birth cohort 96 4.10 Estimated youth labour force participation rate by birth cohort 98 4.11 Gini coefficient by birth cohort 100 4.1.1 Types of assets owned by people living in relative poverty by age in eight 111 developed countries, 2019 (or latest year with data) 4.1.2 Logistic regression predicting functional disability based on work 112 history, by sex, adults aged 50 and older in Europe, 2018 5.1 Share of women among long-term care recipients in institutions other 116 than hospitals and at home, aged 65 or above and aged 80 or above, selected OECD countries 5.2 Long-term care recipients at home and in institutions other than 120 hospitals, selected countries, latest available year 5.3 Estimated numbers and deficits in formal long-term care workers, the 122 world and by region, 2015 5.4 Number of informal long-term care workers per 100 persons aged 65 or 123 over, 2014 5.5 The time that women and men spend on unpaid care work for all 124 household members 5.6 Number of countries with a long-term care policy, plan, strategy 128 or framework, standalone or integrated within an ageing and health plan 5.7 Government spending and household out-of-pocket payments on long- 129 term care, share of GDP, latest available year 5.8 Public spending on long-term care and long-term care beds in 2019 (or 130 latest available year) TABLES 1.1 Countries and areas with the largest shares of people aged 65 years or 23 over, 1980, 2021 and 2050 2.1 Life expectancy at birth by sex, world, regions and income groups, 40 1950, 2021 and 2050 Xi EXPLANATORY NOTES The following symbols have been used in tables throughout the report: A hyphen (-) between years, for example, 1990-1991, signifies the full period involved, including the beginning and end years. A full stop (.) is used to indicate decimals. A dollars sign ($) indicates United States dollars, unless otherwise stated. Details and percentages in tables do not necessarily add to totals, because of rounding. When a print edition of a source exists, the print version is the authoritative one. United Nations documents reproduced online are deemed official only as they appear in the United Nations Official Document System. United Nations documentation obtained from other United Nations and non-United Nations sources are for informational purposes only. The Organization does not make any warranties or representations as to the accuracy or completeness of such materials. The following abbreviations have been used: Economic Commission for Latin America and the Caribbean (ECLAC) Gross Domestic Product (GDP) International Labour Organization (ILO) International Organization for Migration (IOM) International Monetary Fund (IMF) Luxembourg Income Survey (LIS) Organisation for Economic Co-operation and Development (OECD) Purchasing power parity (PPP) Sustainable Development Goals (SDGs) United Nations Conference on Trade and Development (UNCTAD) United Nations Children’s Fund (UNESCO) World Health Organization (WHO) NOTES ON REGiONS, DEVELOPMENT GROUPS, COUNTRiES AND AREAS The designations employed in this publication and the material presented in it do not imply the expression of any opinions whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The term “country” as used in this report also refers, as appropriate, to territories or areas. In this publication, data for countries and areas are often aggregated in six continental regions: Africa, Asia, Europe, Latin America and the Caribbean, Northern America, and Oceania. Further information on continental regions is available from https://unstats.un.org/unsd/methodology/m49/. Countries and areas have also been grouped into geographic regions based on the classification being used to track progress towards the Sustainable Development Goals of the United Nations (see https://unstats.un.org/sdgs/indicators/regional-groups/). The designation of “developing” and “developed”, is intended for statistical purposes and does not express a judgment about the stage in the development process reached by a particular country or area. Developed regions comprise all countries and areas of Europe and Northern America, plus Australia, New Zealand and Japan. Developing regions comprise all countries and areas of Africa, Asia (excluding Japan), Latin America and the Carib- bean, and Oceania (excluding Australia and New Zealand). Further information is available at https://www.un.org/ ohrlls/content/about-us. The classification of countries and areas by income level is based on gross national income (GNI) per capita as re- ported by the World Bank. These income groups are not available for all countries and areas. Further information is available at https://datahelpdesk.worldbank.org/knowledgebase/topics/19280-country-classification. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 1 EXECUTIVE SUMMARY 2 EXECUTiVE SUMMARY Population ageing is a defining global trend longer lives and smaller families. While the of our time. People are living longer, and shift towards older populations is largely more are older than ever before. Spectac- irreversible, collective actions and policy ular improvements in health and survival decisions shape its path and consequenc- and reductions in fertility have driven this es. Postponing critical measures that al- momentous shift, which has begun or is ex- low societies to benefit from and adapt pected to begin soon in all countries and ar- to population ageing would impose high eas. This change brings both challenges and social, economic, fiscal and health-relat- opportunities as countries strive to achieve ed costs, for both current and future gen- the Sustainable Development Goals (SDGs). erations. By contrast, with appropriate foresight and planning, Governments can In 2022, the world marked the twentieth manage the challenges from population anniversary of the adoption of the Madrid ageing while enhancing opportunities for International Plan of Action on Ageing. To all people to thrive and ensuring that no commemorate this landmark, the World one is left behind. Social Report 2023 explores the economic and social implications of the ageing of the As elaborated in this report, population human population. It builds on the Plan of ageing needs to be widely understood as Action’s framework for national policies to more than just a set of discrete concerns create equitable, inclusive societies for peo- mainly for one group of people who have ple of all ages, providing recommendations advanced beyond a given age. Ageing to put the rights and well-being of older touches all parts of economies and so- persons at the centre, across the life course. cieties, from health care and education to employment and taxation. Each stage Population ageing is an inevitable result of life can contribute to or detract from of the demographic transition towards well-being at older ages. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 3 AN AGEiNG WORLD iS Declining mortality throughout the life A SUCCESS STORY course has driven the increase of life ex- pectancy at birth in most countries and globally. Greater longevity has accompa- nied a narrowing of the age range in which Population ageing signals our extraordi- most deaths occur. In the past, death was nary collective success in improving living common at all ages. Many children died conditions for billions of people around from infectious diseases, for example, and the world. Better sanitation and medical women frequently perished in childbirth. In therapies, greater access to education most countries today, “premature death” and family planning, and strides towards before age 60 or 70 is relatively rare. gender equality and women’s empower- ment have all contributed to, and in some Greater global life expectancy reflects cases benefitted from, the steady move underlying improvements in health. In from high to low levels of fertility and countries with available data, the number mortality. These advances have ushered of years lived in good health has climbed, in an era where rapid population growth accounting for most of the increase in is slowly coming to an end, accompanied years lived overall. Statistical averages by a gradual but permanent shift towards hide broad disparities in life expectan- older ages. Over several decades, both cy, however, including by sex and socio- the number and population share of economic status. In almost all societies, older persons have risen globally, while women live longer than men on average, the number and share of children and and the rich longer than the poor. These youth have begun to shrink. By 2050, differences stem partly from poor nu- the number of persons aged 65 years or trition and exposures to environmental older is expected to double, surpassing and occupational hazards that are more 1.6 billion. common among men and people with limited income and education. Currently, population ageing is furthest along in Europe and Northern America, In 2020, the World Health Organization Australia and New Zealand, and most of and the United Nations designated 2021- Eastern and South-Eastern Asia. In most 2030 as the Decade of Healthy Ageing. countries of those regions, the propor- Its purpose is to promote strategies, tion of older persons – by convention, grounded in solid evidence, that sup- those aged 65 years or older – exceeds port well-being among older people. It 10 per cent and in some cases 20 per advocates for developing and maintain- cent of the total population. Most parts ing functional abilities, recognizing that of sub-Saharan Africa and Oceania (ex- these depend on each individual’s intrinsic cluding Australia and New Zealand) are still capacity, the surrounding environment in an early stage of this transition, while and interactions between the two. The most countries in Central and Southern Decade builds on the Madrid International Asia, Western Asia and Northern Africa, Plan of Action on Ageing and aligns with and Latin America and the Caribbean are the timing of the Sustainable Develop- at an intermediate stage. ment Goals. EXECUTIVE SUMMARY 4 POPULATiON AGEiNG BRiNGS age dependency ratio – do not account ECONOMiC REWARDS AND for these factors, however (box 1). Further, CHALLENGES many older people still encounter obstacles that limit their contributions. Age-based discrimination in the labour market, for in- stance, undercuts their full participation in Levels of economic production and con- the economy. sumption vary over the life course. Typically, people in the middle phases of life produce Older persons should have the option of con- more than they consume, generating a sur- tinuing to work for as long as they desire and plus to provide for their dependent children are able to do so. Nevertheless, the ability and others who rely on them for support and to work and generate income wanes sooner contributing towards economic security for or later at advanced ages. As populations themselves at older ages. The demograph- grow older, questions arise around how to ic transition includes first an increase and support rising numbers of older people in the then a decrease in the share of working-age face of escalating pension, health-care and people in the total population. The initial long-term care costs, particularly if equitable increase occurs following a sustained re- and sustainable systems are not in place to duction in fertility, which lowers the portion distribute resources among age groups. of children and youth in the population. The subsequent decrease in the relative size of The means of financing goods and servic- the working-age population is driven by rap- es for older persons differ across coun- id growth in the proportion of older persons. tries. In more developed regions, public transfer systems, including pensions and When the share of working-age people health care, provide over two thirds of is growing, countries have a window of the consumption by older persons. In less opportunity to jumpstart more rapid eco- developed regions, older persons tend to nomic gains. Reaping this “demographic work longer and rely more on accumulated dividend”, however, depends on maintain- assets or family assistance. Countries at ing or expanding investments in education all stages of population ageing should take and health, and on generating opportuni- proactive and forward-looking measures ties for productive employment and de- to adapt and innovate in their labour mar- cent work as rapidly growing numbers of kets and pension and health-care systems young people enter the workforce. to ensure that support for older persons is both adequate and fiscally sustainable. While consumption and production pat- terns change as people age, older people Lower fertility opens doors for families and make important economic and social con- societies to invest more in the education of tributions at all stages of the demographic children. Higher levels of personal savings in transition. Many continue paid employment. anticipation of a longer life can spur capital Within families, older people often provide accumulation, increased productivity and financial support to other family members faster economic growth. This period can or assistance with childcare. Standard de- continue as long as the savings are invested mographic indicators – such as the old- productively. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 5 BOX 1 FiNDiNG BETTER WAYS TO MEASURE POPULATiON AGEiNG AND AGE-RELATED DEPENDENCY There are different approaches to measuring ratio, for instance, includes both younger population ageing and levels of age-related de- and older age groups. Another measure, pendency. Two commonly used measures are: the economic old-age dependency ratio, first, the size of the population aged 65 years or reflects not only the age distribution of a older as a proportion of the total population, population but also variations over the age and second, the old-age dependency ratio. The range in levels of labour income and con- latter compares the size of the older population sumption. Another set of indicators shifts to that of the working-age population. By de- the focus from the time elapsed since birth fining age groups in a chronological and static to the time remaining until death. manner, however, the old-age dependency ratio does not consider changes over time in Some studies have demonstrated that the the health and activity levels of older persons need for health care and social support at or their diverse capabilities. In addition, by older ages is often closely linked to a person’s including older persons but omitting children remaining years of life. Where life spans are and young people in calculating the ratio, the increasing, analyses and forecasts of age- measure provides an incomplete picture of ing-related social and economic costs that age-related dependency over the life course. are based on the expected time until death can provide relevant and useful information Some alternative measures could remedy about the likely fiscal impacts of ongoing these shortcomings. The total dependency demographic changes. EXECUTIVE SUMMARY 6 PATHS TO OLDER AGES tems. In both developed and developing ARE UNEQUAL countries, older persons are more likely to live in poor households than working-age people. Nevertheless, the gap in levels of poverty between older and working-age Although the improvements in health and populations is much larger in developing survival that drive the growth of older pop- regions where social protection systems ulations have been broadly shared, not and services are less well established and everyone benefits equally. Many of today’s often far from comprehensive. older persons are in excellent health. Oth- ers live with multiple ailments or severe Inequalities evolve over the life course and disability. Some are economically active vary from one generation to the next. To- and enjoy income security, but many live day’s youth are healthier and better edu- in poverty. Population averages conceal cated than prior generations. Moving for- the vast inequalities and diverse needs ward, they are expected to be healthier and abilities of older people. and to live longer on average. Education levels are likely to continue increasing de- Inequality starts early in life. Without poli- spite disruptions caused by the COVID-19 cies to prevent it, disadvantages reinforce pandemic. At the same time, young people one another throughout peoples’ lives, today face great uncertainty and economic leading to gaping disparities at older ages. insecurity in the transition to adulthood. Education and employment consistently Profound changes in the world of work emerge as primary determinants of health are affecting job stability and disrupting and economic outcomes at every stage income security. of life, including at older ages. Moreover, health and employment are closely inter- Growing disparities in the labour market twined. Poor health can negatively affect will likely result in higher levels of ine- employment opportunities, while the type quality as people age. For most countries of work that people do, the conditions in with available data, income inequality has which they work and whether they have a risen from one 10-year birth cohort to job in the first place impacts their physical the next at almost all ages in both de- and mental health. veloped and developing regions. This rise may spur widening disparities in health This report highlights the importance of and life expectancy among future cohorts country-specific conditions and policies of older persons. Moreover, widespread to reduce inequality throughout people’s informal employment and the increased lives, guided by some broad parameters. prevalence of other precarious forms of In general, countries with comprehensive work threaten access to adequate pen- social protection systems and universal- sions and other social protection bene- ly accessible essential services, includ- fits, putting economic security at risk for ing for education and health care, have large numbers of older persons. Without been much more successful at mitigating remedial action, there is a significant risk income inequality and reducing poverty at that standards of living at older ages will older ages than those without such sys- become increasingly unequal. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 7 GENDER DiSPARiTiES DRiVE on its own. Substantial improvement in UNEQUAL AGEiNG women’s economic security throughout the life course, including at older ages, depends on eliminating gender dispari- ties in education and ensuring access to Poverty levels at older ages are typical- decent work for both women and men. ly higher among women. Lower levels of Bringing care work more consistently into participation in formal labour markets, the formal economy would create decent shorter working careers and lower wag- jobs and expand employment opportuni- es compared to men leave many women ties for women. struggling with greater economic inse- curity later in life. Given women’s longer LONG-TERM CARE NEEDS life expectancies, older women are more ARE SOARiNG likely than older men to be widowed, less likely to remarry and more likely to live alone – three features that can exacerbate economic insecurity. Demand for long-term care is soaring in many countries as the population of older Women also bear the brunt of deficiencies persons grows larger, especially at ages in caregiving. The unequal distribution of 80 and higher. Traditionally, co-habiting care and domestic work within families family members, usually unpaid women curtails women’s working lives and con- and girls, met the care needs of older stricts pension incomes. In the labour persons. Intergenerational co-residence market, women make up most caregivers, is declining in both developed and devel- working in both the informal and formal oping countries, however. Care models sectors of a poorly regulated care econo- that rely exclusively or primarily on fam- my where workers typically earn low wages. ilies are increasingly inadequate. At the end of their lives, older women are more likely to need long-term care be- So far, public spending in most coun- cause they live longer and are at greater tries has not been sufficient to cover the risk of age-related disabilities than their growing demand for long-term care. The male counterparts. average expenditure by countries of the Organisation for Economic Co-operation Gender equality requires rebalancing care and Development (OECD) was 1.5 per cent duties within families and adopting family of GDP in 2019, down from 1.7 per cent and labour policies that enable women and in 2017. Insufficient funding means car- men to manage both domestic respon- egivers are undervalued, underpaid and sibilities and market employment. Such inadequately trained and often work in changes will foster women’s labour force difficult conditions. A shortage of well- participation, strengthening the produc- trained caregivers leads to poor quality tive capacity of economies as populations care. Many countries, even wealthy ones, grow older. Yet increased participation in continue to rely on informal services by the labour market will not be sufficient paid or unpaid caregivers. EXECUTIVE SUMMARY 8 The COVID-19 pandemic exposed exist- The first set can be taken throughout peo- ing weaknesses in health care for older ple’s lifetimes to promote labour market persons, especially long-term care, and participation and increased productivity, demonstrated how such weaknesses can uphold good health and prevent poverty. aggravate inequalities. Poor quality and The second set consists of policies to re- underfunded systems of care, insufficient duce inequality and promote economic se- provisions for care at home, low wages and curity at older ages in a fiscally sustainable precarious conditions for paid care work- manner, taking into account both pensions ers, and a lack of reliable protocols to pre- and health care. vent COVID-19 transmission within health facilities contributed to a heavy death toll ADDRESSiNG THE ROOT CAUSES OF among older persons. The crisis underlined DiSADVANTAGE AMONG OLDER PEOPLE the imperative for fundamental reforms of STARTS AT BiRTH long-term care. Giving every person an equal chance to Those who deliver unpaid or poorly com- grow older in good health and with eco- pensated care to older persons provide nomic security begins with promoting critical services. Yet their contributions are equal access to opportunities from birth. not adequately recognized. Governments All children should be able to develop can close this gap by developing integrated and advance their capabilities, including long-term care strategies that build on through quality education and health care. appropriate regulation, training and sup- Education should not stop after childhood port for caregivers and mechanisms such or young adulthood, given rapidly evolving as accreditation and monitoring to ensure technologies and labour markets. Oppor- quality. Instituting compulsory public in- tunities for continued learning and skills surance can free individuals from burden- development throughout the life course some out-of-pocket costs for long-term help workers to adapt to shifts in labour care. Promoting formal employment for demand, to use new technologies more care workers and improving their work- effectively and to increase their produc- ing conditions can help meet the demand tivity over time. for quality care. Rethinking approaches to long-term care will benefit not only to- Improved education can raise labour pro- day’s older persons and those who care ductivity and reduce poverty and inequal- for them but also future generations of ity but only when coupled with realistic older persons and their caregivers. prospects for decent work. Job creation matters but so does the quality of the work. LEAViNG NO ONE BEHiND iN AN Employment in the informal sector is often AGEiNG WORLD REQUiRES POLiCY characterized by low worker productivity, ACTiON NOW limited access to social protection pro- grammes and marginal contributions to public revenues. At the same time, dec- ades of wage stagnation jeopardize the This report highlights two sets of actions ability of low-wage workers to save for to build societies for all people at all ages. old age. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 9 Increasing investment in the institutions of that school curricula cultivate skills that work – from regulations and employment people can use to gain a secure footing in contracts to collective agreements, labour the labour market. inspection mechanisms and comprehen- sive social protection systems – will ac- iMPROViNG THE LiVES OF OLDER PERSONS celerate pathways to formalization, boost CALLS FOR ADEQUATE PENSiONS productivity and, above all, strengthen the social contract in an ageing world. For- Countries at advanced stages of popu- malizing large informal sectors will take lation ageing may struggle with concerns time, however. Throughout this transition, about the sustainability of public expendi- countries should progressively extend the tures, particularly for health care and pen- coverage of social protection systems to sions. Yet some proposed pension system all workers in the informal economy. reforms intended to ensure fiscal sustain- ability can, when applied across the board, The world of work begins at home. Reducing negatively affect income security among the burdens of domestic care work, which fall low-income earners. disproportionately on women and impede their equal participation in the workforce, Most public pension systems have not should be a central objective of employment kept up with changes in employment pat- and social policies. From parental leave to terns, especially the growing insecurity investment in public childcare services and of low-paying jobs. COVID-19 and earlier dependent child tax credits, policies can crises have exposed the risks of cutting foster the equitable sharing of unpaid care public transfers across the board. This re- work and promote equal opportunities for port proposes measures to improve sus- women in the paid workplace. tainability while maintaining or increasing the role of pensions in reducing inequality. Population ageing also reinforces the im- It also warns against shifting the financial petus for international investments so that risks associated with pension funds onto countries with large working-age popu- individuals or moving away from collective lations, including many in Africa, can at- risk-sharing. tract much-needed capital. Such capital flows can boost labour productivity and Countries without comprehensive so- wages and foster more rapid economic cial protection systems should focus on growth worldwide. Realizing the historic extending pension coverage, providing opportunity created by a rapidly growing adequate benefits and financing public pool of workers and a large market size pension systems to reach target 1.3 of the also calls for transformative economic and SDGs.1 Although there is no one-size-fits- structural reforms to encourage foreign all route to increased pension coverage, direct investment and technological dif- three actions can help to ensure the fi- fusion. In tandem, countries must invest nancial well-being of all older persons. The in raising educational levels and ensuring first is to encourage private savings and 1 The aim of target 1.3 is “to implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable”. EXECUTIVE SUMMARY 10 improve financial literacy. The second is to perspective. Although these certainly introduce or expand tax-funded pension require policy attention and action by schemes so that all older persons maintain Governments, discussions of sustaina- a basic level of income security. The third bility and fairness to future generations is to strengthen the institutions of work, should be cast in the broader context of as discussed in the previous section. the large and persistent divide separat- ing rich and poor today, both within and A critical factor in extending pension among countries. coverage and guaranteeing adequacy is funding. In most countries, it is possible PUTTiNG AGEiNG AT THE CENTRE to increase public revenues without in- tensifying the tax burden on low-income workers or the middle class. With an un- derstanding of how population ageing As this report goes to press, the world may impact different categories of taxes, continues to suffer from destabilizing Governments can adopt forward-looking shocks with profound impacts on health, reforms to prepare for and address fore- economic prosperity and social welfare. seeable fiscal pressures. For many devel- After more than two years of the COV- oping countries, a top priority should be to ID-19 crisis, the war in Ukraine is upending improve their capacity for generating tax a fragile social and economic recovery. revenues, including by promoting transi- Multiple humanitarian crises are erupting tions from informal to formal employment, amid rising costs of living everywhere. Cli- combating tax evasion and strengthening mate change looms large, inflicting severe tax administration. Such efforts need to and unprecedented droughts and floods, be supported by effective and inclusive further stressing the global food supply international cooperation on tax issues. and threatening the survival of many. As populations age, all countries will face the The World Social Report 2023, including challenge of providing adequate pensions its analysis and review of policy options and care for older persons while ensuring to address population ageing, is intended the long-term fiscal sustainability of current to provide world leaders with informa- support systems. In this context, the fact tion and policy guidance as they chart a that future generations of older people may path forward and renew commitments be more unequal and economically inse- to achieving the SDGs. Rebuilding after cure must be considered. Pension systems multiple crises and advancing implemen- must be fiscally viable yet reforms weakening tation of the 2030 Agenda for Sustainable their redistributive power will jeopardize the Development hinge on wide-ranging and well-being of growing numbers of older per- comprehensive policy responses at the sons. If such reforms are seen as ineffective, national and multilateral levels. Leaders they may also undermine the capacity of of all countries should recognize that States to maintain pension systems. these need to give a central emphasis to managing the challenges of popula- It is also important to put inequalities tion ageing while making the most of its across age groups and generations into opportunities. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 11 WORLD SOCiAL REPORT 2023: LEAViNG NO ONE BEHiND iN AN AGEiNG WORLD iNTRODUCTiON We live in a world of rapid social and eco- Due to spectacular improvements in health nomic change. People in the twenty-first and survival and to reductions in family size century have and will continue to have, on and fertility, the long-term process of pop- average, a noticeably different life expe- ulation ageing has begun, or is expected rience compared to earlier generations. to begin soon, in all countries and areas Amid abundant change and diversity in the of the world. The share of older persons human condition, there are nevertheless as a proportion of the global population common features of life in all human so- is gradually increasing while the share of cieties and similar changes affecting all children and young people is slowly de- populations, including a shift in population creasing. These global trends bring both age structure towards older ages. challenges and opportunities across the economic, social and environmental di- mensions of sustainable development. The long-term process of population Much relates to variations in how people ageing has begun, or is expected to produce and consume over the course of life. Typically, people in the middle stages begin soon, in all countries and areas produce more than they consume, gener- of the world ating a surplus to provide for their depend- ent children or others who rely on them for support or to secure an income for themselves at older ages (figure 0.1). This INTRODUCTION 12 general pattern holds across populations physiological deterioration that marks at various levels of social and economic biological ageing. development. As individuals grow older, questions arise Population averages, however, do not re- around how they will sustain themselves veal the full diversity of individual experi- financially when they no longer work or ences at any given age. Some working-age receive labour income, and how they will people do not generate sufficient labour be cared for when they can no longer care income to finance what they need to live. for themselves. Societies provide support Many older persons are in good health and care for older persons through vari- and continue to provide for themselves ous channels. Traditionally, families have and contribute to their communities played an essential part. Over time, how- until advanced ages. Nevertheless, the ever, States have taken on an increasing ability to engage in productive work and role in transferring resources and provid- carry out activities of daily living wanes ing assistance to older persons as part of sooner or later, given the progressive modern social contracts. Figure 0.1 Age patterns of labour income and consumption, averaged across 41 countries, based on data between 1994 and 2016 1 0.5 0 10 20 30 40 50 60 70 80 90 Consumption per capita Labor income per capita Source: Computed using data from the National Transfer Accounts project. Available at https://ntaccounts.org (accessed on 23 August 2021). Note: Age patterns of consumption and labour income are shown relative to the average labour income for people aged 30 to 49. Relative to per capita labour income for people aged 30 to 49 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 13 As populations globally undergo a demo- primarily on balancing the budget may also graphic transition towards longer lives give short shrift to essential forms of social and smaller families, and the number and protection and, in doing so, intensify pov- population share of older people grow, all erty and inequality among older people. Governments need to adapt and innovate in their policies and programmes to en- Some countries, for instance, have shift- sure that older persons remain productive ed financial risks onto pensioners through and empowered members of society and pension programmes that rely on workers to prepare to support more older people contributing to an investment fund that when needed. With appropriate foresight will pay their pensions in retirement. The and planning, Governments can manage accumulated return on investment in large the challenges associated with population part determines the benefit received. This ageing while also taking full advantage of leaves individual beneficiaries bearing the the opportunities it offers and ensuring uncertainties of investment performance, that no one is left behind. which may result in insufficient income later in life. All Governments need to adapt their Despite such concerns, there are reasons policies to enable older persons to to be optimistic about population ageing. Based on current global trends, future co- remain productive and empowered horts of working-age and older persons are members of society likely to be healthier and better educated, and therefore more productive, compared to earlier cohorts. These changes highlight potentially positive impacts on the econ- In the initial stage of population ageing, omy and broader society. Whether these countries have a window of opportunity potentially positive effects materialize de- to benefit from a demographic dividend pends on countries maintaining or increas- – a boost in per capita economic growth ing public investments in health care and arising from an increasing share of the education for all, including lifelong learn- working-age population. Expanding op- ing. Eliminating age-related discrimination portunities for decent work and investing and barriers to formal employment are in quality education and health-care ser- other critical measures for older persons vices help maximize the potential benefits to make continued contributions. of the dividend and steer economic growth that is inclusive and diminishes poverty The implications of population ageing have and inequality. been on the agenda of the international community for decades. At the First World Governments in countries with rapidly Assembly on Ageing convened in Vienna, ageing populations have responded in var- Austria, in 1982, population ageing was ious ways. In most cases, concerns have identified for the first time as a global issue emerged around the fiscal sustainabili- with vital connections to development. The ty of programmes to respond to ageing. Second World Assembly on Ageing, held Unfortunately, some measures focused 20 years later in Madrid, concluded with INTRODUCTION 14 the adoption of a Political Declaration and balanced manner. It calls for leaving no the Madrid International Plan of Action on one behind and meeting the Sustainable Ageing, a landmark agreement in which Development Goals (SDGs) for all segments Governments committed to “building a of society and at all ages, with a particu- society for all ages”. The Plan of Action lar focus on the most vulnerable people, provides guidance on a broad range of including those at older ages. issues under three priorities: older per- sons and development, advancing health Recognizing the importance of healthy and well-being into old age, and ensuring ageing2 to achieving all 17 SDGs, in De- enabling and supportive environments. The cember 2020, the United Nations General plan acknowledges the contributions and Assembly proclaimed 2021-2030 as the concerns of older persons as vital to the United Nations Decade of Healthy Age- international development agenda. ing.3 The Assembly expressed concern that, despite the predictability of pop- In 1994, the Programme of Action adopted ulation ageing and its accelerating pace, at the International Conference on Pop- the world is not sufficiently prepared to ulation and Development in Cairo recog- protect the rights and address the needs nized population ageing as an irreversi- of older people.4 United Nations Member ble trend and called on Governments and States acknowledged that population age- other stakeholders to take advantage of ing has major impacts on health systems the associated opportunities by helping and many other aspects of societies, in- older people to maintain their economic cluding labour and financial markets and and social independence, and by providing services for education, housing, long-term health care and support through family care and social protection. and other formal and informal safety nets. The Programme of Action calls specifically To commemorate the twentieth anniver- for the support and protection of older sary of the Madrid International Plan of women, recognizing that they constitute Action on Ageing, and at the onset of the the majority of older persons globally. Decade of Healthy Ageing, the World Social Report 2023 examines the social and eco- While the Millennium Development Goals, nomic implications of population ageing adopted in 2000, only marginally included for sustainable development. The report consideration of older persons and their presents concrete policy options to har- needs and contributions to society, the ness opportunities and address challeng- 2030 Agenda for Sustainable Develop- es, including those related to sustainability, ment sets out a universal plan of action equity and inclusion. to achieve sustainable development in a 2 Healthy ageing, defined by the World Health Organization (WHO) as “the process of developing and maintaining the functional ability that enables wellbeing in older age”, replaces WHO’s previous focus on active ageing, a policy framework developed in 2002. Healthy ageing, like active ageing, emphasizes the need for action across multiple sectors and enabling older persons to remain a resource to their families, communities and economies (WHO, 2020a). 3 General Assembly resolution 75/131. 4 In 2010, the General Assembly established an Open-ended Working Group on Ageing, mandated to identify possible gaps in the existing international framework and how best to address them. In 2012, the Assembly requested the Working Group to present a proposal containing the main elements to include in an international legal instrument to promote and protect the rights and dignity of older persons, which are not sufficiently addressed through existing mechanisms. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 15 Chapter 1 examines changes in popula- economically insecure. Proactive changes tion age distribution over the demographic are needed to reduce inequalities among transition, particularly the rapid growth in people right now with the expectation that the number and share of the older pop- this will prevent worsening inequalities as ulation. Although levels and trends differ people age. by country and region, the world is grad- ually transitioning towards longer lives and Chapter 5 examines weaknesses in long- smaller families. term care and support systems given changing living arrangements among old- Chapter 2 describes the global trend er persons. It describes how reforming towards lower mortality and increased such systems could benefit today’s older longevity. It shows that in countries with persons and those who care for them as available data, the number of years lived well as future cohorts of older persons. in good health appears to be increasing. The chapter draws attention to the im- portance of the care economy and to the Chapter 3 discusses the implications of imperative for policymakers to address population ageing for the economy. It af- the disproportionate role of women and firms that different stages of the demo- immigrants in a sector that is often poorly graphic transition have varying economic compensated and remains largely invisible impacts. Other influential factors are eco- in economic accounting. nomic structure and levels of human and social development. Understanding these All countries must make choices about dynamics can open opportunities to better how to maximize the opportunities that prepare for a future with a greater share population ageing brings while ensuring of older persons. people’s well-being at all stages along the life course. This report highlights policies Chapter 4 examines inequality over the that countries can adopt to minimize pov- life course and illustrates how it contrib- erty and to support people in remaining utes to poverty in old age. The analysis productive and healthy as they age. A key suggests that, although future cohorts message is that countries can address con- of older persons will likely be healthier cerns about fiscal sustainability without and more educated than those alive to- sacrificing equity or economic security day, they may also be more unequal and at older ages. INTRODUCTION 16 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 17 CHAPTER 1 AN AGEiNG WORLD KEY MESSAGES are expected to experience the fastest growth in the number of older people █ The number of people aged 65 years or over the next three decades. Today, older worldwide is projected to more Europe and Northern America com- than double, rising from 761 million in bined have the highest share of older 2021 to 1.6 billion in 2050. The number persons. of people aged 80 years or older is growing even faster. █ Women tend to live longer than men and thus comprise the majority of █ Population ageing is an irreversible older persons, especially at advanced global trend. it is the inevitable result ages. Since the average survival of of the demographic transition – the males is projected to gradually move trend towards longer lives and small- closer to that of females, small but er families – that is taking place even noticeable reductions in the sex gap in countries with relatively youthful in life expectancy and in the female populations. in 2021, 1 in 10 people share of the population at older ages worldwide were aged 65 or above. in are likely in coming decades. 2050, this age group is projected to account for 1 in 6 people globally. █ Conventional measures of population ageing, such as the old-age depend- █ As fertility levels fall, the share of ency ratio, are often used as proxy younger people declines, while the indicators of economic dependency. shares of working-age adults and, Other measures can provide a more eventually, older people go up. Fur- nuanced picture by taking account of ther population ageing is driven by increased life expectancy or the eco- more people living longer, healthier nomic production and consumption lives. of various age groups. █ Among regions, Northern Africa and Western Asia and sub-Saharan Africa CHAPTER 1 18 We live in an ageing world, marked by a shift in 2050. By the end of the twenty-first cen- in the distribution of populations towards tury, the world could have nearly 2.5 billion older ages. This pattern began on a global older people (United Nations, 2022a). scale around the middle of the twentieth century and is expected to intensify in the decades ahead. Between 2021 and 2050, the The number of older people global share of the older population, defined as people aged 65 years or over, is project- increased rapidly in all ed to increase from less than 10 to around regions of the world from 17 per cent. The number of older people 1980 to 2021, a trend that is is expected to more than double from 761 million to 1.6 billion during the same period likely to continue over the (United Nations, 2022a). Most of the more next three decades developed countries have experienced pop- ulation ageing over several decades and are already in advanced stages of this process. By contrast, many developing countries face The number of older people increased rapid transitions towards ageing societies. rapidly in all regions of the world from 1980 to 2021, a trend that is likely to con- This chapter presents an overview of levels tinue over the next three decades. From and trends in population ageing around the 2021 to 2050, the population aged 65 or world. It also discusses how common demo- over in Eastern and South-Eastern Asia graphic measures of population ageing can be and in Central and Southern Asia is pro- modified to integrate health and economic jected to grow by more than 540 million, considerations and thus provide clearer guid- accounting for more than 60 per cent of ance as countries seek to implement policies the global increase. Over the next three and services to meet changing needs. decades, Northern Africa and Western Asia and sub-Saharan Africa are projected to have the fastest growth – or highest A. growth rate – of the population aged 65 or above. Globally, the number of people aged 80 OLDER POPULATiONS years or over is rising even faster than the ARE RAPiDLY GROWiNG number aged 65 or above. By 2050, the EVERYWHERE world will have an estimated 459 million persons aged 80 or more, almost triple the number in 2021 at around 155 million. Between 2021 and 2050, this age group is The number of older people is growing fast, projected to increase by more than 200 having tripled from around 260 million in per cent in all regions except Europe and 1980 to 761 million in 2021 (figure 1.1). By Northern America and Australia and New 2030, the number is projected to top 1 bil- Zealand, where it is expected to grow by lion and eventually to reach over 1.6 billion 10 per cent and 60 per cent, respectively. FACTS AND FIGURES SOCIETIES WILL BE OLDER FROM CHAPTER 1 from 1 in 10 people 65+ to 1 in 6 people 65+ MORE THAN DOUBLE in 2021 in 2050 the number of people aged 65+ will MORE THAN DOUBLE from THE GEOGRAPHY OF THE 761 WORLD’S OLDEST COUNTRIES AND MILLION in 2021 to TERRITORIES IS SHIFTING from Europe towards Eastern and South-Eastern Asia by 2050 1.6 World’s oldest country or territory (with the largest share of people 65+) BILLION in 2050 1980 2021 Sweden Japan 16% 30% THE 80+ POPULATION IS GROWING FAST increase expected from 2050 155 459 Republic of Korea 40% MILLION in 2021 to MILLION in 2050 CHAPTER 1 20 FACTS AND FIGURES SOCIETIES WILL BE OLDER FROM CHAPTER 1 from 1 in 10 people 65+ to 1 in 6 people 65+ MORE THAN DOUBLE in 2021 in 2050 the number of people aged 65+ will MORE THAN DOUBLE from THE GEOGRAPHY OF THE 761 WORLD’S OLDEST COUNTRIES AND MILLION in 2021 to TERRITORIES IS SHIFTING from Europe towards Eastern and South-Eastern Asia by 2050 1.6 World’s oldest country or territory (with the largest share of people 65+) BILLION in 2050 1980 2021 Sweden Japan 16% 30% THE 80+ POPULATION IS GROWING FAST increase expected from 2050 155 459 Republic of Korea 40% MILLION in 2021 to MILLION in 2050 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 21 Figure 1.1 Number of people aged 65 years or above in millions, world and regions, 1980, 2021 and 2050 World 260 761 1.603 Regions with fewer than 50 million people Regions with 50 million or more aged 65 and over in 2021 people aged 65 and over in 2021 9 Northern Africa Latin America 1530 and Western Asia 98 and the Caribbean 59 142 Sub-Saharan Africa 12 35 Eastern and 71 293 100 South-Eastern Asia 598 0 38 Oceania (excl. Aus./N.Z.) 0,5 Central 131 1,6 and Southern Asia 350 2 Australia/New Zealand Europe and 1135 9 Northern America 208 303 1980 2021 2050 Source: United Nations (2022a). Women live longer than men on average and of the total population. Population age- thus comprise a majority of older persons, ing unfolds over many decades through a especially at the highest ages. In 2021, wom- gradual upward shift in the age distribu- en outlived men by an average of 5.4 years tion. While the share of population at older and accounted for 56 per cent of the global ages goes up, the share at younger ages population aged 65 or over. Among those goes down. The median and average ages aged 80 or over, the proportion of women of the population both rise in the process. reached 62 per cent. Since survival rates for men are projected to gradually move closer In 2021, 1 in 10 people worldwide was aged to those of women, the sex distribution at 65 or over compared to 1 in 20 in 1950. older ages is expected to become more In 2050, this age group may account for balanced. Still, in 2050, women will likely 1 in 6 people worldwide (figure 1.2). Over comprise a majority of the population aged the next three decades, the proportion 65 or above and 80 or above (54 per cent of older people is projected to double in and 59 per cent, respectively). five regions while increasing more slowly in the other three. In sub-Saharan Africa, high birth rates are expected to keep the B. share of children and youth relatively large and therefore the share of older persons relatively small. In Europe and Northern America and in Australia and New Zealand, THE POPULATiON AGE where population ageing is already well DiSTRiBUTiON iS SHiFTiNG advanced, further ageing will take place STEADiLY UPWARD more slowly. In 1980, the world’s 10 oldest popula- tions were in Europe, each with around The older population is growing globally 15 per cent of the population at ages 65 both in absolute numbers and as a share or above (table 1.1). By 2021, the share CHAPTER 1 22 The geography of the world’s expected 30 per cent by 2050. Although Japan had the world’s oldest population oldest countries will shift from in 2021, China, Hong Kong, Special Ad- Europe towards Eastern and ministrative Region (SAR) of China, and the Republic of Korea will likely surpass South-Eastern Asia between it before 2050. The geography of the now and 2050 world’s oldest countries will shift from Europe towards Eastern and South-East- ern Asia between now and 2050, when above age 65 had pushed past 20 per the latter is expected to include 5 of the cent in all 10 countries, on its way to an 10 oldest populations. Figure 1.2 Percentage of people aged 65 years or over, world and regions, estimates for 1950–2021 and projections for 2022–2050 70 60 50 40 30 20 10 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 World Sub-Saharan Africa Northern Africa and Western Asia Central and Southern Asia Eastern and South-Eastern Asia Latin America and the Caribbean Australia / New Zealand Oceania (excl. Aus./N.Z.) Europe and Northern America Source: United Nations (2022a). Economic old-age dependency ratio per 100 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 23 Table 1.1 Countries and areas with the largest shares of people aged 65 years or over, 1980, 2021 and 2050 1980 2021 2050 RANK COUNTRY OR PERCENTAGE COUNTRY OR PERCENTAGE COUNTRY OR PERCENTAGE AREA AGED 65 AREA AGED 65 AREA AGED 65 YEARS OR YEARS OR YEARS OR OVER OVER OVER China, Hong 1 Sweden 16.3 Japan 29.8 Kong, SAR of 40.6 China Republic of 2 Germany 15.7 Italy 23.7 39.4 Korea 3 Austria 15.4 Finland 22.9 Japan 37.5 4 United Kingdom 14.9 Portugal 22.6 Italy 37.1 5 Norway 14.8 Greece 22.5 Spain 36.6 China, Taiwan, 6 Belgium 14.4 Bulgaria 22.4 Province of 35.3 China 7 Denmark 14.4 Puerto Rico 22.4 Greece 34.8 8 France 14.0 Germany 22.2 Portugal 34.5 9 Switzerland 13.8 Martinique 22.1 Singapore 34.2 10 Luxembourg 13.6 Croatia 22.0 Kuwait 33.6 Source: United Nations (2022a). Note: For countries and areas with a population of 90,000 or more by mid-2021. Population ageing is progressing persons from 7 to 14 per cent in 15 to 35 more rapidly in developing countries years and a further increase from 14 to 21 per cent in just 10 to 30 years. than it did historically in more developed countries Between 2021 and 2050, all regions are expected to experience a rise in the me- dian age, which divides the younger and Population ageing is progressing more older halves of the population. Globally, rapidly in developing countries than it did the median age is expected to climb from historically in more developed countries. 30 years in 2021 to 36 years in 2050. The With few exceptions, such as Japan, in most region of Latin America and the Caribbean countries of the more developed regions, is projected to experience a rapid rise in the proportion of the population aged 65 the median age from 30 years in 2021 to or above rose from 7 to 14 per cent in any- 40 years in 2050. Over the same period, where from 40 to 120 years. It took (or will the median age in Europe and Northern take) between 20 and 50 years to increase America is projected to increase from 40 the share further from 14 to 21 per cent. to 46 years. Between now and 2050, 16 By contrast, most developing countries will countries are expected to reach a median likely see a doubling in the share of older age of 50 years or higher. CHAPTER 1 24 Historically, older persons made up a much tio provides an approximate indication of smaller share of the population compared how many dependents are likely to need to younger age groups. As fertility rates support from each person of working age, drop during demographic transition, the on average. The ratio reflects the number shift in the age structure manifests ini- of children and young people under age 20 tially as a swelling share of adults in the plus the number of older persons compared working and reproductive ages and falling to the number of working-age people, often proportions of children and youth. If fertil- defined as those between ages 20 and 64. ity remains at lower levels, the population The actual ages of dependency, however, begins to age and eventually the share of vary considerably from country to country older people starts to rise. Successive co- and from person to person. Factors such horts tend to live longer, increasing the as the pursuit of higher education or youth demands on younger generations as po- unemployment often prolong the dependent tential sources of assistance in old age. period beyond age 20. Health and financial considerations as well as personal prefer- Children and older people tend to rely on ences influence the age at which people economically active adults for financial retire from the workforce and eventually support and care. A total dependency ra- become dependent. Figure 1.3 Distribution of the global population in broad age groups and total dependency ratios, estimates for 1950–2021 and projections for 2022–2050 100 120 90 100 80 70 80 60 50 60 40 40 30 20 20 10 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 Aged 0-19 Aged 20-64 Aged 65 and older TDR Source: United Nations (2022a). TDR indicates total dependency ratio. Population, percentage Total dependency ratio, per 100 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 25 In 2002, at the time of the Second World ca and the Caribbean will complete this tran- Assembly on Ageing, more than half of the sition by 2060 and Central and Southern global population was between 20 and 64 Asia by 2080. Populations in sub-Saharan years old (54 per cent), meaning 8 or 9 in- Africa, Oceania (excluding Australia and New dividuals potentially depended on every 10 Zealand), and Northern Africa and Western workers (figure 1.3). Most “dependents” were Asia will continue to have dominant shares children and youth below age 20; only 15 of young dependents through the end of per cent were older people. By 2021, with this century. the progression of population ageing, older people made up a larger share of the de- pendent group, although still less than that of children and youth, and the proportion of working-age persons in the total popu- C. lation had increased to 57 per cent. This share will remain relatively stable through BETTER MEASUREMENT 2050, keeping the dependency ratio below iMPROVES UNDERSTANDiNG 1. Part of the increased portion of people OF AGEiNG SOCiETiES at ages 65 or over stems from the greater share over age 80. The latter is expected to increase from 2 to around 5 per cent of the global population between 2021 and 2050. The total dependency ratio allows an overall understanding of the demand for public A regional review of the evolution of the services and the necessary financial re- working-age population shows that it sources. Yet to better comprehend the peaked in Europe and Northern America socioeconomic implications of population in 2013. It is projected to peak in 2027 in ageing, several additional measures help Eastern and South-Eastern Asia, followed account for the diversity of capacities and by Latin America and the Caribbean in 2043 dependencies across ages. and Central and Southern Asia in 2058. All other regions are expected to experience The old-age dependency ratio, based on continued growth in the working-age pop- chronological age, compares the size of the ulation through the end of the century. older population to that of the working-age population. It assumes implicitly that all old- Although population ageing is progressing er persons are net recipients of economic everywhere, younger populations will con- transfers, including for health care, and that tinue to constitute the largest share of de- these transfers are financed by the labour pendents globally even while declining from income of younger age groups. Defining age 33 per cent of the global population in 2021 groups in a purely chronological and static to around 28 per cent in 2050. Three regions manner, however, may limit understanding will complete the transition from a high share of possible changes over time in the health of youth dependents to a high share of older status and activity levels of older persons dependents before 2050: Australia and New (see chapter 2). Other concepts and meas- Zealand, Europe and Northern America, and ures that shift the focus from the number Eastern and South-Eastern Asia. Latin Ameri- of years lived since birth to the expected CHAPTER 1 26 time until death, or remaining life expec- to 64. By 2050, this ratio is projected to tancy, offer an alternative perspective on increase to 29 per 100. In fact, the old-age how population ageing impacts social and dependency ratio is expected to rise in all economic development. regions between 2021 and 2050 (figure 1.4). Given the diversity among older persons A complementary way to assess population in terms of economic activity, health and ageing involves shifting the focus from the well-being, and levels of non-market activi- time since birth (chronological age) to the ty, and considering that not all working-age expected time until death (thanatological people are economically active, researchers age). At an aggregate level, the expected have proposed alternative measures of pop- time until death is determined by a set of ulation ageing that incorporate information age-specific mortality rates covering the about age patterns of production and con- remaining years of life. Since a person’s sumption. Such measures have been devel- health, welfare and social care demands oped in the context of the National Transfer at older ages are often more closely linked Accounts (United Nations, 2013, 2019a; Lee to thanatological than to chronological age, and Mason, 2011; Mason and others, 2017).5 forecasts of the social and economic costs of ageing that are based only on chron- ological age are prone to bias (Riffe and 1. COMPARiNG CHRONOLOGiCAL AND others, 2016). During periods of declining PROSPECTiVE MEASURES OF OLD- mortality and increasing longevity, predic- AGE DEPENDENCY tions of health and social care costs based on chronological age tend to overestimate The old-age dependency ratio is based total financial expenditure, as most acute on chronological age and is defined as the medical care costs occur in the final months number of persons aged 65 years or over of life with little additional impact from a divided by the number of working-age person’s age at that time (Miller, 2001; Riffe people (20 to 64 years). This indicator al- and others, 2016; Sanderson and Scherbov, lows an examination of national trends in 2010; Stearns and Norton, 2004). population ageing and a comparison across countries at a given point in time. Age 65 The prospective old-age dependency ratio is generally the threshold for defining old- (Sanderson and Scherbov, 2005, 2007) con- er persons, who are often net recipients siders as “old” those ages at which people of economic transfers through publicly are expected to live, on average, a certain funded pensions and health care. number of years (for this analysis, 15 years). Accordingly, this ratio is calculated as the In all regions of the world, the old-age de- number of persons above the age for which pendency ratio has increased continuously the remaining life expectancy is closest to since 1990, albeit at varying speeds. Glob- 15 years, relative to the number of persons ally, in 2021, there were 17 persons aged between age 20 and that age. In this way, 65 years or over per 100 persons aged 20 the number of people with a remaining life 5 Ageing measures featured in this chapter focus on those with comprehensive data available at the global level or for large numbers of countries. Chapter 2 refers to other measures that are available only for a select number of countries for certain periods of time, including measures that incorporate information about health status or functional ability (WHO, 2015). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 27 Figure 1.4 Traditional and prospective old-age dependency ratios, world and regions, estimates for 1990–2021 and projections for 2022–2050 A. Old-age dependency ratio B. Prospective old-age dependency ratio 50 40 30 20 10 0 1990 2000 2010 2020 2030 2040 2050 1990 2000 2010 2020 2030 2040 2050 World Sub-Saharan Africa Northern Africa and Western Asia Central and Southern Asia Eastern and South-Eastern Asia Latin America and the Caribbean Australia / New Zealand Oceania (excl. Aus./N.Z.) Europe and Northern America Sources: United Nations (2022a), own calculations, based on Sanderson and Scherbov (2005, 2010, 2019). Note: The bump in the trajectories of prospective ratios around 2020–2022, as shown in panel B, are due to the impact of the COVID-19 pandemic, which interrupted trends in life expectancy for most regions. expectancy of less than 15 years serves as a and production and other components of proxy for the number who are economically economic behaviour over the life course, as dependent on others due to advanced age. described in the literature on National Trans- fer Accounts (United Nations, 2013, 2019a; Comparing the traditional and prospective Lee and Mason, 2011; Mason and others, old-age dependency ratios, the latter is low- 2017). The analysis of such accounts focuses er in all regions except sub-Saharan Africa on the age distributions of consumption, and Oceania (excluding Australia and New labour earnings and other economic ag- Zealand). This result suggests that the im- gregates in a national economy. National pact of population ageing may be less than Transfer Accounts can be used to measure what is implied by the traditional old-age and analyse the age and generational dimen- dependency ratio in populations with high sions of an economy, providing evidence of levels of life expectancy (figure 1.4). the consequences of population ageing for economic policymaking. 2. MEASURiNG AGEiNG FROM In contrast to the measures discussed AN ECONOMiC PERSPECTiVE above, the economic old-age dependency ratio explicitly considers age-related pat- The old-age dependency ratio has economic terns of economic activity to assess levels analogues based on levels of consumption of dependency (net consumers) associ- Dependency ratio. per 100 CHAPTER 1 28 ated with old age. The ratio is defined as The economic old-age dependency ratio the effective number of consumers aged indicates that globally in 2020, there were 65 years or over divided by the effective 21 effective consumers aged 65 years or number of workers at all ages.6 The key over per 100 effective producers. By 2050, advantage of this measure is that it explic- this ratio is projected to rise to 35 per itly incorporates age-specific variations in 100, with increases in all regions (figure labour income and consumption. In doing 1.5). The economic old-age dependency so, it gives a more direct, focused and re- ratio is slightly higher than the old-age alistic measure of economic dependency dependency ratio in all regions, with a over the life cycle than either the old-age greater difference in Europe and Northern dependency ratio or the prospective old- America and in Australia and New Zealand age dependency ratio. compared to other regions due to their relatively higher consumption at older ages (United Nations, 2019a). Figure 1.5 Economic old-age dependency ratios, world and regions, estimates for 1990–2021 and projections for 2022–2050 70 60 50 40 30 20 10 0 1990 2000 2010 2020 2030 2040 2050 World Sub-Saharan Africa Northern Africa and Western Asia Central and Southern Asia Eastern and South-Eastern Asia Latin America and the Caribbean Australia / New Zealand Oceania (excl. Aus./N.Z.) Europe and Northern America Source: Based on the method outlined in Mason and others (2017). 6 The effective number of workers or consumers at a given age is calculated as the population at that age weighted by the labour income or consumption profile. People aged 30–49 are counted, on average, as one effective worker and one effective consumer. People at other ages are counted as more or less than one effective worker or consumer depending on how much they produce through their labour or consume relative to the average for those aged 30 to 49 (Mason and others, 2017). Economic old-age dependency ratio, per 100 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 29 Considering total demand for public sup- that account for increased life expectancy port by younger and older populations and actual economic production and con- worldwide, the share of dependents is ex- sumption in various age groups, however, pected to remain rather stable. The com- provide a more nuanced picture. position is changing, however. Most regions are already experiencing or will experience a shift in dependency from younger to older ages. Because populations are ageing at different speeds, national ratios vary sig- D. nificantly. In half of all countries or areas, the total dependency ratio is expected to DEMOGRAPHiC TRANSiTiON STEMS change either upwards or downwards by FROM LONGER LiVES AND SMALLER 25 per cent or more from today until 2050. FAMiLiES In 40 per cent of countries or areas, it will change by 30 per cent or more. Most countries in the early stages of pop- The demographic transition, a gradual shift ulation ageing will continue to benefit from towards longer lives and smaller families, stable and in some instances even grow- began first in Europe and Northern Amer- ing workforces while striving to meet the ica, where levels of fertility and mortality demands of large shares of young people began to fall as early as 1800, leading to a and mounting numbers of older persons. larger population and, eventually, a much Regions at more advanced stages of pop- older one as well. The transition took off ulation ageing may see declining demands on a global scale around the middle of the from shrinking younger populations and twentieth century (Caldwell, 2006; Lee and shift their focus to promoting the health Reher, 2011).7 The process typically unfolds and well-being of working-age and older in stages (figure 1.6). Population growth first populations. In doing so, they may ben- accelerates and then slows down, while the efit from people working longer in better age distribution first becomes younger be- health, with reduced needs for health care. fore shifting towards older ages.8 Conventional measures of population age- Three main mechanisms drive population ing, such as the old-age dependency ratio, ageing during the demographic transition. are often used as a proxy indicator of eco- First, the share of older people increases as nomic dependency. From this perspective, fertility levels decline and reduce the pro- growing numbers and rising shares of older portion of younger people (ageing “from the persons are frequently considered a loom- bottom”). Second, the continuing extension ing threat to public services, particularly of the human lifespan raises the number health care and pensions. Other measures of older people (ageing “from the top”). 7 Today, no country or area is in the pre-transition stage. Among the 236 countries or areas that comprise the global population, one sixth, located almost exclusively in sub-Saharan Africa, are in an early stage; one third are in an intermediate stage; and the other half are in a late or post-transition stage (United Nations, 2022a). 8 This stylized description of the demographic transition refers to a population that is closed to migration, in which population trends are determined entirely by changes in levels of fertility and mortality. Box 1.2 examines the role of international migration in population ageing. CHAPTER 1 30 Third, when the cohort of people who are Before the demographic transition, the pop- about to enter old age is large compared ulation distribution by age and sex resembles to its predecessors, their progression into a pyramid, with a wide base and relatively older ages will enlarge the older popula- few older people (figure 1.6, left population tion (a “cohort effect”). A large number of pyramid). At the onset of the transition, the people ageing into their 60s and beyond opposite of population ageing – population stems from earlier declines in mortality at rejuvenation – often occurs. Mortality levels younger ages but can also result from high typically fall first among infants and children or fluctuating levels of fertility in the past, due to improved nutrition and effective con- historical inflows of migrants or a combina- trol of infectious diseases, including pneu- tion of factors (Bloom, 2019; Sudharsanan monia, diarrhoea and malaria (Caselli, Meslé and Bloom, 2018).9 Because such a cohort and Vallin, 2002), while fertility levels remain effect is driven by past demographic chang- high. As the population grows due to declin- es, it can influence the age distribution of ing mortality at younger ages, the share of a population even if levels of fertility and children and youth expands, widening the mortality are not changing. base of the pyramid. Figure 1.6 Population distribution by age and sex, crude birth and death rates, and total population size at different stages of the demographic transition 100+ Males Females Males Females Males Females 95-99 90-94 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 Percentage Percentage Percentage Stages Pre-transitional Early Intermediate Late Post-transitional 50 25 0 Crude death rate Crude birth rate Population Population growth Source: United Nations calculations. Note: The crude birth (or death) rate is the annual number of live births (or deaths) divided by the population size at the midpoint of the observation period. Both rates are expressed as the number of births or deaths per 1,000 people per year. 9 Change in the age distribution associated with large cohorts born from the late 1940s until the early 1960s in some countries, known as the “baby boom” generation (Van Bavel and Reher, 2013), is an example of population ageing led by a temporary rise in fertility. Today’s ageing “boomers” comprise a significant part of the older population in some countries. Age group WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 31 In an intermediate stage, fertility starts to like a bell tower or a rocket (figure 1.6, fall while mortality continues to decline, right population pyramid). including at adult ages. The base of the population pyramid shrinks as the share of children falls, while the share of people at working and childbearing ages expands, While population ageing is signalling the onset of population ageing an inevitable consequence (figure 1.6, middle population pyramid). Eventually, the share of older persons of demographic transition, starts to increase as well. As the transition population decline is not progresses, fertility may reach and level off at the so-called “replacement” level, at which successive generations become Once the demographic transition is com- roughly equal in size (box 1.1). In this sce- plete, populations may stop growing and nario, there will be less of a difference in reach a stable size or begin to decline population size across the age range, as (figure. 1.6, the post-transitional stage). the population “pyramid” becomes more However, while population ageing is an BOX 1.1 DEFiNiNG REPLACEMENT-LEVEL FERTiLiTY Replacement-level fertility refers to a level end of the reproductive age range. In reality, of childbearing where each generation ex- replacement-level fertility is slightly higher actly replaces the previous one in terms of than 2 births per woman to account for the size. In other words, children of the current unbalanced natural sex ratio at birth (slightly generation of parents grow up to become an more boys than girls) and for the loss of equivalent number of potential parents in the reproductive potential due to premature next generation. To “replace” themselves, mortality. In populations with relatively low women need to have, on average, one daugh- levels of mortality, replacement-level fer- ter who survives through the reproductive tility requires approximately 2.1 live births age and so on for succeeding generations. per woman over a lifetime. In countries with higher levels of mortality, a slightly higher An average of 2 births per woman will ex- level of fertility is required to compen- actly replace mothers and fathers, but only sate for the greater loss of reproductive if two conditions hold true: first, the same potential and to ensure the replacement numbers of boys and girls are born, and of generations (Espenshade, Guzman and second, all female children survive to the Westoff, 2003). CHAPTER 1 32 inevitable consequence of demographic al migration (box 1.2). Today, about half transition, population decline is not. The the countries or areas of the world have fall in fertility that typically occurs dur- completed or are in a late state of the ing the transition is a necessary but not transition, with life expectancies at birth sufficient condition to produce a deficit of 75 years or more and fertility below the of births. Population decline occurs only replacement level (box 1.3). if below-replacement levels of fertility continue for several decades without a counteracting effect due to internation- BOX 1.2 iNTERNATiONAL MiGRATiON CAN BOTH SLOW AND ADD TO POPULATiON AGEiNG Beyond the interplay of mortality and fer- retirees. If migrants remain and grow old in tility, international migration can influence destination countries, they will eventually the age distribution in countries with large add to older cohorts, increasing the share inflows of migrants. Because immigrants typ- of older people and gradually diluting the ically include a disproportionate number of impact of immigration on the population young adults, immigration often results in a age distribution. On the other hand, if mi- younger population and workforce in des- grants return to their countries of origin tination countries, postponing the process and do not become permanent residents of of population ageing by a few years without the host country, and if they are followed fundamentally altering the trend towards an by younger cohorts of migrants, immigra- older population. The children of immigrants tion can have an enduring impact through also contribute to a younger population, es- keeping the population somewhat younger pecially when migrants have more children than it would have been in the absence of than the resident population. migration. International migrants comprise a sizea- In 2020, international migrants accounted ble share of working-age people in some for nearly 19 per cent of the working-age countries today. By lowering the old-age population of high-income countries and dependency ratio, they contribute to a more over 1 in 10 of those aged 65 or above (United affordable balance between workers and Nations, 2020a). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 33 FROM TAX CREDiTS TO BABY BONUSES, COUNTRiES BOX 1.3 CONCERNED ABOUT LOW FERTiLiTY OFFER SUPPORT BOX 1.3 FOR BEARiNG AND REARiNG CHiLDREN In 2021, fertility hovered below the replace- tary support, such as tax credits, child and ment level in 124 of 236 countries or areas. family allowances, baby bonuses and child- Among these, 47 had fertility below 1.5 births care subsidies; and service provision, such per woman (United Nations, 2022a). Govern- as childcare and after school programmes. ment policies and institutional settings, as Some high-income countries (e.g., France, well as associated cultural, economic and Hungary, Japan, the Republic of Korea, the sociopolitical structures and histories, can Russian Federation and Singapore) have cause fertility to decline to low levels. adopted explicit policies to influence the fertility level through economic or social Influential factors include the incompatibility incentives and tax credits. Others do not between professional careers and family life, have such specific policies in place (Demeny, which has been identified as a major driver of 2011; May, 2012). low fertility (Wilkins, 2019; Sobotka, Matysiak and Brzozowska, 2019; McDonald, 2006). In developed countries, family-orient- Other factors encompass the flexibility of ed policies have evolved mostly through the labour market, the educational system, social welfare systems. For example, the gender equity, the links between marriage “maternity capital” programme in the Rus- and childbearing, governmental subsidies for sian Federation and the “speed premium” the costs of childrearing, the housing market in Sweden provide cash benefits for hav- and international migration (United Nations, ing children. Norway makes high-quality 2015a). Over the past three decades, amid childcare facilities available, and Estonia concerns about population ageing and po- grants universal and generous parental tential population decline, a growing num- leave (Sobotka, Matysiak and Brzozowska, ber of governments have adopted policies 2019). Some developing countries, despite to raise the fertility level. Based on survey their less extensive welfare systems, have data from 2019, Governments in half of the adopted measures that include maternity 82 low-fertility countries with available data leave, family or child allowances and publicly had adopted policies to raise the fertility subsidized childcare. Notably, all low-fer- level (United Nations, 2021b). tility countries except the United States of America provide national paid maternal A wide range of family policies can help leave. Fewer countries also provide paternal parents balance their work and family life. or parental leave (United Nations, 2021a). Examples include employment-related sup- port, such as parental leave for one or both A recent review of policy responses to con- parents and flexible working hours; mone- cerns about low fertility indicates that di- CHAPTER 1 34 rect monetary support may have temporary rangements and access to parental leave for BOX 1.3 effects, mainly on the timing and spacing of both parents (Wilkins, 2019). births, but little long-term impact (Sobotka, Matysiak and Brzozowska, 2019). Policies that Improving work-family balance and guaran- lower the costs of childbearing in a predicta- teeing income security could have positive ble way over several years, not just around the impacts on dependency ratios and fiscal sus- time of birth, are more likely to be effective. tainability. Such policies can assist men and Clashes between work and family life under- women in realizing their desired family size line the need to advance gender equality, while contributing to financial independence achieve work-family balance, subsidize costs at older ages, especially for women. They for childbearing and housing, and ensure that may also support the voluntary extension the private sector allows flexible working ar- of people’s working lives. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 35 CHAPTER 2 TOWARDS LiViNG LONGER, HEALTHiER LiVES KEY MESSAGES the life course. Uneven access to af- fordable, quality health care can lead to █ There is no doubt that increasing human unequal use of services and disparities life expectancy is a long-term trend. in life expectancy. Survival to older ages has become more common worldwide. Health among █ Rapid growth in the number of peo- older people varies considerably, how- ple reaching older ages highlights ever, both among and within countries. the importance of promoting health and preventing and treating illness █ increased global life expectancy re- throughout the life course, as con- flects better health overall. The num- ditions experienced earlier in life can ber of years lived in good health, or have a substantial impact on a person’s at least without severe disability, has health and well-being at older ages. risen in many places. The concept of “healthy ageing” high- lights the importance of maintaining █ Men live, on average, fewer years than functional ability as people grow older women. Yet older women experience to enable their continued participa- a greater prevalence of morbidity and tion in society. disability. Given the dominance of cardiovascular disease and cancer as █ Societies with ageing populations need causes of death, different personal to adapt to having increasing numbers behaviours and diverse exposures to of older persons with a wide range of environmental risks both contribute functional abilities. The ability to per- to group variations in morbidity and form critical functions and to partic- mortality, including by sex. ipate in everyday activities depends not only on the intrinsic capacity of █ inequalities in income, education and individuals but also on the social and living arrangements, including those physical environments in which they due to race or ethnicity, help explain live. Supportive environments can help observed differences in the health of older persons to remain active and in- individuals and their risks of dying over dependent as they age. CHAPTER 2 36 Virtually all people aspire to live longer average length of life, or life expectancy lives. Some may wonder whether the extra at birth, has increased progressively in years of life will be spent in good health nearly all countries and globally. Declin- or consumed by disease and disability. ing mortality accompanies a change in For individuals, deteriorating health at the distribution of deaths from younger older ages raises concerns about living to older ages. independently and securing needed care and support. From a collective perspec- Figure 2.1 illustrates this pattern with his- tive, societies need to adapt to increas- torical data from Denmark from 1835 to ing longevity by adjusting labour markets, the present. In the nineteenth century, social security and health-care systems, a large share of deaths occurred among and other institutions. children and young adults, with a second- ary concentration among people ranging The United Nations has recognized that in age from 60 to 80 years, approximately. older persons have a right to support- Over time, infant and child mortality de- ive environments to enjoy healthy lives clined due to preventive health measures, and fully participate in and contribute to better treatment of infectious diseases, their families, communities and broader and improvements in maternal and child societies. To advance action along these health care. lines, Member States of WHO and the United Nations proclaimed 2021-2030 to Deaths in Denmark started to tilt to- be the United Nations Decade of Healthy wards adult ages in the early twentieth Ageing. The Decade builds on previous century, reflecting a decline in the num- international agreements, including the ber of premature deaths among both 2002 Madrid International Plan of Action men and women. This shift intensified on Ageing and programmes such as the by the middle of the century, at which 2016-2020 WHO Global Strategy and Ac- point there were very few deaths be- tion Plan on Ageing and Health. low age 30 and a large and increasing concentration among older adults, es- pecially octogenarians, nonagenarians A. and centenarians. Such trends have unfolded now in coun- tries in all world regions. A summary ex- A LONGER LiFESPAN iS pression for the growing proportion of A SUCCESS STORY deaths within a short age interval is the “compression” of mortality (Wilmoth and Horiuchi, 1999; Kannisto, 2000; Robine, 2021). This term describes the clustering Around the world, populations have of deaths around the most frequent or shifted from high to low mortality rates as modal age at death. A higher modal age part of a larger process known as the de- indicates a shift towards more advanced mographic transition. Despite differenc- ages at death (or mortality delay) and an es in the timing and pace of this shift, the increase in average lifespan. Recent rises WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 37 in external causes of death,10 however, (Thatcher and others, 2010). More recently, have halted this compression, slowed mortality decline at older adult ages has the rise in life expectancy and increased become a major driver of rising life expec- the variability of ages at death for sev- tancy in countries with already low levels eral countries in Europe and Northern of mortality. Indeed, since the early 1990s, America (Beltrán-Sánchez, Finch and more than two thirds of the average gain in Crimmins, 2015). life expectancy in low-mortality countries has come from extended years of life among In the early twentieth century, increasing those aged 60 or older. In countries with life expectancy in the more developed re- higher levels of mortality, recent increases gions arose mostly from decreased mor- in life expectancy have mostly resulted from tality among infants and young children reduced mortality at younger ages.11 Figure 2.1 Number of deaths by sex and age in Denmark, 1835-2020 110 110 110 100 100 100 90 90 90 80 80 80 70 70 70 60 60 60 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0 0 0 3000 2000 1000 0 1000 2000 3000 4000 3000 1500 0 1500 3000 4500 1000750 500 250 0 250 500 750 10001250 110 110 110 100 100 100 90 90 90 80 80 80 70 70 70 60 60 60 50 50 50 40 40 40 30 30 30 20 20 20 10 10 10 0 0 0 750 500 250 0 250 500 750 1000 750 500 250 0 250 500 750 750 500 250 0 250 500 750 Female Male Source: Robine (2021), based on data from the Human Mortality Database. Available at www.mortality.org/. 10 External causes of death include intentional and unintentional injury, poisoning (including drug overdose), and complications from medical or surgical care (WHO, 2022b). 11 High-mortality countries refer to those where life expectancy at birth was below age 60 from 1990 to 1995; low-mortality countries had a life expectancy at birth of age 75 or higher in the same period. CHAPTER 2 38 Globally, a baby born in 2021 could expect been in Eastern and South-Eastern Asia, to live on average almost 25 years more where improvements in survival have add- than a newborn from 1950 (for a discussion ed nearly 34 years to the average length of the impact of the COVID-19 pandemic, of life. In 2021, people in that region could see box 2.1).12 expect to live 76.5 years compared to just 43 years in 1950. Unsurprisingly, high-in- come countries and areas in Asia and the Globally, a baby born in 2021 could Pacific and in Europe feature at the top of life expectancies globally. Middle-income expect to live on average almost 25 countries follow suit with multiple coun- years more than a newborn from 1950 tries in Latin America and the Caribbean having also attained a life expectancy of 80 or more years. Most low-income coun- tries, although subject to higher mortality While all regions have experienced rising rates, are also seeing significant gains in life expectancy, the greatest gains have life expectancy (United Nations, 2022a). SURVIVAL TO OLDER AGES HAS BECOME MORE COMMON WORLDWIDE. since the early 1990s MORE THAN 2/3 of the average gain in life expectancy in low-mortality countries has come from extended years of life among those aged 60 or older. 1950 2021 +25 YEARS 12 These values reflect “period” life expectancy, which shows the average age to which a newborn would live if current death rates continued during their entire life. The estimates do not predict actual lifespans. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 39 BOX 2.1 COViD-19 HAS DiSRUPTED STEADY GAiNS iN GLOBAL LiFE EXPECTANCY Global life expectancy at birth fell to an The living arrangements of older persons estimated 71 years in 2021, down from 72.8 in congregate settings emerged as a fac- in 2019, due mostly to the COVID-19 pan- tor increasing the risk of contracting and demic. Some countries saw greater declines dying from COVID-19 by heightening the than others. In Central and Southern Asia efficiency of transmission (Comas-Herrera and Latin America and the Caribbean, life and others, 2020). expectancy fell by almost three years on av- erage between 2019 and 2021. As with many Based on the latest available estimates of the causes of death, COVID-19 took many more effect of the pandemic on mortality, global lives among older people than younger ones. life expectancy at age 65 fell by 1.2 years Older people have a greater risk of serious between 2019 and 2021, representing more illness and higher case fatality rates.13 than 71 per cent of the total decline in life expectancy at birth. Outside Australia and Environmental and social factors account New Zealand, all regions of the world expe- for substantial variation across countries in rienced a drop-off in the average number of old-age COVID-19 mortality. Such factors years a 65-year-old person could expect to include the prevalence of comorbidities, live. This was sharpest in Central and South- the presence of robust old-age social pro- ern Asia (–2.3 years) and Latin America and tection systems and the capacity of health the Caribbean (–1.5 years) (United Nations, systems to protect those at increased risk. 2022a, 2022b). 13 The case fatality rate refers to the share of people who died from COVID-19 among all persons infected with the virus during a certain period. CHAPTER 2 40 B. gap may have been no more than two or three years in pre-industrial populations (Beltrán-Sánchez, Finch and Crimmins, 2015). In more recent times, however, the WOMEN HAVE A SURViVAL gap has widened, especially where mortal- ADVANTAGE – BUT iT MAY ity levels are relatively low. In 1950, wom- NOT LAST en could expect to live almost four years more than men globally. In 2021, although both men and women could anticipate living longer than in 1950, the difference Women live longer, on average, than men. between the two had increased to more A female survival advantage exists in nearly than five years. Global life expectancy at all populations with available data, both birth is projected to increase further for past and present (table 2.1) (United Nations, both women and men, reaching 80 years 2020b). Historical data suggest that the sex for women and 75 years for men by 2050. Table 2.1 Life expectancy at birth by sex, world, regions and income groups, 1950, 2021 and 2050 1950 2021 2050 REGiON FEMALE MALE FEMALE MALE FEMALE MALE World 48.4 44.6 73.8 68.4 79.8 74.8 Sub-Saharan Africa 38.7 36.2 61.6 57.8 69.1 64.3 Northern Africa and Western Asia 43.4 39.8 74.8 69.7 80.8 76.0 Central and Southern Asia 40.2 41.5 69.6 65.9 79.4 74.9 Eastern and South-Eastern Asia 45.6 40.3 79.6 73.6 84.1 79.4 Latin America and the Caribbean 50.8 46.5 75.8 68.8 83.1 78.1 Australia/New Zealand 71.6 66.7 85.6 82.7 88.6 85.4 Oceania (excluding Australia and 43.9 40.3 70.1 64.6 74.9 68.4 New Zealand) Europe and Northern America 66.6 61.2 80.4 73.9 86.1 81.6 World Bank income groups High-income countries 65.0 58.2 83.1 77.5 87.6 83.4 Middle-income countries 44.9 42.2 72.7 67.6 79.6 74.8 Low-income countries 35.1 28.6 65.0 60.0 71.6 66.0 Source: United Nations (2022a). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 41 Changes in the sex gap in life expectancy one sex cannot be characterized as closely relate to shifting disease patterns. enjoying better health. Much depends From the late nineteenth century until the on historical time, geographic location early twenty-first century, an increasing and individual behaviours (Crimmins and share of deaths came from chronic and others, 2019). degenerative diseases and conditions. For several decades, cardiovascular disease has been the leading cause of death in most low-mortality countries. While the sex dif- ference for some causes of death is small C. (for example, most infectious diseases and cancers), the male disadvantage is relatively MANY FACTORS DETERMiNE large for cardiovascular ailments. Over the HEALTHY AGEiNG next few decades, continuing reductions in morbidity and mortality from cardiovascu- lar disease may bring a gradual reduction in the life expectancy gap between men and As with mortality risks, the health status women, at least for low-mortality countries of older people diverges considerably. (Crimmins and others, 2019). Different experiences of illness and disa- bility reflect diversity among individuals in Although girls and women tend to experi- genetics, life histories, environmental ex- ence lower mortality rates across the age posures, personal behaviours and access range, the female advantage in survival is to health care, as well as random variation. most noticeable at older ages. Older wom- en have lower cumulative exposures than Ongoing examination has probed the re- men to lifestyle risk factors such as tobacco lationship between the “quantity” and and alcohol use, along with differences in “quality” of life. The WHO defines healthy diets, occupational hazards, environmental ageing as “the process of developing and exposures and use of health care. Men are maintaining the functional ability that more likely to die from cancer, cardiovas- enables wellbeing in older age” (WHO, cular disease and other ailments associated 2020a, p. 8). Functional ability depends with exposure to lifestyle risks, particular- on having the capabilities “that enable ly after age 65. Women often experience people to meet their basic needs, learn, higher rates of chronic conditions, such grow and make decisions, be mobile, build as arthritis, osteoporosis and depression, and maintain relationships, and contribute which may be debilitating and diminish the to society” (ibid., p. 11). Several factors quality of life but are less likely to result in influence functional ability, such as the death (Carmel, 2019; OECD, 2021a; United presence and severity of disease or injury Nations, 2020c). (morbidity) and age-related physiological changes (biological ageing or senescence), With men and women experiencing which affect a person’s intrinsic capacity. somewhat different health problems, In addition, the physical, social and eco- CHAPTER 2 42 nomic environments in which people live can promote or hinder healthy ageing.14 D. Although healthy ageing centres on the health status and needs of older people, LONGER LiVES ARE NOT ALWAYS the term refers to a process that spans HEALTHY, ESPECiALLY FOR the life course. Changes conducive to in- WOMEN creased longevity and greater well-being at older ages may occur early in life. Better nutrition in childhood, improved access to health care throughout life, reduced expo- Healthy life expectancy is analogous to life sure to hazardous working conditions and expectancy but adds a quality dimension favourable behavioural changes in terms of to the quantity of life. It offers a summary smoking, diets or physical activity can all measure of how many remaining years contribute to healthier older lives (Crim- are expected to be lived in good health, mins and others, 2019). Risks of specific free of disease or disability. A specific morbidities and mortality vary widely across measure of healthy life expectancy is individuals of the same age. This dynamic disability-free life expectancy. Whether process across the life course produces disability-free life expectancy increases great heterogeneity in the patterns and in proportion to total life expectancy is trajectories of both intrinsic capacities a question of debate. and functional abilities among older peo- ple (WHO, 2015, 2020). A recent analysis of selected countries in Asia, Western Europe and Northern Amer- Many indicators can assess the average num- ica found that increased life expectancy ber of years that a person can expect to live in recent decades was accompanied by in good health, including disability-free life a proportional increase in disability-free expectancy, health-adjusted life expectan- life expectancy, with the number of years cy, chronic disease-free life expectancy, life lived without disability as a share of total expectancy in good perceived health and life expectancy remaining fairly constant. cognitive-impairment-free life expectancy. The study concluded that all life spans are An assessment of health status and an es- increasing, meaning that life expectancy timation of expected years lived in good or without disability as well as life expectancy poor health can vary by indicator. with disability are increasing in roughly the same proportion. The implication is that “while on the one hand, an increase in life expectancy in good functional health Changes conducive to increased should be welcome, there should also be concerns about the increase in the number longevity and greater well-being at of years lived with disabilities” (Robine, older ages may occur early in life 2021, p. 12). 14 Environments include the home, community and broader society, and all the factors within them, such as the built environment, people and their relationships, attitudes and values, health and social policies, the systems that support them and the services that they implement (WHO, 2020b, p. 10). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 43 There is less evidence about levels and 2000 and 2010 while life expectancy kept trends of healthy life expectancy for oth- increasing (Campolina and others, 2014). er parts of the world, including sub-Saha- Life expectancy free of cognitive impair- ran Africa, Eastern Europe, Latin America, ment at age 60, both the observed value Northern Africa and the Middle East, and in years and as a proportion of total life Southern Asia. In India, older people (aged expectancy, increased from 2003 to 2016 60 or over) experienced both an increase in Chile (Moreno and others, 2019). in life expectancy and in life expectancy without mobility limitations between 1995 More systematic and comparable data to and 2004 (Sreerupa and others, 2018). A assess a population’s health status come relative compression of disability (i.e., the from measures of health-adjusted life ex- reduced proportion of remaining life with pectancy commonly used by WHO since mobility limitations) took place among older the early 1990s. Health-adjusted life ex- men in rural areas compared to a relative pectancy is the number of years that a per- expansion of disability (increased propor- son is expected to live in good health plus tion) among older women in urban areas. In fractions of years lived with some form of South Africa, healthy life expectancy based disease, injury or disability (WHO, 2020c). on self-rated health at ages 50 and above According to the latest estimates, between increased more than life expectancy from 2000 and 2019, global life expectancy at 2005 to 2012 (Chirinda and others, 2018). birth increased by six years, from 67 to 74 In São Paulo, Brazil, disability-free life ex- years.15 Healthy life expectancy also in- pectancy at age 60 fell sharply between creased by six years, from 58 to 64 years. Figure 2.2 Life expectancy and health-adjusted life expectancy at age 60, by sex, selected countries, 2000–2019 22 20 18 16 14 12 2000 2005 2005 2015 2020 Women's life expectancy Men's life expectancy Women's health-adjusted life expectancy Men's health-adjusted life expectancy Source: WHO (2020c). Note: Estimates for 183 countries with available data. 15 Slight differences exist between estimates from WHO and the 2022 revision of the World Population Prospects. Life expectancy at age 60, years CHAPTER 2 44 Figure 2.2 presents life expectancy and health-adjusted life expectancy at age 60 between 2000 and 2019. The difference E. between the two indicates the number of years lived with a given disease burden or DiSPARiTiES iN HEALTH AND LiFE disability. On average, life expectancy at EXPECTANCY iNTERSECT WiTH age 60 increased faster than health-ad- MULTiPLE iNEQUALiTiES justed life expectancy for both men and women. In 2000, the gap for men was 4.1 years; for women, it was 5.3 years. By 2019, the gap had increased to 4.7 years While all regions of the world have seen for men and 6.0 years for women. Globally, substantial improvements in life expec- the proportion of time spent in ill-health tancy, the risk of death differs from one has slightly increased at birth and at age person to another, depending on access 60. These averages, however, mask signifi- to health care and socioeconomic status, cant variation within and across countries among many factors. Increased inequality (WHO, 2020b). may emerge due to declining life expec- tancy among lower socioeconomic groups Surveys based on self-reported disa- even as it continues to rise in higher so- bilities often find that older women are cioeconomic groups. more likely than older men to indicate that they are disabled. Disability in this Cost and other barriers can lead to dis- context refers to an inability to perform parities in access to and use of health certain activities of daily living, such as care, adoption of technological innova- walking across a room, feeding oneself or tions in medicine and preventive health using toilet facilities without assistance. behaviours. Those with higher socioec- This gap may indicate women’s greater onomic standing have greater access to propensity to report health problems. resources, including better and earlier Yet researchers have confirmed the high- medical care to avoid disease or minimize er prevalence of disability among older its impact. Wider societal, economic, en- women through direct physical meas- vironmental and cultural conditions influ- urements. Overall, the available evidence ence some risk factors associated with supports the conclusion that the sex gap many diseases affecting older persons. in disability at older ages is real, with These dynamics can result in social strat- women having a noticeable disadvantage ification and lead to inequalities in health (Crimmins and others, 2019). and ultimately life expectancy. Recent increases in the inequality of life expectancy within a number of devel- oped countries has coincided with wid- ening gaps between the wealthiest and the poorest members of the population. For example, in the United States and Den- mark, life expectancy has been stagnant or WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 45 even declined among low-income groups in education and income. In some cases, while the wealthiest continue to show gains these gaps have narrowed. For example, (Kinge and others, 2019; Dahl and others, between 1980 and 2018, college-edu- 2021). Inequalities in life expectancy as- cated adults lived three more years, on sociated with income levels are not uni- average, between ages 25 and 75 than form among men and women, however. In those without a degree (Case and Deaton, Sweden, the gap in life expectancy at age 2021). This educational divide was present 65 for men from the highest and lowest for college-educated Black and White income quartiles increased from 3.4 to 4.5 people alike. Over this period, the racial years between 2005 and 2016. For women divide in expected years of life narrowed the gap grew from 2.3 to 3.4 years (Fors, by 70 per cent for those with or without Wastesson and Morin, 2021). a college degree, while the educational divide in average longevity doubled for both White and Black people. Recent increases in inequality in Risk factors explain much of the inequality life expectancy in some developed in life expectancy by income and educa- countries have coincided with tion. Behavioural risks (smoking, alcohol widening gaps between the rich and consumption, being overweight, physical inactivity) are key channels for socioeco- the poor nomic status to impact lifespan (Al Snih and others, 2007; Tian and others, 2011). For instance, smoking prevalence and obesity have fallen much faster among well-edu- A study of 15 European countries using cated and higher-income Americans than level of education as a measure of socio- among those with lower socioeconomic economic status found the most educated status (Bor, Cohen and Galea, 2017). consistently living longer than those with lower education (Mackenbach and others, Socioeconomic status has largely deter- 2019). The results varied among countries, mined the unequal impacts of COVID-19 with a 2.1-year difference between men infection and disparities in mortality rates in Spain with the highest and lowest lev- (box 2.1). Lower-status groups were less els of education and a more than 8-year likely to work from home and more likely difference between these two groups in to face infection (Mena and others, 2021), Lithuania. The gaps were smaller for wom- even as they had more limited access to en but still persistent. Women in Spain had health care. Further, risk factors or comor- a 0.6-year difference in life expectancy bidities that increased COVID-19 mortality between low- and high-income groups, and morbidity (cardiovascular disease, di- while women in Lithuania saw a gap of more abetes, heart diseases and obesity, among than 4 years. others) are higher among lower socioec- onomic groups. Significant racial inequalities in life ex- pectancy persist in the United States, In the United States, during the pandemic, partly attributable to racial differences ethnic and racial disparities in hospital CHAPTER 2 46 outcomes for Medicare beneficiaries aged More and more people are surviving at 65 years and older included higher death younger ages and therefore dying at older rates (Song and others, 2021). People in ages. While few studies examine develop- counties with low socioeconomic status ing countries with high and intermediate had higher rates of both COVID-19 cases levels of mortality, those countries may and fatalities than those in counties with follow paths of mortality decline similar higher socioeconomic status (Hawkins, to those in the more developed countries. Charles and Mehaffey, 2020). Many developing nations, however, are still struggling to prevent premature deaths from communicable and non-communi- F. cable diseases, including neonatal con-ditions, lower respiratory infections and diseases of the circulatory system (Gouda and others, 2019). Given this situation, and PREMATURE DEATHS HAVE considering the global impacts of the COV- DECLiNED BUT THE FUTURE ID-19 pandemic on trends and patterns of iS UNCERTAiN morbidity and mortality, future trends are uncertain at least in the short term. While all regions have seen substantial The COVID-19 pandemic reversed many increases in life expectancy, striking in- recent gains in health and well-being. equalities persist both among and within Global life expectancy at birth was lower countries. These are tied to income, ed- in 2021 by 1.7 years compared to 2019. ucation, race and other factors and to Eight years from now, however, when the differences in living arrangements. They 2030 Agenda for Sustainable Develop- in part determine the health of individuals ment and the Decade of Healthy Ageing across the life course as well as their risk come to an end, it is expected that life of dying. Disparities in life expectancy also expectancy at birth will have recovered arise from unequal access to affordable, worldwide.16 At that point, average lon- quality health care. gevity is projected to be 82 years in the more developed regions and 73 years in While there is little doubt about the long- the less developed ones. By then, life term trend towards longer lives, the rela- expectancy at age 65 is predicted to tionship between longevity and health at reach 21 and 17 years in the more and older ages has varied over time and across less developed regions, respectively, countries. Although the length of a healthy and the share of people aged 65 years life, or at least the number of years lived or more will have risen globally from 10 without severe disability, has increased in to 12 per cent. many places, it remains unclear if longer 16 In 2021, life expectancies globally were affected by the impact of the COVID-19 pandemic on death rates, particularly among older persons. For the projection period, all countries are assumed to catch up with their pre-COVID-19 pandemic levels and trends in life expectancy at birth between 2022 and 2025, depending on their mortality experience in 2020 and 2021 and their adult COVID-19 vaccination coverage in early 2022. Such recovery can be considered a reasonable assumption in a context of uncertainty about the implications of the pandemic over the short and medium term in different regions (United Nations, 2022b, 2022c). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 47 lives go hand-in-hand with healthier ones that growing populations of older persons in all situations. The answer depends on a enjoy additional years of good health. Dis- population’s health profile, the time period ease prevention, access to health care considered and the specific measure used over the life course, and supportive and to evaluate health status. A central goal of enabling environments all play key roles in the Decade of Healthy Ageing is to ensure achieving this objective. CHAPTER 3 48 CHAPTER 3 WHAT POPULATiON AGEiNG MEANS FOR ECONOMiES AND iNTERGENERATiONAL EQUiTY KEY MESSAGES with making ageing integral to eco- nomic development and ensuring that █ Changes in population age structure older people can use their expertise unfold at different times and speeds. and skills in ways that benefit them The impact of ageing on the economy and the broader economy. depends on where countries are in their demographic transition as well █ Women’s labour force participation as their economic structure and level rate remains below that of men in every of social development, including edu- age group, reflecting gender gaps in cation and human capital formation. education and the predominant share of women in unpaid work, among oth- █ The young and the old consume, on er concerns. Such patterns mean that average, more than they produce women generally receive lower pension through formal labour. Families, mar- benefits in most countries. Pension sys- kets and governments mediate the tems need to be transformed to help reallocation of economic resourc- reduce gender gaps and protect wom- es from one age group to another to en’s income security in old age. smooth consumption over the life course. An ageing population calls for █ in all societies, policymakers must the continuous adaptation of chan- support the reconciliation of conflict- nels for redistribution. ing work and family demands through effective and equitable social and eco- █ Ageing societies may face fiscal chal- nomic policies. lenges due to rising health-care, long- term care, retirement and other old- age support costs, combined with a potential reduction in government revenue from fewer working-age tax- payers. Addressing these issues starts WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 49 FACTS FROM CHAPTER 3 THE SHIFT IN THE AGE STRUCTURE OF A POPULATION CAN RESULT IN DEMOGRAPHIC 2.5 DIVIDENDS THAT CAN CONTRIBUTE BETWEEN 1 AND 2.5 PER CENT 1 OF ANNUAL GROWTH IN GDP PER CAPITA 0 2015 the life cycle deficit, or unmet resource needs of all older persons worldwide was estimated at 11.5 PER CENT of the total labour income CHAPTER 3 50 Population ageing has profound impacts members, and public transfers, including on the economy depending on where through government programmes. countries are in their demographic tran- sition. It poses challenges but also opens Public systems for intergenerational trans- opportunities. fers are based on the prevailing social con- tract. Children, young people and older persons receive education, health care, pensions and other support from the work- Population ageing has profound ing-age population, which benefitted from impacts on the economy depending such support from earlier generations when on where countries are in their it was young and can expect the same from future generations when it grows old. Old- demographic transition. er people often continue to contribute to it poses challenges but also the economy and society through various opens opportunities forms of formal and informal work, including childcare, volunteerism and part-time em- ployment as well as productive investment. Within families, older persons may make As more countries move from high to low net transfers to their children. fertility and mortality levels, the global population is undergoing major changes In 2015, the life cycle deficit, or unmet in age distribution. This shift is unfold- resource needs of all older persons world- ing at different times and speeds across wide, was estimated at 11.5 per cent of the countries and regions, producing ageing at total labour income of all those who work, intermediate and advanced stages. irrespective of their age, on average, based on a sample of 119 countries (Mason and The young (aged 0 to 19) and, in most Lee, 2018). This deficit, which is larger in societies, the old (aged 65 or older) high-income than low-income countries, consume, on average, more than they needs to be financed through either public produce through their labour. Most or private transfers. working-age people (aged 20 to 64), by contrast, consume less than they pro- Countries significantly diverge in how they duce through their own labour. Families, finance the deficit. Most rely on some com- markets and governments support this bination of public transfers, asset-based pattern of income and consumption over reallocations (net asset income or spend- the life course by mediating the reallo- ing down of savings) and private or family cation of economic resources from one transfers. This combination and overall age group to another. For older peo- available resources determine the financial ple, intergenerational reallocations can impact of ageing on a society and the po- arise from their individual accumulation tential policy responses. In many low- and of wealth, including savings or other fi- middle-income countries, older persons nancial capital and property or physical depend heavily on asset-based realloca- capital. Other reallocations come from tions and to a smaller extent on public private transfers, such as between family transfers. Family transfers play a significant WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 51 but comparatively smaller role in many age groups compare in terms of economic countries. Net private/family transfers to productivity, health, functional abilities the older population tend to be negative; and/or biological age, as these attributes older persons generally transfer more to may more directly capture socioeconomic their children and grandchildren than what and health requirements. Current meas- they receive from them. ures of labour force participation similarly do not adequately reflect the significant Rapid population ageing may escalate role that older people play in the informal needs for health care, long-term care economy, underlining the need to develop and pension expenditures at a time when a more accurate measures of the economic growing share of older people may constrict contribution of older people. the productive capacity of the economy (IMF, 2019). This can translate into impacts This chapter examines how countries can on public finances, requiring mitigation navigate the economic challenges and through effective and equitable strategies. opportunities of ageing. This includes as- Significant population ageing may require sessing key labour market variables, such reforming economic and social protection as the size and composition of the work- structures, public finances, and public and ing-age population and the labour force private pension schemes, bearing in mind participation rate, given their impact on that the effects of ageing on the economy overall productive capacity. The chapter and public finances are not inevitable. Much also considers core strategies to harness depends on policy choices. the opportunities of ageing and ensure its positive contribution to the economy and society more broadly. The effects of ageing on the economy and public finances are not inevitable. Much depends on policy choices A. AGEiNG OPENS DOORS AND POSES CHALLENGES How countries measure population age- ing is continuously evolving as people live longer and healthier lives. Chronological ageing or the share of people aged 65 years The multiple economic impacts from pop- and older has traditionally informed fiscal ulation ageing require careful navigation and social planning as a summary statistic through appropriate policy responses tai- indicating the scale of economic, social lored to different stages of demographic security and health needs among older transition. Dimensions to consider include persons. Older people are not a homoge- demographic dividends, the productive nous group, however. While chronological capacity of the economy, consumption age is a valuable measure of ageing, it is patterns, financing consumption and also important to examine how different achieving sustainable economic growth. CHAPTER 3 52 1. TWO DEMOGRAPHiC DiViDENDS CAN A second dividend may occur later in the DRiVE GREATER GROWTH demographic transition, driven by the in- creased capital intensity of the economy The shift in the age structure of a population and the savings of working-age individuals can result in two demographic dividends for retirement. A population concentrated that at their height can contribute between at older working ages and facing an extended 1 and 2.5 per cent of annual growth in GDP period of retirement has a powerful incen- per capita (Mason and others, 2017). A first tive to accumulate assets, unless people are demographic dividend can take place when confident that families or governments will declines in both fertility and mortality rates provide for their needs. The rise in savings result in an increasing share of the work- among people at older working ages can ing-age population. Having fewer depend- support greater human and physical cap- ents and more workers frees resources for ital accumulation, increased productivity consumption or investment in accelerated and higher national income, and stimulate economic and social development. During further economic growth. Raising the ratio the first dividend period, the ratio of ef- of capital to labour makes labour more pro- fective producers to effective consumers ductive, a “capital deepening” that drives in the economy is rising. This period can be the second dividend. This period remains quite long, often lasting five decades or more as long as savings generated in the econ- (figure 3.1). But eventually, lower fertility re- omy are invested productively in human, duces the growth of the labour force even physical and environmental capital. as longer life spans accelerate the growth of the older population. As a result, increases The timing and duration of the first demo- in per capita income start to slow. graphic dividend has varied considerably across regions (figure 3.1). In the Americas, The first demographic dividend can have Asia and Oceania, it likely started in the a lasting impact on economic growth if 1970s, with an end predicted in the 2030s. gains in per capita income are used to in- Ageing in Europe started earlier with the crease human capital through investment first demographic dividend phase esti- in health and education, to accumulate mated to have concluded around 2000. physical capital, to support technological In Africa, the demographic dividend phase innovation and to strengthen growth-in- likely started in the early 1990s but may ducing institutions. Realizing the first de- last much longer than in other regions, mographic dividend also depends on the ending only in the early 2080s (Mason and ability of labour markets to absorb and others, 2017).17 provide decent jobs for the rapidly growing working-age population. 17 The United Nations Department of Economic and Social Affairs has published the National Transfer Accounts Manual: Measuring and Analysing the Generational Economy. This methodology provides a link between population trends and economics. Its foundation is a life course analysis of income and consumption for 60 countries and territories that make up a large part of both the global population and GDP. Participants in the National Transfer Accounts project have extended the estimates and analyses to another 106 countries, bringing the total to 166. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 53 Figure 3.1 Years marking the beginning and end of the demographic dividend (upper panel) and average duration of the first demographic dividend (lower panel), both by region 2083 2032 2033 2036 1991 2000 1974 1975 1971 1962 Start End Start End Start End Start End Start End year year year year year year year year year year Africa The Americas Asia Europe Oceania 92 65 58 58 38 Africa The Americas Asia Europe Oceania Source: Mason and others (2017). 2. AGEiNG HAS AN iMPACT ON phisticated goods and services in an efficient PRODUCTiVE CAPACiTY and competitive manner (UNCTAD, 2021). The changing size and composition of the Economic activity varies by the age struc- working-age population and labour force ture of a population. As it shifts to older are key factors in the impact of population ages, the proportion of workers (net pro- ageing on productive capacity. In any econ- ducers) first increases and then declines omy, productive capacity drives growth and while the share of older persons (net con- structural economic transformation. Such sumers) rises. This compositional change capacity encompasses the diverse com- can reduce aggregate economic output petencies, resources, skills, infrastructure, unless sufficient increased productivity, technological capabilities, institutions and brought about by investment in human knowledge systems that a country needs to and physical capital, offsets the effects produce and deliver progressively more so- of a shrinking labour force. Duration of first dividend phase, years Start year and end year CHAPTER 3 54 A. SIZE AND COMPOSITION OF THE until the end of the century. The number WORKING-AGE POPULATION of older workers in Africa is projected to rise from 63 million in 2021 (9 per cent of An expanding working-age population pro- the world population aged 55 to 64) to vides opportunities for faster economic 160 million in 2050 (15 per cent) and 432 growth. It also poses challenges for job million in 2100 (35 per cent). creation due to the increasing number of people entering the labour market. By contrast, a shrinking working-age pop- B. SIZE OF THE LABOUR FORCE ulation can slow economic growth, re- duce competitiveness and increase the A decline in the working-age population old-age dependency ratio. If a society is can affect aggregate output and income to maintain or raise its standard of living, in an economy unless it is countered by the working-age population must produce higher labour force participation rates. enough to provide for its own material The labour force participation rate, as needs while funding public and private defined by the International Labour Or- transfers to children and older persons ganization (ILO), is the percentage of the and saving for retirement. working-age population 16 years or older that is employed or actively looking for In numbers, the global working-age popu- work.18 It does not include those employed lation is expected to grow from 4.5 billion in the informal sector, however. The global people in 2021 to 5.4 billion in 2050. As a labour force participation rate in 2019 was share of the global population, however, 60.7 per cent: 74 per cent for men and 47 it is projected to decline from 57 to 56 per cent for women (ILO, 2020). per cent. This relatively modest aggre- gate change averages out greater shifts The labour force participation rate gen- in some regions, particularly Africa, with erally declines with age, which reduces a projected doubling in the number of per capita and even aggregate output and working-age people from 639 million in income. Since 1990, the global labour force 2021 to 1.3 billion in 2050. participation rate has trended downward partly due to the ageing of the working-age The working-age population is also grow- population, a direction projected to con- ing older, which may further reduce pro- tinue until at least 2030 (ILO, 2018a). This ductive capacity, especially in countries should be of concern especially in re- relying heavily on manual labour. The num- gions where the working-age population ber of older working-age people (55 to 64 is shrinking, for reasons that include the years) is projected to increase from 723 higher price of labour expected with a de- million in 2021 to 1,075 million in 2050 and clining labour force. Further, in developing to 1,218 million by 2100. Africa is expected countries, where most older persons work to account for two thirds of the projected informally in agriculture, a structural eco- global increase in older workers from now nomic transformation resulting in a shift 18 The United Nations Population Division defines the working-age population as individuals aged 20 to 64 years. The ILO defines the labour force participation rate, however, as the percentage of the working-age population that is 16 years or older that is employed or actively looking for work. This means that the two indicators are not fully comparable. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 55 of employment away from this sector has it is 51 per cent for those aged 55 to 59. caused many to lose their jobs. Changes This may reflect an earlier retirement age in Asia, which accounts for over half the for women in some countries and other world’s population, have driven the declin- factors such as greater expectations that ing global labour force participation rate. women will care for older family members. Many gender-based patterns and norms The global labour force participation rates constrain the ability of women to partic- of men and women diverge by some 30 ipate in the formal labour force. A large percentage points, on average, for persons proportion of the work that women do aged 20 to 64 (figure 3.2). While the global is informal and/or unremunerated care labour force participation rate of women work that goes unrecognized by current aged 30 to 54 is 60 per cent or higher, labour measures. Figure 3.2 Global labour force participation rate by age and sex, 2019 95 96 95 94 91 90 83 69 65 65 62 63 62 59 60 51 46 37 29 28 20 13 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65+ Age group Female Male Source: Calculations based on ILO (2020). Percentage of population aged 15 to 64 CHAPTER 3 56 Several factors underlie declining labour at 40 per cent. The same ratio in Europe force participation among older workers and Latin America and the Caribbean is over time: poor working conditions, ill 8 per cent and 9 per cent, respectively. health, low job satisfaction, labour mar- Africa’s high ratio is likely due to the lack ket rigidities and the overall ageing of the of adequate retirement benefits, which working-age population. In addition, the gives older persons no choice but to con- institutional arrangements of pensions tinue working. While it is important from an systems may reduce incentives for old- economic perspective to incentivize older er workers to remain on the job. In many people to work longer in ageing societies, developed countries, for example, some there should always be an option to retire workers choose to retire early, prior to and live with basic income security above the official or statutory retirement age a certain age. (usually at age 65, although increasingly at older ages). For them, generous early pension benefits make the choice of work 3. AS PEOPLE GROW OLDER, over leisure unattractive. Cultural norms CONSUMPTiON PATTERNS CHANGE and discrimination against older workers, including when it comes to recruitment, As income, needs and preferences change retention and retraining, may also help over the course of life, so do consumption explain early retirement in some countries. behaviour and the marginal propensity to consume. This has implications for the composition and level of consumption While encouraging older persons in society. to work longer is important, there Consumption patterns at older ages dis- should always be an option to retire play some distinctive differences across and live with basic income security countries (figure 3.4). One is the tendency in developed economies for consumption above a certain age to increase sharply after people reach age 80. In some high-income countries, consumption at older ages exceeds that Worldwide, an estimated three out of four of younger adults by 30 per cent or more. older people work in the informal sec- This is due mainly to a large jump in the use tor, which is not reflected in the global of health care. Countries with more gen- labour force participation rate. In 2019, erous public transfer and welfare systems, Asia’s labour force participation rate was such as Sweden, generally have higher the lowest of all regions (figure 3.3), partly consumption levels later in life compared reflecting sizeable informal sector employ- to other developed countries such as Aus- ment. The labour force participation rate tralia and Canada, where such systems are noticeably declines with increasing age in less extensive. In low- and middle-income all regions after people reach age 55, al- countries, consumption remains relatively though less so in Africa. Africa also stands constant across all adult ages. out in terms of the proportion of people older than 65 remaining in the labour force, WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 57 Figure 3.3 Labour force participation rate by region and age group (in years), 2019 100 90 80 70 60 50 40 30 20 10 0 Africa Asia Europe Latin America Northen Oceania and the Caribbean America 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65 years or over Source: Calculations based on ILO (2020). Figure 3.4 Per capita consumption by age relative to the consumption level among those aged 30 to 49, latest year available, 2005–2016 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 0 0 10 20 30 40 50 60 70 80 90 Age in years High-income countries Upper-middle-income countries Low- and lower-middle-income countries Source: National Transfer Accounts database. Available at https://ntaccounts.org (accessed on 4 April 2022). Labour force participation rate, percentage Ratio of average level of consumption relative to consumption of persons aged 30 to 49 years CHAPTER 3 58 Among the many drivers of consumption vate household adapts its consumption patterns, ageing is probably less important behaviour to the actual habits and needs than factors such as income or education. as well as the income situation” (Stoever, At the same time, different age groups 2012, p. 3). Data on consumption patterns vary in how they consume. Evidence from in China show two consistently high-value the European Union suggests that older expenditure categories in older house- persons spend more on services, housing holds compared to younger ones: health and health care than younger cohorts, and care and housing. For older households in less on transport (figure 3.5). the lowest income quintile, food consump- tion is significantly lower than in younger In the United States, older households, households (Khan, 2022). where the household reference person is above age 65, spend a larger share of in- Age structure and consumption patterns come on housing, utilities and fuel, house- have implications for inflation in coming hold operations, housekeeping supplies decades (Juselius and Takats, 2016) but the and health care compared to working-age burden of rising prices may not be equita- people. They spend significantly less on bly shared across age groups. For example, alcoholic beverages, apparel and services, between 2014 and 2017, inflation for online tobacco and smoking supplies, and insur- goods was at least 1 full percentage point ance and pensions. A study from Germany lower every year than inflation for equiv- found that age influences the amount that alent goods in the overall consumer price individuals spend for different purposes, index (Goolsbee and Klenow, 2018). Should implying that “during the lifecycle, a pri- this tendency continue to hold, older per- Figure 3.5 Structure of consumption expenditure by age, European Union countries, 2015 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Less than 30 30-44 45-59 60 or over Age group Education Other Health Recreation and culture Transport Food and non-alcoholic beverages Housing, water, electricity, gas and other fuels Source: Eurostat. Available at https://ec.europa.eu/eurostat/data/database. Sectoral consumption expenditure WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 59 sons, who are more likely to shop in stores Without policy reforms, population ageing than online, may face higher prices than tends to put upward pressure on age-re- other age cohorts (although such an effect lated public spending. Global health-care would decline as people accustomed to expenditure, as a share of GDP, has con- shopping online age). Online shopping is sistently risen over the years, increasing also more common among high-income in comparable terms (PPP, or purchasing groups, and as this interacts with age, it power parity) from about $8.3 trillion in can make some less affluent older persons 2011 to $13.4 trillion in 2019. Data from particularly vulnerable to higher inflation. Organisation for Economic Co-operation and Development (OECD) countries show The United States Bureau of Labor Sta- that most have seen increases in public tistics calculated an experimental con- health expenditure since 2000 (figure 3.6). sumer price index for households with a This is not just explained by population reference person or spouse aged 62 or ageing. It also relates to the increasing older, finding that older persons face a prevalence of unhealthy and sedentary higher inflation risk. In past decades, older lifestyles. This trend is likely to continue, Americans, according to this index, have on with the European Union expecting public average seen slightly higher inflation than spending on health care and long-term people in general (Stewart, 2008). This care to rise by 0.7 and 1.3 percentage finding is particularly important because points of GDP between 2013 and 2060, many countries link pension benefits to respectively (Nerlich and Schroth, 2018). the consumer price index. If that index Studies on emerging economies predict does not properly reflect cost-of-living that population ageing will have a signifi- increases for older persons, applying it cant impact on public and private health- may further accentuate income inequality. care expenses (Zhou and others, 2020). Figure 3.6 Total annual expenditure on health as a share of GDP in OECD countries 18 16 14 12 10 8 6 4 2 0 2019 2020 Source: OECD.Stat. Available at https://stats.oecd.org/. Percentage Türkiye Luxembourg Mexico Hungary Poland Latvia Ireland Estonia Slovakia Lithuania Costa Rica Israel Colombia Czech Republic Greece Republic of Korea Slovenia Iceland Italy New Zealand Spain Finland Chile Australia Portugal Denmark United Kingdom Netherlands Austria Norway Belgium Canada Sweden Japan France Switzerland Germany United States CHAPTER 3 60 As the share of people aged 65 or older 4. FiNANCiNG OLD-AGE CONSUMPTiON grows, both public and private health-care DEPENDS ON REALLOCATiNG expenditures are expected to increase. The RESOURCES old-age dependency ratio has a significant impact on per capita health-care expendi- Patterns of income and consumption across ture, after controlling for other factors (Khan, the life course, including deficits for certain 2022). Yet the effect is not straightforward, age groups, are not necessarily a macroe- depending on a host of variables. Both the conomic problem if systems to reallocate number of older persons and their health resources are balanced and sustainable. At status determine the relationship between the individual level, adequate private sav- ageing and health-care spending. Education ings and pensions can ensure the welfare level also directly links to better health and of older people. Without equitable and sus- lower health-care expenditure among older tainable systems in place, however, rising persons. Long-term investment in education pension, health-care and long-term care can thus have significant positive spillover costs can pose challenges to both individu- effects on the health-care budget (Borresc- als and the macroeconomy, raising risks of io-Higa and Valenzuela, 2021). poverty and inequality among older people (Pandey and others, 2018). Without equitable and sustainable systems in place, however, rising A. SOURCES OF FINANCING pension, health-care and long-term How older people finance their consumption care costs can pose challenges to both differs across countries. The main sources of finance are people’s own work, savings and individuals and the macroeconomy, other assets, and private and public trans- raising risks of poverty and inequality fers. In developed countries, public transfer among older people systems, including for pensions and health care, meet at least two thirds of consump- tion needs among older persons. In devel- oping countries with limited public transfer The impacts of ageing also differ by modes systems, older persons tend to work longer, for financing health care. In past decades rely on assets accumulated when younger in the United States, for instance, average or turn to their families for support (figure medical costs have been strongly associ- 3.7). In low-income countries, where public ated with time until death but only weakly transfer systems are poorly developed, older associated with age (Miller, 2001). This is due persons rely more on assets than on private in part to a health-care industry that uses or family transfers. Asset-based realloca- costly new treatments and offers limited tions fund about 95 per cent of the old-age options for end-of-life care. In high-income deficit in India. In East Asia, family support countries, nearly 10 per cent of the aggre- remains important in many countries even gate annual health budget goes to the less if its role has been declining over time. than 1 per cent of people who die each year (Normand and others, 2021). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 61 Figure 3.7 Sources of income by age group A. Selected developed countries 100 90 80 70 60 50 40 30 20 10 0 55-59 60-64 65-69 70-74 75-79 80+ Age group Private transfers Public social benefits Pensions Capital income Labour income B. Selected developing countries 100 90 80 70 60 50 40 30 20 10 0 55-59 60-64 65-69 70-74 75-79 80+ Age group Private transfers Public social benefits Pensions Capital income Labour income Source: Calculation based on the Luxembourg Income Survey (LIS) Database, latest year available. Available at www.lisdatacenter.org. Proportion of income source as Proportion of income source as a percentage of total income a percentage of total income CHAPTER 3 62 Significant differences in financing the B. IMPLICATIONS FOR GOVERNMENT consumption of older persons oper- REVENUE ate among countries at similar levels of economic development and stages Population ageing may have implications of demographic transition. For exam- for government revenues, amid concerns ple, older people in Brazil receive much about potential declines in the labour force larger public transfers than their coun- and uncertain effects on labour productiv- terparts in Mexico, primarily through ity. Government revenue tends to change pension benefits. Brazilians become net with the number of taxpayers and their beneficiaries of public transfers at age income, so it is more directly related to 52 while Mexicans pay more in taxes than the working-age or employed population they receive in public benefits until age than to the total population. Since taxes 58. While Brazilians receive generous and social contributions vary over the life pension benefits throughout old age, course, population ageing may imperil or people in Mexico work longer and tend dampen the growth of fiscal revenues. to support themselves more through asset income than public transfers (Lee Countries in the early stages of ageing may and Mason, 2011). see their tax revenue increase as all income sources have the potential to grow. Coun- Without mitigating reforms, total expend- tries that are more advanced in ageing may iture on pensions will increase with pop- see declines in fiscal revenue from social ulation ageing. In advanced and emerging contributions linked to the labour market economies, pension spending as a per- as well as taxes on income, profits and centage of GDP rose from around 7 per capital gains. Offsetting this effect would cent in the 1970s to 8 per cent in 2010. By require older persons to remain gainfully 2050, public pension spending in these employed or otherwise generate income countries is projected to increase by 1 (Cylus and others, 2019). to 2.5 percentage points of GDP, to an average of 9.6 per cent of GDP (Amaglobeli Figure 3.8 outlines the age profile of dif- and others, 2019). In the European Union, ferent types of tax revenues and potential demographic changes alone are expected changes in revenue sources as populations to raise pension spending by 7.6 per cent grow older. These trends would shift if of GDP from 2013 to 2060 (Nerlich and older persons were healthier, better ed- Schroth, 2018). ucated and work longer. The overall im- pact of ageing on government revenue thus depends on the combined effect of these factors. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 63 Figure 3.8 Per capita taxes and social contributions across the life course, selected countries in Europe, Asia and the Americas 2,500 2,000 1,500 1,000 500 0 Age group Social contributions (including payroll taxes) Taxes on income, profits and capital gains Taxes on goods and services Taxes on property Source: Cylus and others (2019). Note: Revenue types were averaged across six countries with available data: Italy, Japan, Sweden, Thailand, Uruguay and the United States. A smaller labour force can have a sub- Population ageing may diminish revenue stantial impact on government revenue. from value added taxes due to reduced In Slovenia, for example, the projected taxable private consumption and a shift in decrease in the working-age population, demand towards specific services, such as from 66 per cent of the total population health care, that are often subject to tax in 2016 to 58 per cent by 2040, together exemptions. Since the consumption tax with a rising share of older persons could burden of the oldest households is gen- cause government revenues to contract erally lowest, fiscal revenue will fall as the by a projected 1.6 per cent as a share of size of that age group increases. Revenue GDP (Colin and Brys, 2020). Simulations from taxes on capital, property and cor- for Germany indicate that annual income porate income are likely less influenced by tax revenue could decrease by around 7 population ageing. In some countries, such per cent by 2035 compared to 2016 de- revenue may even increase due to asset spite greater labour market participation accumulation by older persons by older people (Beznoska and Hentze, 2017). This outcome, however, could be An OECD simulation found that without offset by changes to the tax system, such policies to increase tax revenues to offset as by increasing marginal tax rates on the age-related increases in expenditures, pub- highest wage earners. lic debt levels in advanced and emerging Revenues per person 00-04 05-09 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-plus CHAPTER 3 64 economies may increase dramatically and tensity raises productivity, the magnitude unsustainably over the next 40 years (Guil- of this effect varies across countries and lemette and Turner, 2018; Rouzet and oth- depends on different factors. In general, ers, 2019). The simulation incorporates de- the retirement savings of working-age in- mographic changes and the future impacts dividuals takes on added importance as of already legislated increases in retirement it can contribute to capital accumula- age, built-in pension system stabilizers, the tion and investment in both domestic and phasing out of early retirement provisions international assets, resulting in higher and changes to benefit formulas. Significant national income. variations arise due to differences in pen- sion commitments, however (figure 3.9). Total investment in the economy may de- cline if expected growth in aggregate de- mand slows as an ageing population moves 5. ADAPTiNG TO SUSTAiN ECONOMiC towards a different consumption profile GROWTH OVER TiME (Aksoy and others, 2019). A shift in demand towards less capital-intensive services such Economic growth may slow during the as health care may reduce needs for cap- demographic transition as population ital investments (Lee, 2016). Ageing thus growth levels off and societies move to- amplifies the need for countries to adopt wards ageing. Ageing tends to increase policies that foster structural economic capital accumulation and investment in transformation, including through digital- the economy through many channels, as ization, investment in physical and human discussed earlier. While greater capital in- capital and the greening of the economy. Figure 3.9 Changes in the fiscal burden due to pension promises in 32 OECD countries, percentage of GDP, 2018–2060 7.0 5.0 3.0 1.0 -1.0 -3.0 -5.0 Countries with a declining fiscal burden from pension promises Countries with a rising fiscal burden from pension promises Source: Guillemette and Turner (2018). Note: The change reflects the primary fiscal revenue needed between 2018 and 2060 to offset additional pension costs and stabilize public debt to GDP at the 2018 value. Percentage points of GDP GRC -3.9 FRA -2.4 DNK -2.2 PRT -1.6 LVA -1.5 EST -1.0 SWE -0.9 ESP -0.8 ISR -0.8 JPN -0.6 ITA -0.5 AUS -0.3 FIN -0.1 POL 0.0 ISL 0.2 NLD 0.8 CHE 0.8 AUT 0.8 USA 0.9 GBR 1.3 CAN 1.3 SVK 1.5 NOR 1.7 HUN 1.8 IRL 2.2 DEU 2.3 NZL 2.3 BEL 2.6 KOR 3.4 CZE 3.5 SVN 4.3 LUX 7.1 WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 65 Ageing can also alter the trajectory of pro- Other research indicates that ageing and ductivity, especially in sectors requiring shrinking populations may have a positive particular abilities. It is usually assumed influence on the collective demand for re- that as work becomes increasingly de- sources, food production, energy use and pendent on digital tools and technology, pollution (Clements and others, 2015). The an older workforce with fewer relevant clearest influence is perhaps on changes in skills will be less productive. This assump- demand for environmental resources, with tion is increasingly challenged, however, positive effects on natural capital (SDG tar- by successive cohorts of technologically get 12.2). This results from shifts in produc- sophisticated older persons. Moreover, tion towards more capital-intensive indus- older people have accumulated knowl- tries and methods and in consumption from edge that may compensate for lower material-intensive goods towards health rates of technology adoption. The overall and leisure activities. Countries with higher impact of ageing on labour productivity old-age dependency ratios have smaller thus depends on the combined effect of ecological footprints.19,20 these factors. The influence of ageing on other sustaina- One promising approach to popula- bility measures is less clear but does offer tion ageing is to invest in technology opportunities to make progress in halving per and more capital-intensive economic capita global food waste and reducing food activity. Already, the rapid advance of losses along production and supply chains automation and artificial intelligence is (SDG target 12.3), and in improving prevention, reducing reliance on labour. Some evi- reduction, recycling and reuse systems to dence suggests that additional capital reduce waste generation (SDG target 12.5). investment in automation in some ad- Population ageing also raises important ques- vanced ageing economies is helping to tions around how to recognize unpaid care accelerate economic growth (Acemoglu work in economic growth accounting, an is- and Restrepo, 2020). sue briefly discussed in box 3.1. 19 The ecological footprint is a measure of how much area (in global hectares) of biologically productive land and water an individual, population or activity requires to produce all the resources it consumes and to absorb the waste it generates, using prevailing technology and resource management practices. 20 Population ageing may also increase the consumption of energy from heating and cooling. It is important to consider sources of energy generation in assessing the overall impact on the environment. CHAPTER 3 66 ACCOUNTiNG FOR UNPAiD CARE BOX 3.1 iNFORMS POLiCiES EQUiPPED TO MANAGE AN AGEiNG SOCiETY The ILO (2018a) has estimated that unpaid and its distribution. It is also essential to care work for household production ac- assess the quality of care work, based on counts for 16.4 billion hours of work time the experiences of those receiving care annually, equivalent to around 2 billion services. This emphasis is consistent with jobs. Data from the UN SDG Global Data- the “beyond GDP” movement’s call for a base, based on a sample of 32 developing shift from measuring economic production and 24 developed countries (56 in total), to measuring people’s well-being (Stiglitz, suggest a significant gender difference in Sen and Fitoussi, 2009). Quality is particu- the proportion of time spent on unpaid care larly pertinent for ageing countries as it is and domestic work in countries at different already low and could further deteriorate stages of population ageing. without sufficient investment to match ris- ing demand. In developing countries, which tend to be at earlier stages of the demographic transi- From a policymaking perspective, insuffi- tion, women on average spend 17.3 per cent cient measurement of unpaid care work lim- of their time on unpaid care and domestic its analysis of gender gaps in labour market work, compared to 17.1 per cent in mostly outcomes, such as labour force participa- older developed countries. In contrast, men tion, wages and job quality – as well as ef- in ageing societies tend to spend a greater fective measures to rectify these disparities. portion of their time on unpaid care work, The lack of measurement also obscures the at 8.7 per cent on average, than men in de- true scale of caregiving in an ageing society veloping countries, at 5.8 per cent. Men’s and limits proactive actions enabling unpaid share in both cases remains much lower than caregivers (often women) to become full women’s share. Globally, women currently participants in the labour force. perform three quarters of unpaid care work hours, reflecting entrenched gender ine- With population ageing, a better understand- quality (ILO, 2018a). ing of unpaid care work could inform more accurate assessment of measures to miti- The neglect of unpaid care work in eco- gate adverse economic effects. For example, nomic accounting results in inaccurate since unpaid care work is not included in GDP assessments of changes in individuals’ and unpaid care workers are not considered well-being and the value of time (OECD, part of the labour market, national accounts 2014; Lequiller and Blades, 2014). A more miss a full reflection of the productivity of complete calculation would capture both the women and men who carry out unpaid the aggregate amount of unpaid care work care work. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 67 BOX 3.1 Further, calculations to estimate the eco- women into paid work. It would be more nomic benefit from narrowing the gender appropriate to interpret the potential boost gap in labour force participation, with the to growth as a ceiling, indicating its limits. A implicit assumption that women who are not more accurate estimate would require better “participating” in the labour market are un- understanding and measurement of the eco- productive, would likely overstate the impact nomic contribution of unpaid, predominantly of potential policy measures to bring more female, care workers. B. ing to ensure that the broader economy benefits from the expertise and skills of older persons. KEEPiNG UP WiTH AGEiNG CALLS FOR SHiFTiNG CONSUMPTiON 1. WOMEN AND OLDER WORKERS ADD AND PRODUCTiON STRATEGiES VALUE iN LABOUR MARKETS As societies age, labour force partici- pation rates need to rise accordingly, In both developed and developing coun- particularly for women, older workers tries, opportunities and challenges from and other groups traditionally exclud- population ageing warrant adopting ef- ed from the formal labour market. This fective, equitable strategies for both the applies especially to countries with ad- production and consumption sides of the vanced ageing. economy. Ageing should be central to economic development agendas, includ- Women’s greater role in the labour force has been integral to positively transform- ing the structures of economies in many Ageing should be central to countries in recent decades. Yet they still participate at rates well below those of economic development agendas, men in every age group, reflecting distinct including to ensure that the broader gender roles and social status, among oth- economy benefits from the expertise er issues. Women’s increased participation would slow the projected decline in the and skills of older persons size of the labour force. CHAPTER 3 68 Towards that end, a key challenge for pol- The economic benefits of closing the gender icymakers is to reconcile conflicting work gap in labour force participation are signif- and family demands. Employment and so- icant according to a recent examination of cial policies need to make it possible for historical factors contributing to economic women to have children while remaining growth in 178 countries.21 The analysis re- in the labour market and continuing to affirmed the essential importance of im- develop their careers. Policies can include proving labour productivity and women’s the provision of subsidized childcare, ma- participation in the labour force. In 2018, ternal and paternal leave, and tax credits, roughly one third of working-age people among others. globally remained outside the labour force, with significant variation by gender. Globally, a 20-percentage-point gap exists between male and female rates of labour force par- Employment and social policies ticipation (figure 3.2). The gap is as high as need to make it possible for women 31.2 percentage points in Asia and as low as to have children while remaining in 8.7 percentage points in Northern America. the labour market and continuing to Expanding female labour force participa- develop their careers tion provides a major opportunity to boost GDP per capita and expand the economic base in countries with ageing populations. Closing the gender gap would add another The greater participation of women and 30 per cent to global GDP per capita. In older workers in the labour force will effect, this amount represents the global require workplaces to make changes in opportunity cost of women’s lower labour occupational safety and health, working force participation. hours and organization, such as more flexible working hours and arrangements In Europe, legislated pension reforms, and taxation systems, as well as enhanced particularly a higher retirement age, track support to families with children. For older an expected rise in employment rates workers, it may be important to eliminate among women and older persons. These distortions in pension and social transfer are projected to raise the labour force par- programmes that discourage them from ticipation rate of workers aged 55 to 64 remaining in the labour force. Older per- from 62 per cent in 2019 to 72 per cent by sons should be able to work as long as 2070. An even larger increase is predict- they wish and can do so productively. This ed for women, leading to a convergence will require systematically countering age- with men (European Commission, 2021a). based discrimination, the main challenge These forecasts also envisage long-term to realizing older people’s right to work improvements in the employment ratio and at all levels of the labour market (United a lowering of the unemployment rate from Nations, 2021b). 6.8 per cent in 2019 to 5.8 per cent by 2070. 21 Based on an unpublished internal research note by the Development Research Branch of the United Nations Department of Economic and Social Affairs in April 2022. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 69 In OECD countries, the relaxation of rules 2. GREATER LABOUR PRODUCTiViTY stipulating mandatory retirement and the DEPENDS ON iNVESTiNG iN SKiLLS promotion of more flexible working ar- rangements are projected to raise GDP Lifelong learning improves the labour growth by an additional 2.5 percentage productivity of all workers, especially points, on average. The OECD projects that amid rapidly changing technologies. In giving older workers greater opportunities ageing societies, labour productivity may to work would enhance GDP per capita by fall because of declining average physi- as much as 19 per cent over the next three cal and cognitive abilities among older decades (United Nations, 2021c). workers without commensurate efforts to enhance their skills and knowledge. An ageing labour force thus provides an additional incentive for firms to invest in Every society needs to focus on new technologies that enhance labour investing in the education and skills productivity. The combined impact of of people of all ages, including during these measures will ultimately determine the overall effect of population ageing on the demographic transition towards labour productivity. older societies Every society needs to focus on investing in the education and skills of people of all ages, including during the demographic transition towards older societies (box 3.2). This enhances labour productivity while also transforming economic struc- tures and incentives, leading to accel- erated application of digital and green technologies as instruments of sustain- able development. CHAPTER 3 70 BOX 3.2 HOW TO AMPLiFY ECONOMiC GROWTH DURiNG THE DEMOGRAPHiC TRANSiTiON Increasing labour productivity is imperative for the three factors would see the required countries seeking to mitigate ageing’s adverse labour productivity growth reduced by 44 effects on income growth. Based on a recent per cent on average. analysis, the needed rate of improvement de- pends on achieving gender parity in labour force Among the three factors, attaining gender participation, increasing the statutory retire- parity in labour force participation makes ment age from age 65 to age 70, and maintaining the biggest difference for 99 countries out or increasing the level of international migration. of 167 sampled, comprising 113 developing and 54 developed countries. It is followed by The analysis estimated labour productivity raising the retirement age, which would be the growth required to reach a given target for most impactful in 67 countries, half of which income growth, considering demographic are developed countries. Among all countries changes projected in the World Population with available data, only one will gain more Prospects (United Nations, 2019b). The annual from continued migration (compared to no income growth targets were a 2 per cent per migration) than from the other two factors. year increase between 2020 and 2050 for OECD countries and others with higher in- A push for higher fertility would have a lim- come than the group’s average, and, for other ited impact in increasing per capita income countries, halving the income gap with the between 2020 and 2050. Increased fertility OECD average by 2050. The exercise applied would slow population ageing and over time alternative scenarios for the three factors result in a larger working-age population. But and quantified the extent to which they can it would also immediately raise the share of help to achieve the target income growth. dependent children, limiting favourable im- pacts on growth from a larger workforce. On average and across countries, achiev- ing gender parity in labour force partici- Even accounting for the three factors con- pation, an increase in the retirement age ducive to economic growth, most countries and maintaining existing migration flows would still need to accelerate labour produc- could lower the annual labour productiv- tivity growth from levels before the pandemic ity growth required during 2020-2050 to to achieve the targeted income growth. This achieve the above income growth target by includes those with a growing working-age 9.5 per cent, 6.7 per cent and 1.0 per cent, population, suggesting that nations cannot respectively, or 17.2 per cent combined. Sig- rely on favourable demographic trends alone nificant regional variation reflects different to narrow the income gap. On average, the development conditions (figure 3.10). The required increase in annual labour productivity 10 countries that could benefit most from growth is 3.2 percentage points. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 71 BOX 3.2 Figure 3.10 Projected contributions of three factors to achieving the annual average labour productivity growth required for income growth targets, regional averages, 2020–2050 23.6 13.9 11.0 11.3 6.8 8.0 8.36.5 5.5 6.0 6.5 5.7 2.3 1.9 0.8 0.0 -0.1 -0.4 Gender parity, labour force participation rate Raising retirement age Migration Note: Regions are ordered in terms of the sum of the average of each of the three factors, starting from Western Asia, which has the greatest sum. The income growth target is 2 per cent annual growth during 2020-2050 for OECD countries and countries with incomes higher than the OECD average. For other countries, the income target is to halve the income gap with the OECD average by 2050. Japan is among the countries facing con- and the United States. Required productiv- siderable economic impacts due to rapid ity growth in all these cases seems within population ageing. Based on a 2007 esti- reach by historical standards; an annual mate, labour productivity would need to per capita income growth of 2 per cent grow by 2.6 per cent per year to sustain is lower than the average achieved in the annual per capita income growth of 2 per past. Yet maintaining an annual 2 to 2.5 per cent over a 30-year period (United Na- cent productivity growth rate for about tions, 2007). A similar pattern holds, to five decades will not be easy, requiring a lesser degree, in other countries with sustained policy support to stimulate tech- ageing populations, such as Germany, Italy nological progress and innovation. Contribution of each factor to achieving the labour productivity required to reach income growth targets, percentage Western Asia Developed economies Developed Eastern and Southern Asia Latin America and the Caribbean Economies in Transition Africa CHAPTER 3 72 3. HARNESSiNG THE POTENTiAL OF THE pany shifts in working patterns, such as the TECHNOLOGiCAL REVOLUTiON rapid rise of the “gig economy” over the last decade. As the size of the working-age The world today is riding a new wave of tech- population declines and salaries increase nological change. The Fourth Industrial Rev- in many countries in coming years, private olution promises to alter people’s work and and public institutions will likely continue to lives in fundamental ways. New technologies replace labour through the automation and such as artificial intelligence and robots are digitalization of work. creating new occupations and taking over thousands of routine tasks. In many areas, In the United States, an estimated 9 to 47 per new technologies are substituting for labour cent of jobs may be automated over the next rather than complementing it. two decades (Frey and Osborne, 2017; Arntz, Gregory and Zierahn, 2017). The International Population ageing has become a key factor Federation of Robotics has estimated that 3 driving changes in work, technology and million robots operated in 2017 worldwide. the globalization of markets. Some highly They are increasing annually at a rate of 14 advanced ageing countries like Japan are per cent and could reach 11 million by 2030 systematically introducing new technolo- (Bloom, McKenna and Prettner, 2018). gies to replace human labour in manufac- turing and services (box 3.3). Many other The fast pace of innovation and technological countries are examining opportunities to development poses a particularly significant mitigate negative fallout from ageing on challenge for many developing countries. their economies. While new technologies They will need to manage and make the most can improve economic productivity and of such changes or risk being left behind in the delivery of services, digitalized business the economy of the future. One common and models also pose risks in terms of labour urgent priority is to increase investment in rights and income inequality. Such issues education, including early child development, will likely move to the forefront of global as well as health and social protection, as a policymaking in coming decades. strategy to seize the potential of new tech- nologies to accelerate sustainable economic In some industries, like automotive man- development. It is also important to invest ufacturing, robots have already largely re- in the skills and knowledge of older persons placed people on the assembly line (Bloom, and ensure that technology platforms are McKenna and Prettner, 2018). Mine opera- accessible to them. tors use self-driving trucks that refuel only once a day. 3D printers increasingly produce Many developed countries have already goods that previously required extensive lost a significant number of manufacturing labour inputs, including tailor-made medical jobs to automation. Technologies are also products like hearing aids. 3D printing, in displacing people in low-skilled occupa- fact, may become a lynchpin for boutique tions. For example, robots play increasing manufacturing in rural areas. Other tech- roles in caring for older people, assisting nologies, like machine learning, have begun with daily tasks such as bathing, dress- to diagnose diseases, among many other ing, eating, communications and transport uses. These trends in technology accom- (Pruchno, 2019). While new technologies WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 73 carry enormous potential to improve results. A United Nations expert meeting in standards of living, many people remain 2015 concluded that maternity, paternity rightly concerned about negative impacts and parental leave, paid at a high level of on employment and inequality. wage replacement and for moderate du- rations, appeared to positively influence fertility (United Nations, 2015a). Similar 4. PRONATALiST POLiCiES SHOW results came from affordable, accessible, MiXED RESULTS high-quality childcare and education servic- es for children of all ages. Evidence on the A longstanding concern is that population response to cash benefits is mixed. Quebec, ageing will drag down public finances and Canada’s cash grant, France’s birth grant, standards of living. An analysis of data from Australia’s baby bonus, Germany’s mater- 40 countries shows that fertility well above nity leave and the Israeli child subsidy pro- the replacement level would generally be gramme have demonstrated positive fertility most beneficial for government budgets. responses according to some research (Lee, Fertility near the replacement level, how- 2022). Other studies have found no signif- ever, would be most beneficial for the mac- icant fertility response to such benefits. roeconomy and the average standard of The effect largely depends on the country, living. Considering the effects of age struc- type of programme and research method. In tures on families as well as governments, general, small benefits may not counteract the total fertility rate that would maximize other, stronger factors in fertility decisions. the economic support ratio is estimated at 1.8 births per woman in low-income countries, 2.0 in upper-middle-income 5. BEYOND BORDERS: iMPETUS FOR countries and 2.3 in high-income countries NEW iNVESTMENT FLOWS (Lee and Mason, 2014).22 The accelerated outsourcing of production Many European societies view boosting birth and enhanced global value chains will likely be rates as an important strategy to slow pop- key strategies that rapidly ageing countries ulation ageing and reduce fiscal pressures. deploy to address the economic implications Most governments in countries that are of declining working-age populations. Ageing past the demographic dividend, in Europe countries may need to diversify their invest- and elsewhere, have introduced pronatalist ments beyond what is possible domestically policies to respond to declining fertility and and potentially obtain higher average rates rapid population ageing. Examples include of return as well. Ageing thus accelerates the providing incentives to have more children impetus for international investment flows through baby bonuses, family allowances, tax from upper-middle income and high-income breaks, parental leave, subsidized childcare countries to lower-middle and low-income and flexible working schedules. countries, such as some in Asia and Africa with abundant labour. Such capital flows can Different examinations of the impact of increase labour productivity and wages and pronatalist policies on fertility show mixed propel higher economic growth. 22 The economic support ratio measures the share of the working-age population in the total population. CHAPTER 3 74 BOX 3.3 iN JAPAN, AGEiNG iS REORGANiZiNG iNDUSTRY AND ADVANCiNG THE DiGiTAL ECONOMY Japan’s population is predicted to decline exports rose from 8.8 per cent in 1995 to 18 from 126 million to 100 million people be- per cent in 2020. Vertical farming and new tween 2020 and 2050. This could shrink the agricultural technologies have transformed workforce by 20 per cent between 2020 and agriculture and resulted in more efficient 2040 as it sheds from 65 million to 52 million use of natural resources. The rising average people. By 2040, an estimated 36 per cent of age of farmers, which topped 68 years in the population will be older than 65, up from 2020, has in part driven the reinvention 29 per cent in 2020. The near certainty of of agriculture. labour shortages has already catalysed eco- nomic transformation. Japan’s digital transformation has offered a solution to the “succession problem” facing Changing demographics have forced Japa- many companies, where hiring cannot keep nese companies to accelerate digitalization, up with retirement. Sharp increases in job for example, and brought about a major re- mobility, the number of independent con- organization of industrial architecture and tractors and the use of dual employment policy. Japan, along with Germany, is now systems have together brought about a signif- at the forefront of digital manufacturing. icant rethinking of existing pension systems, Japan’s global market share in industrial including to improve coverage of workers robotics and machine vision technologies in non-standard and informal forms of em- exceeded 50 per cent in 2019, up from 30 ployment and to open opportunities to defer per cent in 2016. By 2020, plants and offices pension benefits until age 75. A low unem- outside Japan generated more than half of ployment rate, less than 3 per cent in 2020, manufacturing sales. minimizes apprehensions around technologi- cal change. Further, educational reforms and Managing global value chains is now central major government and private investments in to how Japanese companies do business. reskilling the workforce are helping workers As a result, the GDP share of manufacturing adapt to momentous changes. Source: Schaede and Shimizu (2022). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 75 Africa has potential to become a major driver and global value chains, especially given of global economic growth in the latter half their competitive wages. Increased in- of the twenty-first century – if countries vestment in human capital and physical adopt the right policies to realize a histor- infrastructure will be key to making the ic demographic opportunity. Policies need most of this opportunity. to nurture a rapidly growing pool of well- trained workers and advance economic and structural reforms that make the continent a magnet for foreign direct investment and technological diffusion. The digital revolu- C. tion offers Africa an extraordinary chance to make the public and private sectors more CAREFULLY TiMED POLiCiES CAN cost-effective, efficient and transparent, a STEER A SUCCESSFUL TRANSiTiON major catalyst for economic growth. It can also bypass traditional structural transfor- mation anchored in the rapid expansion of a highly polluting manufacturing sector, Success in extending human lives and choosing instead a lighter environmental reducing fertility rates have presented footprint with greater emphasis on growth opportunities and challenges in manag- in services such as business process out- ing economies. Harnessing the oppor- sourcing, e-commerce and fintech. tunities and mastering the challenges depends in part on government policies at different stages of the demographic Africa has potential to become a major transition. These need to recognize how changes in the size and composition of the driver of global economic growth working-age population and labour force in the latter half of the twenty-first heavily influence the impact of ageing century – if countries adopt the on productive capacity. Furthermore, as income, needs and preferences change right policies to realize a historic over the course of life, so does consump- demographic opportunity tion behaviour, with implications for both government spending and revenue. Governments need to adopt comprehen- As digital technologies spread and ease sive strategies aimed at enhancing invest- the flow of both manufacturing and ser- ments in health and education; fostering vice jobs to offshore locations, global labour force participation, particularly production networks will expand in de- among women and older workers; im- veloping economies with surplus labour. proving labour productivity; and raising Continued improvement in education fiscal revenue. Ageing needs to move to and skills and a readiness to transition the centre of economic development to green and digital economies could agendas, towards ensuring that econo- make labour-surplus economies such as mies both thrive and benefit from the those in Africa into a hub for production expertise and skills of older persons. CHAPTER 4 76 CHAPTER 4 AGEiNG, POVERTY AND iNEQUALiTY, NOW AND iN THE FUTURE KEY MESSAGES █ While worries over fiscal sustainability have dominated pension reforms, pen- █ Old-age pensions and access to health sion benefits are still too low in many care are critical in reducing poverty countries and beyond the reach of some and inequality among older persons. groups. inadequate investment in eco- But they are not sufficient on their nomic security at older ages risks jeop- own. Ensuring economic security and ardizing progress in reducing poverty health for all in old age calls for pro- among older persons. it may diminish moting equal opportunity from birth, the well-being of future cohorts of older including through universal access to persons and further undermine already health care and education as well as shaky trust in Governments. opportunities for decent work. █ Not everyone has benefitted equally █ investments in decent work are par- from the advances in health and liv- amount. Decades of wage stagnation ing conditions that drive population are jeopardizing people’s ability to ageing. Many of today’s older persons save enough to support themselves in are in good health. Others live with older ages. informal employment and multiple ailments or severe disabili- various non-standard forms of em- ty. Some are economically active and ployment limit workers’ social protec- enjoy income security but many live in tion coverage and their contributions poverty. Some have strong social ties. to public revenues. Others lead isolated lives. Population averages conceal these inequalities █ Without swift policy action to prevent and the diverse needs and abilities of it, future cohorts of older persons are older people. likely to be economically more unequal than those today. With growing numbers of older persons in all regions, inequality and economic insecurity at older ages should be rising causes of concern. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 77 Inequalities do not emerge suddenly at older try evidence to explore how public policies ages. They follow and feed on people’s dif- can influence economic well-being at older ferent experiences throughout their lives. A ages.23 Even countries that have made pro- person’s country of birth, family, education, gress in improving the opportunities and employment path and social networks affect quality of life of women and men as they well-being in later life, as do gender, ethnicity grow older,24 however, are far from ensuring and other characteristics. Advantages or that no one is left behind. disadvantages in access to opportunities and resources can reinforce each other at any point. Prolonged unemployment, for in- stance, has negative impacts on health and social networks. Poor health and limited so- A. cial networks, in turn, constrain employment opportunities. From a policy perspective, it POVERTY, iNEQUALiTY AND is important to understand the influences EXCLUSiON iN OLD AGE: across the life course that underlie inequal- A SNAPSHOT ities in later life, and how different national and local contexts shape this process. Inequalities evolve over a single generation 1. POVERTY RiSKS CAN RiSE and from one generation to the next. On av- WiTH AGE erage, today’s youth are healthier and more educated than prior generations. Progress in Reducing poverty among older persons is a education is likely to continue among future core objective of the Madrid International generations, despite the disruptions of the Plan of Action on Ageing. Older people face COVID-19 crisis. Younger people today are particular risks of falling into poverty. At some expected to live longer and make important point, most begin to work less or stop working contributions to society, including at older altogether due to health reasons or family ages. Yet growing uncertainty and economic responsibilities, or because they are obligated insecurity mar their transition to adulthood. or wish to retire at a statutory retirement Examining the labour market characteristics age. Discrimination may undermine further of successive cohorts of youth, working-age employment. While many older persons re- adults and older persons across countries main productive, their economic well-being as well as inequality trends across cohorts depends on the availability of public income sheds light on ongoing changes with impli- support, affordable health care, family sup- cations for the future of ageing. port and personal savings to a greater extent than for the working-age population. This chapter illustrates how diverse ageing paths drive disparities in old age within and Despite the policy relevance of detailed, between countries, with a focus on poverty disaggregated poverty information, in- and income inequality. It uses cross-coun- cluding for SDG monitoring, there are few 23 The chapter’s findings are based on microdata analyses using the LIS Database, which covers numerous developed and developing countries, and the Gateway to Global Aging data platform. 24 The Madrid International Plan of Action on Ageing refers to this as “building a society for all ages”. CHAPTER 4 78 UNEQUAL AGEING ACROSS THE LIFECOURSE Better health, Poorer health, sufficient insufficient pension income, OLD AGE pension income, assets little/no asset-base Higher earnings, Lower lifetime comprehensive earnings, social protection WORKING insufficient social AGE protection (where available) High quality Low quality education, SCHOOL education, access to AGE less access touniversity university Investment in Early childhood early childhood development development, EARLY unaffordable, adequate nutrition, CHILDHOOD poorer nutrition, access to less access to healthcare healthcare WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 79 cross-country, comparable estimates of the 4.1 describes the methodological challenges prevalence of poverty among different pop- affecting the reliability and comparability of ulation groups, including older persons. Box poverty data by age. BOX 4.1 CHALLENGES iN MEASURiNG OLD-AGE iNCOME POVERTY Measuring poverty and inequality remains a Assuming intrahousehold equity in the dis- difficult task. Most estimates rely on household tribution of resources, income (or con- survey data that are not regularly available in sumption) is often divided by the number of many developing countries and that are not household members to adjust for household fully comparable across countries or over time. size in poverty calculations. This per capita In terms of poverty data disaggregated by age, equivalence scale does not consider that one major constraint of household surveys is some costs are fixed regardless of household that they do not provide information on the size. Namely, the costs of energy or housing actual distribution of income or consumption do not increase proportionally with each within households. Without detailed individ- additional household member. Other equiv- ual data, it is often assumed that income and alence scales, such as the square root scale other resources are shared equitably among used in this report, take economies of scale household members. All older persons living into account. A wide range of equivalence in households where pooled income or con- scales, including those used by the OECD, sumption are above the poverty line are there- adjust for assumed lower resource needs fore considered to live above the poverty line among children. and vice versa. Intrahousehold inequalities, the equivalence Evidence suggests that the intrahousehold scales used and other methodological choices distribution of resources is not always equi- (including the use of income versus consump- table, however. In some settings, older persons tion data to measure poverty) affect the relia- (especially older women) and children have bility of estimates of old-age poverty. Whether lower levels of economic well-being than other child poverty estimates are higher than old-age household members, particularly when re- poverty and by how much depends on the sources are limited (Brown, Calvi and Penglase equivalence scale used, for instance (Gelders, 2021; de Vreyer and Lambert, 2020). Further, 2021). While there are no easy ways to address the needs of individual household members these challenges, the underlying assumptions vary. While older persons may have lower ener- must be made explicit and their impact sys- gy requirements than working-age adults, they tematically assessed. Additional research is more often live with disabilities and therefore needed to account for intrahousehold ineq- incur higher costs to achieve the same stand- uities in the distribution of resources and the ard of living (WHO and World Bank, 2011). ways in which these affect older people. CHAPTER 4 80 Taken at face value, scarce cross-country Findings based on a new series of esti- estimates suggest that levels of extreme mates of relative poverty by age, cover- income poverty are lower among older ing 49 countries, including 20 developing persons than among children and even the countries, differ somewhat from those working-age population. In one of the most based on absolute extreme poverty meas- comprehensive efforts to provide a glob- ures (figure 4.1). They suggest that older al demographic profile of people living in persons live in relatively poor households extreme income poverty using harmonized more often than working-age people (aged survey data, Castañeda and others (2018) 25 to 64 in this case), as do children (aged estimated that the percentage of persons 0 to 14) and youth (aged 15 to 24).28 Rela- aged 65 or above living on less than $1.90 a tively lower incomes, combined with fewer day around 2013 (7 per cent) was below that opportunities to participate in the labour of the working-age population (from 10 per market, can make older persons more eco- cent for those aged 25 to 34 to 7 per cent nomically insecure and vulnerable. for those aged 55 to 64) and much lower than for children (20 per cent).25 Differences in relative poverty between the working-age population, older persons and Whereas extreme poverty is increasingly children tend to be larger in developing than concentrated in some developing regions, developed countries. In the latter, compre- particularly sub-Saharan Africa and South- hensive social protection systems, including ern Asia, other measures of poverty are rele- more generous public pensions and broader vant for countries at all income levels. In most coverage and access to health care than in developed countries, for example, poverty developing countries, have been successful is not measured in absolute terms. Instead, in addressing economic insecurity at older the poverty line is set as a proportion of ages. In developing countries, age-related each country’s mean or median income.26 differences in relative poverty are larger The proportion of people living below 50 per even though more older people live in in- cent of each country’s median income, dis- tergenerational households, which should aggregated by age, sex and disability status, is help to protect older and younger members part of the SDG global indicator framework.27 from falling into poverty in times of crisis. 25 Based on the World Bank’s Global Micro Database, which contains harmonized household survey data for 89 low- and middle-income countries. The estimates are based on the international poverty line of $1.90 per day using 2011 PPP conversion rates and a per capita equivalence scale. 26 The use of relative poverty measures is increasingly common, including in regional and international organizations. The World Bank, for instance, has introduced a relative (or “societal”) poverty line to its set of estimates (Jolliffe and Prydz, 2019). These relative measures, including the one used in this chapter, are tailored to country circumstances. They reflect the fact that different countries have different standards for basic needs, namely, higher expenditure may be deemed necessary to cover such needs in a rich country than in a poor one. The main limitation of relative measures is that they rely on a different yardstick to assess poverty in each country, effectively treating individuals differently depending on their country of residence. Half of the median income is close to or even below absolute (extreme) poverty in some low- income countries and way above extreme poverty in high- and even middle-income countries. Considering this limitation, relative poverty measures are used here to compare poverty levels by age and across different groups within countries but not to compare well-being across countries. 27 See indicator 10.2.1, the only indicator for SDG target 10.2 (by 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status). The SDG indicator database does not currently contain information on indicator 10.2.1 disaggregated by age, sex or disability status. See https://unstats.un.org/sdgs/dataportal (accessed on 27 July 2022). 28 The estimates are based on a relative poverty line of half of the median income of the total population. This threshold is also used by the OECD, which calculates estimates using similar assumptions (see https://data.oecd.org/inequality/ poverty-rate.htm). The series in figure 4.1, which is based on harmonized income survey data, covers a larger number of countries (49, including 20 developing countries) than the OECD. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 81 In all regions, people aged 80 years or older, for instance, the percentage of persons who the majority of whom are women, face the neither worked nor received a pension was highest risk of relative poverty among all age higher among people aged 70 or over (37 groups. They are more likely than people in per cent) than among those aged 60 to 64 younger groups to be widowed and to live (25 per cent) or aged 65 to 69 (29 per cent) alone, two features that affect their eco- around 2016 (ECLAC and ILO, 2018). More- nomic vulnerability. They also participate over, the share of those aged 70 and older less in the labour market and are not as well who did not work or receive a pension was covered by public pensions as those aged 65 much higher among women (48 per cent) to 79. In Latin America and the Caribbean, than among men (13 per cent) (ibid.). Figure 4.1 Share of the population living in relatively poor households by broad age group, late 2010s (or latest year with data) 30.0 25.0 23.7 23.2 20.0 18.2 16.1 15.0 0-14 12.0 12.5 11.4 15-24 10.0 9.2 25-64 65+ 5.0 0.0 Developed countries Developing countries 14.5 10.4 22.6 25.5 65-79 80+ 65-79 80+ Developed countries Developing countries Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: Estimates are based on a relative poverty line of 50 per cent of the median income of the total population. They are calculated using harmonized survey data on disposable household income, reported at the individual level, for 20 developing countries (3 in Africa, 7 in Asia, and 10 in Latin America and the Caribbean) and 29 developed countries. The calculation of individual-level income is based on a squared root scale. Disposable income includes labour income, capital income, pensions, public social benefits and private transfers minus income taxes and social security contributions. Percentage in relative poverty CHAPTER 4 82 Differences in the prevalence of relative de Prestaçao Continuada, a social assis- poverty by age vary substantially across tance transfer for older people and people countries (figure 4.2). The Republic of Korea with disabilities living in poor households, stands out for having much higher levels of and Previdência Rural, which includes in- relative poverty among older persons than formal workers (Barrientos, 2021; Tramujas among the working-age population. De- Vasconcellos Neumann and Albert, 2018). clines in family support, linked to changes in living arrangements and a rapid increase Across developed countries, there is some in the number of older persons living inde- correspondence between public spend- pendently, have not been countered with ing on pensions and the old-age poverty adequate public pensions and other social gap. Pension spending is below the OECD protection measures (Ku and Kim, 2020; average in most countries that, according OECD, 2016). At the same time, younger to figure 4.2, suffer from relatively high cohorts have benefited from the country’s old-age poverty.29 Australia’s spending on fast economic transformation and rising pensions (3.9 per cent of GDP in 2019) is levels of education much more than older just over half the OECD average (7.7 per persons in this rapidly ageing country. By cent of GDP). Estonia’s pension system has contrast, Brazil’s social protection system one of the lowest net replacement rates in plays a major role in keeping older persons the European Union.30 By contrast, pension out of poverty and reducing inequality at spending is above 10 per cent of GDP in older ages, including through the Beneficio France, Greece, Italy and Spain. Figure 4.2 Differences in relative poverty rates between older and working ages, selected countries, 2018 (or latest year with data) 40 Poverty higher among older persons 30 20 10 average average 0 -10 Poverty higher in working age -20 Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: See note on figure 4.1. 29 See the OECD pension spending indicator at https://data.oecd.org/socialexp/pension-spending.htm (accessed on 11 April 2022). 30 Net replacement rates are defined as an individual’s net pension entitlement over her or his net (disposable) income before retirement. Difference, in percentage points Rep Korea Peru Venezuela Paraguay China Israel Panama Mexico Guatemala Colombia Chile Cote d'Ivoire Jordan India Egypt South Africa Iraq Uruguay Georgia Brazil Average Estonia Australia Japan Switzerland Lithuania United States Ireland Romania Slovenia United Kingdom Hungary Canada Germany Netherlands Austria Finland Czechia Denmark Belgium Russia Slovakia Poland Iceland Norway France Luxembourg Spain Greece Italy Average WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 83 With growing numbers of older persons in 2. iNEQUALiTY NEED NOT iNCREASE both developed and developing countries, iN OLD AGE high levels of economic insecurity should be a rising concern. Longer life expectan- Poverty snapshots by age conceal large cies and policy reforms that reduce future and persistent inequalities within each age retirement income could exacerbate these group. Overall, the shape of the age-specific trends. They may even jeopardize the gen- disposable income inequality curve, which eral health and economic improvements is used to compute the Gini coefficient, dif- observed among older persons in devel- fers substantially between developing and oped regions in recent decades. developed countries (figure 4.3). Inequality is higher among older persons than among working-age people in developing countries With growing numbers of older but lower in developed countries. In the 18 developing countries included in this anal- persons in both developed and ysis, inequality is higher among people aged developing countries, high levels 65 to 69, on average, than in any other age of economic insecurity should be group. This occurs despite the fact that peo-ple at the bottom of the income distribution a rising concern tend to die earlier, on average, a selection effect that should push inequality down as people grow older.31 In developed countries, by contrast, a precipitous drop in inequality starts around age 65. Figure 4.3 Gini coefficient by age, selected developed and developing countries, 2018 (or latest year with data) 110 105 100 95 90 85 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Developed countries Developing countries Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: The figure shows the Gini coefficient of equivalized disposable household income. Income values are top and bottom coded. Estimates by age relative to the Gini coefficient at ages 25 to 29 are based on information for 29 developed countries and 18 developing countries (3 in Africa, 5 in Asia and 10 in Latin America and the Caribbean). 31 Cohort effects may influence age-specific Gini coefficients. That is, inequality may have been systematically higher among people in older cohorts throughout their lives. Levels of inequality have increased across successive cohorts in most countries, however, as discussed below. Cohort effects alone probably do not explain the rise in inequality over people’s work lives or the sudden decline in developed countries after ages 60 to 64. Longitudinal studies support the finding that inequality tends to increase with age within cohorts, especially during people’s working lives (Hungerford, 2020; Crystal, Shea and Reyes, 2017; Deaton and Paxson, 1994). Gini coefficient relative to the 25-29 age group CHAPTER 4 84 The sudden drop in inequality starting at consumption and withstand shocks once around age 65 in countries that, overall, they stop working. The distribution of have comprehensive social protection household wealth is typically more unequal systems, including public pensions and than the distribution of income within and other public old-age transfers, suggests across countries (United Nations, 2020d). that these play an important role in curbing income inequality in old age.32 In general, About 46 per cent of adults save for old age in pension entitlements are less unequal than high-income countries, compared to 16 per wages in countries with broad coverage cent in middle- and low-income countries.33 (OECD, 2013, 2015, 2017; Bosch, Melguizo These disparities reflect people’s varying and Pagès, 2013). Replacement rates are capacities to accrue wealth based on their higher for people with lower wages; tax- incomes and their unequal access to asset based pensions provide an income floor markets. In 75 countries, women’s property for the lowest earners. In countries without rights are still restricted, for instance (World comprehensive social protection systems, Bank, 2019). Even without legal obstacles, the redistributive role of public pensions is there are substantial inequalities in access absent, and inequalities over the life course to and use of financial services, including in persist at older ages. old age. A lack of financial literacy, limited digital capabilities, illiteracy (especially in developing countries), discrimination, and The sudden drop in inequality the absence of financial services, products starting at age 65 in countries with and digital infrastructure affect some groups of people more than others. comprehensive social protection systems suggests that these play an Given the challenges in measuring household important role in curbing inequality and individual wealth, even more so if the focus is on differences by age, estimates are in old age not widely available. Figure 4.4 shows wealth levels by age among people living in relative income poverty and those living above the 3. SAViNG FOR OLD AGE STUMBLES poverty line in eight developed countries OVER MULTiPLE OBSTACLES with available data (Australia, Canada, Fin- land, Germany, Italy, Norway, the United Wealth assumes an increasingly important Kingdom and the United States). function for economic security through- out old age. Individuals and households Average household wealth typically rises use wealth accrued throughout their lives, with the age of the household head up to including physical assets such as homes the official retirement age, when older or land and financial assets, to finance persons start to spend their savings or 32 Differences in living arrangements between more and less developed countries may also play a role. In settings where the co-residence of older persons and working-age adults is still common, mostly in countries in developing regions, the disposable income of households of older persons reflects inequalities during working ages to a greater extent than in settings where intergenerational co-residence is less common. 33 World Bank, Global Findex database. Available at https://www.worldbank.org/en/publication/globalfindex. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 85 else stop accruing assets and the burden 4. GENDER DiSPARiTiES MAKE OLDER of liabilities declines. There are large gaps WOMEN POORER in wealth between people living in relative income poverty and those with incomes Inequalities between men and women per- above the relative poverty line, however. sist into old age. Economically, women’s low- These differences increase up to ages 70 to er levels of formal labour market participa- 74. Gaps in wealth widen among survivors tion, shorter working lives and lower wages despite the fact that the poorest people during working years lead to more economic tend to die earlier than people with higher insecurity in later life. As a result of longer life incomes and more wealth. expectancies, older women are also more likely than older men to be widowed, less The composition of wealth matters as well. likely to remarry following widowhood and Non-financial assets constitute a large more likely to live alone, three features that share of wealth owned by older persons contribute to their economic insecurity, es- with low incomes in the eight developed pecially by age 80 or beyond. countries with data (see annex figure 4.1.1). Their main residence, vehicles and other In developed countries with data, higher non-liquid durables and valuables make up levels of relative poverty among older per- 90 per cent of these non-financial assets. sons compared to people of working age are Spending down these assets to finance due to greater poverty among older women consumption is challenging, particularly (see figure 4.5.A). In developing countries for older persons in poverty, who for the with data, relative poverty is higher among most part can hardly downsize their homes. women than men at all ages (figure 4.5.B). Figure 4.4 Household wealth by age, selected developed countries, 2019 (or latest year with data) 800 000 700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Households above (income) poverty Households in relative (income) poverty Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: Estimates are calculated using harmonized survey data on wealth reported at the household level for eight developed countries (Australia, Canada, Finland, Germany, Italy, Norway, the United Kingdom and the United States). Households in relative poverty are those living under 50 per cent of the median income of the total population. Estimates of household wealth include financial assets except pension assets and non-financial assets minus liabilities. Consumer price index, ppp adjusted (in US dollars) CHAPTER 4 86 Figure 4.5 Share of the population living in relative poverty by age and sex, late 2010s (or latest year with data) A. Selected developed countries 18 16 14 12 10 8 0 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Male Female Total B. Selected developing countries 28 26 24 22 20 18 16 14 12 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Male Female Total Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: See note on figure 4.1. Percentage in relative poverty Percentage in relative poverty WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 87 While retirement benefits and old-age supportive infrastructure is often insuffi- transfers should reduce old-age poverty cient limits autonomy, mobility and access in countries with strong social protection to spaces, markets and services. Surveys systems, the gap in pensions between men have found that older persons report lower and women is substantially higher than the life satisfaction, fewer social interactions gender pay gap, at least in the OECD coun- and less social support than working-age tries (OECD, 2019). Older women are more adults (OECD, 2020a). Against a backdrop likely to have worked in lower-paying jobs of age discrimination, they also express a than men. Because of the unequal distri- lack of agency or control over their lives bution of care and domestic work, as well and feel that they are not treated with as their reproductive roles, women also dignity or respect (WHO, 2021a). Across have shorter working careers and lower Europe, more than one in three people pension incomes even as they spend longer aged 65 years or older reported being a periods in retirement. Some countries have target of ageism (Abrams and others, 2011). recognized these differences in pension A meta-analysis of 52 studies across 28 entitlements. A growing number of coun- countries suggested that one in six older tries in Europe offer caregiver credits for persons has suffered from some form of public, tax-funded pensions, for instance elder abuse, a problem exacerbated by the (Gerlinger, 2018). Expanding access to pandemic (Yon and others, 2017). tax-funded old-age pensions and reducing requirements for access to contributory schemes have also helped women. Older persons report lower However, pension systems are not a silver life satisfaction, fewer social bullet to close gaps in old-age poverty that result from the wider inequalities that interactions and less social women and other disadvantaged groups support than working-age confront throughout their lives. Addressing adults these disparities requires more compre- hensive life course approaches, including social, employment and family policies. For employed older workers who can afford to retire or are forced to do so, leaving 5. OTHER DiMENSiONS OF the labour market often leads to shrinking OLD-AGE EXCLUSiON social networks (Kauppi and others, 2021; Patacchini and Engelhardt, 2016). It also While older persons do not always fare means losing a source of social identity worse than younger people economically, and social acceptance. Older people who they face spatial and social barriers that remain in the labour market, however, of- exacerbate the risk of social exclusion.34 ten report high levels of job insecurity and The fact that disability grows with age but discrimination (Ayalon and Tesch-Römer, 34 Defined as a state in which individuals are unable to participate fully in economic, social, political and cultural life (United Nations, 2016). CHAPTER 4 88 2018; Phoenix and Parravani, 2019; OECD, acerbated social isolation among older 2020a). Cross-country evidence shows that persons, particularly at its onset (see box employers are less likely to hire older than 4.2). Digital technologies and new media younger applicants for the same position platforms allowing connections with fam- and that, once employed, older workers ily and friends may reduce social isolation have less access to training (Chang and to some extent. Yet a persistent digital others, 2020; Lahey, 2006). divide in accessibility and usability may exclude older people from yet another Social connections are important for peo- sphere of social life. ple’s well-being and health. Compared to younger people, older persons report fewer social interactions and a lack of A persistent digital divide in social support in times of crisis. In OECD countries, older people are almost three accessibility and usability times more likely than young people to may exclude older people say they have no friends or family mem- bers to turn to for help in an emergency from yet another sphere of (OECD, 2020a). The COVID-19 crisis ex- social life BOX 4.2 COViD-19, iSOLATiON AND DiSCRiMiNATiON AGAiNST OLDER PERSONS The COVID-19 pandemic has disproportion- rangements for older persons were fragile ately affected older people. After many coun- and unequal. tries enacted limits on interpersonal contact to control the virus, warnings emerged about The restrictions disrupted social connections the possible unintended impacts on vulner- for many older persons, contributing to lone- able groups, including older people. liness, stress and deteriorating mental health. Isolation has been particularly acute for those Early evidence suggests, for instance, that living in dedicated care facilities or alone. lockdowns prevented health and social For older persons with cognitive decline or care systems from effectively responding dementia, the interruption of regular and fa- to older peoples’ pre-existing needs (Hel- miliar social interactions and group activities pAge International, 2020). This has been a has likely been particularly damaging. Some particular problem for older women as they restrictions, including the closure of long- are overrepresented among older persons term care facilities to visitors, persisted far and require more long-term care than older longer than others due to the specific threats men. Even before the pandemic, care ar- the virus poses to older persons. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 89 BOX 4.2 The physical isolation of older persons from Measures meant to protect older persons traditional social networks may have put may have contributed to narratives, in some at greater risk of elder abuse and news and media coverage, of COVID-19 neglect. Social isolation is a known risk as mainly an “older person’s illness” and factor for elder abuse as it limits oppor- of older people as a homogenous and ex- tunities for detection (Burnes and others, tremely vulnerable group, despite large 2015). While data are still limited, a study variations in risks within age groups. The suggests that, in the United States, one in World Health Organization (2021a) has not- five older persons was abused during the ed that this framing may have undermined pandemic, an over 80 per cent increase public health efforts against COVID-19 by compared to pre-pandemic estimates pitting the needs of younger and older (Chang and Levy, 2021). adults against each other and eroding in- tergenerational solidarity. Health care, social care and social protec- Physical isolation and immobility also lim- tion, and transportation and mobility are it access to public services and spaces, lifelines for older persons to participate in forming a vicious cycle of exclusion for society. Even in countries that offer these some older persons. A lack of accessible public services, older persons are often public transport and unwalkable public excluded or their needs are not adequate- spaces such as marketplaces, hospitals ly met (United Nations, 2016). Insufficient and parks create barriers to their partic- access to services and supporting infra- ipation. They also threaten the ability of structure is a particular problem for older older persons to “age in the right place”, persons in rural and remote areas. As an as discussed in chapter 5. increasing number of public services are offered online, age-related gaps in access and skills compound these challenges. CHAPTER 4 90 B. of longitudinal studies. These are crucial to understanding how context affects the ways that family, education and work in- fluence ageing outcomes. Better ageing iNEQUALiTiES OVER THE COURSE outcomes in some countries than in others OF LiFE ADD UP provide some evidence to assess which social and economic policies matter most. Snapshots of older persons at one point 1. HEALTH DiSPARiTiES AMONG OLDER in time provide little information on how PEOPLE OFTEN START EARLY: advantages or disadvantages over the life EDUCATiON iS KEY course affect health and other markers of well-being in later life (Carr, 2019). A life Adversity early in life can leave lasting im- course approach helps identify the roles prints on health and well-being in later that early life conditions and people’s paths ages. Extensive research illustrates how during adulthood play in driving divergent disadvantages in infancy and childhood in- outcomes in old age. It can also shed light crease the likelihood of developing chronic on some of the structural social and po- diseases, engaging in unhealthy behaviours litical factors that explain unequal ageing. and suffering from functional limitations in adulthood.35 Education has consistently emerged Education has consistently emerged as a as a primary determinant of health primary determinant of health and well-be- ing throughout the life course. A person’s and well-being throughout the education, and even that of their parents, life course affects their income, access to health care, lifestyles and social networks – all the way to old age. This section examines how education and Disparities in the prevalence of relative old- employment paths affect economic pros- age poverty by education, for instance, are pects and health in old age – specifically, very large (figure 4.6). Gaps are greater in the risk of living in poverty or with a disabil- developing countries but substantial in de- ity. Despite the importance of understand- veloped countries as well, suggesting that ing the determinants of healthy ageing, social protection in old age does not ful- necessary data are not widely available, ly correct disadvantages that accumulate particularly in developing countries. Com- along the lifespan even in these countries. parisons across countries are even more Older persons with low levels of education challenging due to the lack of harmonized experience three to four times as much pov- cross-country surveys containing retro- erty as those with high levels of education spective information as well as the dearth in developed countries with data. 35 See, for instance, Carr, 2019; Kobayashi and others, 2017; McEniry, 2013; and van der Linden and others, 2020. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 91 Figure 4.6 Share of older persons living in relative poverty by level of education, 2019 (or latest year with data) 30 25 20 15 10 5 0 Selected countries in developed regions Selected countries in developing regions Low Medium High Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: Based on information for 18 developing countries and 29 developed countries. The educational level is classified into three categories: low (primary and lower secondary levels), medium (upper secondary) and high (tertiary). People with less education are also more older adults, across countries. On aver- likely to suffer from poor health and die age, the prevalence of disability is twice as earlier. Even with this selection effect, large among older adults with low levels of health disparities by education persist education. In some developed countries, into old age. levels of disability among the less educated are as high as in the developing countries As shown in figure 4.7, there is a significant in figure 4.7. The disability gap differs by difference in functional disability preva- country in part due to differences in social lence – defined as limitations in completing protection coverage, levels of spending on daily tasks, as in the note for the figure public education and support to workers – between the least and most educated or families with children. Percentage CHAPTER 4 92 Figure 4.7 Share of adults 50 and older with a functional disability by education level, selected countries, around 2018 70 60 50 40 30 20 10 0 en aly us l nd nd lta ain ae ria r k iar t a n ri a ce m nd iau h ni a ia ia ia y ia o g d ia a d It n k tv a n t ic ur n n in si a di a s te we Cy p rla nla Mai Sp Is r us m ve g a an gi la c ae t o va a m oa ex o la ua h ay In ta S itz F A en lo u l Fr el Po ze om Es lo LC S er C r M b ng th C a l S B B R m E i S w D G xe L M ite d S Lu Un High education Low education Sources: Harmonized Health and Retirement Studies accessible from the Gateway to Global Aging Data platform. Available at https://g2aging.org/. Studies include the China Health and Retirement Longitudinal Study, the English Longitudinal Study of Ageing, the Irish Longitudinal Study on Ageing, the Longitudinal Aging Study in India, the Malaysia Ageing and Retirement Study, the Mexican Health and Aging Study, the Survey of Health, Ageing and Retirement in Europe and the United States Health and Retirement Survey. Notes: Functional disability is measured by whether the respondent had some difficulty in any of the following activities: (a) walking 100 metres, (b) getting up from a chair, (c) stooping, kneeling or crouching, or (d) lifting or carrying 10 lbs (5 kilos). Educational attainment in China, India, Malaysia and Mexico was classified as none (low) or more than primary education (high). In all other countries, education was divided into low (less than upper secondary education) and high (tertiary education). Estimates are age-adjusted and weighted to correct for sample design. The age range of the studies is 50 to 118 years. Percentage WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 93 BOX 4.3 DiSPARiTiES iN DiSABiLiTY SiGNAL UNEQUAL AGEiNG The onset and severity of disability, affecting associated with disability, such as limited either physical or mental health, profoundly access to health care, unsafe water systems impacts people and their families. It incurs and malnutrition. Disability rates are also large economic and societal costs in terms of steeper in populations that have experi- health care and caregiving needs. The esti- enced catastrophic events such as natural mated global cost of dementia alone reached disasters and civil conflict. While disability nearly $1 trillion in 2016 (Xu and others, 2017). rates are higher in developing countries than Physical disability can include limitations in in developed countries around the world, the ability to carry out daily activities needed disability prevalence is greatest among the for personal care and an independent life, poorest in all countries (Hosseinpoor and such as eating, bathing and mobility. others, 2013). The onset of disability prior to old age and Examining functional limitations as a meas- a disproportionately high rate of disability ure of disability (see note for figure 4.7) are indicators of poor health that are une- allows cross-national comparisons of ine- qually distributed. Disability rates vary sig- qualities in health in old age as it tracks the nificantly throughout the world and reflect difficulties that people face in daily life. It differences in childhood circumstances, does not depend on access to health care adverse exposures to disease and risk, and and medical professionals for diagnosis, as uneven access to resources and oppor- is the case for examining differences in the tunities. In general, people in developing prevalence of diseases, such as diabetes or countries are more exposed to risk factors cardiovascular disease. CHAPTER 4 94 2. EMPLOYMENT CAN SUPPORT OR Physically demanding jobs can also damage DAMAGE HEALTH health. In European countries, men and women holding such jobs since the start A person’s occupation, whether they have of their working lives had a 35 and 41 per a job and the conditions in which they work cent greater risk of disability by the age of shape well-being in old age. While the ef- 50, respectively, than those who did not fects of employment on health depend on (see figure 4.8 and annex figure 4.1.2). The the types of jobs people do and their ac- interplay between the type of work and cess to social protection, the fallout from disability later in life occurs independent- unemployment is unequivocally negative. ly of the level of education. For women, Episodes of unemployment damage phys- the effect of working or having worked in ical and mental health,36 cause financial physically demanding jobs is as large as hardship and lead to isolation and psy- not having higher education. chological stress. Vulnerable employment, often in the informal sector, has similar The significant, independent effects of impacts as it limits access to social pro- employment characteristics and educa- tection and links with social and political tional attainment on functional disability organizations, including unions. at older ages suggest distinct pathways linking each to ageing. Figure 4.8 Odds ratios of the effect of working in physically demanding jobs on functional disability, adults aged 50 or older, selected European countries and israel, around 2018 History of physically demanding work 1.35*** 1.41*** No history of physically demanding work 1.00 1.00 Less than upper secondary education 2.05*** 1.55*** Completed secondary education 1.49*** 1.38*** Teritary or higher education 1.00 1.00 Men Women Source: Survey of Health, Ageing and Retirement in Europe for ages 50 to 118. Available at http://www.share-project.org/home0.html. Notes: The numbers represent the odds ratio of experiencing disability compared to workers with non-physically demanding jobs (employment history) and those with tertiary education (education). For employment history, respondents either agreed or disagreed with the following statement: My main job was physically demanding. Results are significant at the p <.001 level. 36 See, for example, Wanberg, 2012 for a review. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 95 Job demands may increase the risk of injury ductive – than those today. They will benefit or other health risks that can lead to disa- from continuing scientific and technological bility and poor health in old age. Education innovations, including medical and pharma- likely affects health behaviours. Low edu- ceutical advances, that will allow many to cational attainment may be a good proxy of enjoy healthier and longer lives (Carr, 2019). the characteristics of employment history Health has largely improved throughout the with negative effects on health, other than life course, both over time and across succes- physical labour, such as episodes of un- sive cohorts. Yet from an economic perspec- employment, job precarity and low wages. tive, successive cohorts of youth and adults are increasingly unequal and economically insecure, in both developed and developing C. countries, despite improvements in health and education. Without swift and bold policy action to counter this trend, future cohorts of older persons may be even more econom- THE FUTURE OF AGEiNG: ically unequal than those today. MORE UNEQUAL 1. THE EMPLOYMENT CRiSiS WiLL BE FELT ACROSS GENERATiONS The situation of older persons will continue to evolve as today’s children and youth grow older. Assessing the social and eco- A. PRECARIOUS WORK AND LACK nomic characteristics of successive co- OF EMPLOYMENT horts of youth, working-age adults and older persons provides important insights Recent decades have seen dramatic into the future of our ageing world. changes in how people work. Labour mar- ket participation has helped millions of people to escape poverty and empowered Successive cohorts of youth and women and other disadvantaged groups. Yet deficits in decent work are large and adults are increasingly unequal and persistent. Full-time jobs under standard economically insecure, in both employment contracts, which usually en- tail access to social protection and other developed and developing countries, employment rights, have ceased to be the despite improvements in health norm even in developed countries. Invol- and education untary temporary, part-time and casual work, including zero-hours contracts, subcontracted labour and self-employ- ment, are on the rise. New forms of em- Despite the impact of COVID-19 and other ployment and work are emerging partly sources of uncertainty, future cohorts of through digitalization and automation and older persons are likely to be healthier and in a growing “gig” economy. Workers in more educated – and therefore more pro- these new forms of employment have little CHAPTER 4 96 employment security, unsteady incomes ment rose from 9 per cent for the cohort and limited access to social protection, of people born in the 1940s, on average, to much like workers with more traditional 12 per cent for those born in the 1980s in forms of non-standard contracts as well developed countries. For workers aged 55 as those in the informal economy. to 59, it climbed from nearly 7 per cent for those born in the 1920s to 9 per cent for This growing labour market flexibility has not the 1960s cohort. In developing countries, brought about more employment opportu- the shorter cohort series also suggests ris- nities for all workers. Globally, the number of ing unemployment from one cohort to the jobless persons increased from 161 million in next, particularly among younger workers. 2000 to 187 million in 2019 and is projected to touch 207 million in 2022, after reach- To some extent, temporary shocks affect ing 221 million in 2021 due to the COVID-19 trends across cohorts. For example, part of crisis.37 The unemployment rate hovered the 1980s cohort reached their 20s during between 5 and 6 per cent before the crisis. the 2008 financial and economic recession, which resulted in a protracted unemploy- Growing unemployment levels across suc- ment crisis. This downturn and other distur- cessive 10-year birth cohorts are evident in bances have had scarring effects on workers, figures 4.9.A and 4.9.B. Unemployment has affecting their employment prospects in the increased from one cohort to the next in long term. It is unlikely that temporary set- practically all age groups in developed and backs alone, however, explain the increase developing countries with data. For work- in unemployment across birth cohorts. ers aged 25 to 29, for instance, unemploy- Figure 4.9 Estimated unemployment rate by age and birth cohort A. Selected developed countries 18 16 14 12 10 8 6 4 2 0 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Decade of birth 1920s 1940s 1960s 1980s 37 ILO Statistics. Available from: https://ilostat.ilo.org/. See also ILO, 2022. Estimated unemployment rate (percentage) WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 97 B. Selected developing countries 18 16 14 12 10 8 6 4 2 0 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Decade of birth 1920s 1940s 1960s 1980s Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Notes: Based on information for 29 developed and 16 developing countries. Data come from successive waves of the LIS Database, from 1978 to 2019. Each line represents a 10-year birth cohort (that is, people born between 1 January 1920, 1940, 1960 or 1980 and 31 December 1929, 1949, 1969 or 1989, respectively). The trend for each cohort is estimated using age and country fixed effects to adjust for some missing observations, especially in earlier survey waves. Unemployment trends are an incomplete Persistent informality and the rise of measure of deficits in productive employ- non-standard forms of formal employment ment and decent work. In countries lacking pose a challenge to income security in old comprehensive social protection systems, age. Most workers in informal employment most workers cannot afford to stay unem- do not pay into contributory pensions or ployed. An estimated 60 per cent of workers other social protection programmes. In worldwide, and over 70 per cent in devel- fact, a lack of social protection coverage oping countries, struggled to earn income is often a criterion to identify informal through informal employment in 2019 (ILO, employment (Gatti and others, 2014). Fur- 2021a; World Bank, 2021). As a result of the ther, liquidity constraints limit the ability pandemic and measures to contain it, in- of these workers to save privately and formal workers were three times as likely regularly, since wages are lower and more as workers in formal employment to lose unreliable in informal than in formal em- their jobs in countries with data (ILO, 2021a). ployment. Such workers also face many barriers to accessing formal and reliable financial services, from low financial lit- Persistent informality and the rise eracy and high transaction costs to a lack of non-standard forms of formal of information. Many workers in the “gig” economy, own-account workers and those employment pose a challenge to with temporary or part-time contracts face income security in old age similar obstacles due to unsteady incomes and the lack of employment security. Estimated unemployment rate (percentage) CHAPTER 4 98 B. THE YOUTH EMPLOYMENT Young people are three times as likely to be PREDICAMENT unemployed as adults and bear the brunt of employment losses during recessions (ILO For young people, decent jobs are an 2021a, 2021b). Many countries have wit- important step in the transition to adult- nessed a big surge in the number of dis- hood. Since early labour market experi- couraged young workers, who are available ences shape future employment oppor- to work but have dropped out of the labour tunities, decent work deficits, both in market. As shown in figure 4.10, labour force the amount and quality of jobs available participation rates on average have declined to youth, can have long-lasting conse- steadily among young men aged 20 to 24 as quences in terms of poverty, includ- well as young adults aged 25 to 29 from one ing in old age, and may even deter the birth cohort to the next in countries with well-being of future generations. They data. Female labour force participation rates also challenge the ability of countries reached their highest point for young women moving through a demographic transition of the 1960s cohort and have declined across to capitalize on a demographic dividend. more recent cohorts (1970s and 1980s). Figure 4.10 Estimated youth labour force participation rate by birth cohort 100 90 80 70 60 50 40 1940s 1950s 1960s 1970s 1980s Age group Male (20-24) Female (20-24) Male (25-29) Female (25-29) Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: Based on information for 29 developed countries and 16 developing countries (see figure 4.1). The horizontal axis represents consecutive 10-year cohorts. Estimated labour force participation, percentage WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 99 The growing number of years that young In developing countries, according to women and men spend in education ex- figure 4.11.B, the Gini coefficient has in- plains part of the decline. Since the mid- creased steadily from one birth cohort to 2000s, however, the number of young the next at all ages. Cohorts born in the people who are “not in employment, ed- 1960s or later are extremely unequal: Gini ucation or training” (known as NEET) has coefficients between 44 and 45 are well increased. This represents a severe waste above the world average of 38 around of human potential with potentially drastic 2015 (United Nations, 2020d). In devel- repercussions, both for young people in oped countries, inequality is also deep- terms of lifelong marginalization and ex- ening across cohorts at all ages but with clusion and diminished well-being in old exceptions. Increasingly comprehensive age, and for societies at large, particularly social protection systems and other forms those who could benefit from a demo- of old-age support have helped curb ine- graphic dividend. quality among older people, even during crises (part of the 1940s cohort reached Growing casualization, underemployment retirement age amid the 2008 financial and persistent informality are long-stand- meltdown and its aftermath). ing features of an employment crisis that has endured even during periods of eco- High and growing income inequality is nomic expansion and disproportionately concerning for ethical and instrumental affects youth. The economic insecurity reasons. Extremely unequal countries are generated by this deep crisis compounds less effective in reducing poverty and less inequality, undermines public trust and successful in sustaining economic growth damages the social fabric. than those with low inequalities (United Nations, 2020d). Income inequality is linked to disparities in health and educa- 2. iNEQUALiTY iS RiSiNG tion that transmit disadvantages from one generation to the next. Without appropri- Changes in the world of work have implica- ate institutions to prevent them, inequal- tions for inequality. Cohort analysis based ities often concentrate political influence on the Gini coefficient of income inequality among those who are already better off. shows widening disparities among suc- Political inequalities tend to maintain or cessive cohorts of youth and working-age widen unequal opportunities and under- people (figures 4.11.A and 4.11.B). Future cut trust in the ability of Governments to cohorts of older persons will likely face address the needs of the majority, with higher inequality in old age without action implications for political stability and the to prevent it. functioning of democracy. CHAPTER 4 100 Figure 4.11 Gini coefficient by birth cohort A. Selected developing countries 30 29 28 27 26 25 24 23 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Decade of birth 1920s 1940s 1960s 1980s B. Selected developing countries 46 44 42 40 38 36 34 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Decade of birth 1920s 1940s 1960s 1980s Source: Calculations based on data from the LIS Database (multiple countries; surveys conducted between 2010 and 2020). Available at www.lisdatacenter.org. Note: Based on information for 29 developed countries and 16 developing countries (see figure 4.1) Estimated Gini Coefficient Estimated Gini coefficient WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 101 3. COViD-19 ALTERED PROSPECTS FOR Disparities within countries in access to EDUCATiON AND LABOUR MARKETS remote work are likely to appear across countries, considering that poor countries The COVID-19 pandemic and the en- have more jobs with physical or manu- suing economic crisis have had major al tasks and lower ICT access and use. implications for education and labour A growing reliance on self-employment, markets. The hardest hit are low-wage particularly in the “gig” economy, could workers, including those in informal em- accelerate the trend towards precarious ployment, and women and youth. As a work for a large share of the labour force. result, poverty has increased and emerg- ing evidence indicates that income ine- For younger cohorts, disruptions in ed- quality has risen within many countries ucation brought about by the pandem- as well, possibly reversing the declining ic compound unequal employment op- inequality observed in a majority of de- portunities. Among the various channels veloping countries since 2000 (World through which the pandemic will affect Bank, 2022; Narayan and others, 2022; future cohorts, education is probably the United Nations, 2022d). Current trends most important and de-equalizing one. point to increased inequality between men and women (Alon and others, 2021; Although learning away from school has Flor and others, 2022) and indicate that been temporary for some, others may nev- youth aged 18 to 25 suffered the largest er return to the classroom due to eco- drops in household income (Belot and nomic hardship at home that forced them others, 2020). to work instead of going back to school or because they have become discour- There is a high risk that rising inequality aged. Even for those who did not drop will continue to escalate and even intensify out, disruptions in education leave scars, during the recovery from the pandem- affecting motivation, future employment ic and over the long term. In the labour opportunities, wages and social mobility, market, the crisis is inducing structural with implications for well-being in old age. changes that threaten to exacerbate ex- The COVID-19 pandemic and its aftermath isting divides. The rise in remote work, for may result in a lost generation of children instance, is likely to reduce decent work and youth without fast action to address opportunities for low-income workers, in their needs. Current cohorts of children particular, since the tasks they perform are and youth risk losing $17 trillion in life- less amenable to working from home, and time earnings in present value because their housing conditions, including Internet of school closures induced by COVID-19 connectivity, are less adequate. (World Bank, UNESCO and UNICEF, 2021). CHAPTER 4 102 D. penditures over the long run can affect progress towards more immediate goals of eradicating poverty and reducing inequality. REDUCiNG iNEQUALiTY AND Nonetheless, action on two fronts can help PROViDiNG SECURiTY – WiTHOUT address sustainability concerns without BREAKiNG THE BUDGET sacrificing equity or the right to economic security at older ages. First, ex ante ac- tions can be taken over the life course to promote healthy ageing and reduce levels Many older persons have incomes that are low of poverty and inequality before people by national standards, placing them below reach older ages. Second, specific pol- the relative poverty threshold. Some enjoy a icies to reduce inequality and promote comfortable old age; a few are very wealthy. economic security at older ages can be Without policies to prevent it, disadvantage constructed in a fiscally sustainable man- accumulates through peoples’ lives, leading ner, with a focus on old-age pensions. to large disparities. This chapter highlights how countries with comprehensive social protection systems, including broad access 1. CUTTiNG THE ROOTS OF to affordable health care, have been much OLD-AGE DiSADVANTAGE more successful in curbing income inequal- AND iLL-HEALTH ity and reducing poverty at older ages than those without them. Policies and programmes that promote the well-being of older persons are critical. Yet from a life course perspective, such efforts Countries with comprehensive social are insufficient (Carr, 2019). Poverty and protection systems, including broad exclusion at older ages result from dis-advantages experienced by some groups, access to affordable health care, including women, throughout their lives. have been much more successful Actions to counter or mitigate such disad- vantages along the life course can prevent in curbing income inequality and poverty and exclusion from taking root. reducing poverty at older ages than those without them While no single set of policies applies universally, all countries should adopt a coherent and integrated policy strategy to give every person an equal chance to Fiscal sustainability concerns have domi- grow older in good health and with eco- nated policy discussions about the impacts nomic security. Towards that end, national of population ageing, including those relat- strategies should promote equal access ed to pension reforms. In countries with to opportunities, back fiscal policies con- broad pension coverage, benefits currently ducive to reducing inequality, and tackle represent 2.5 to 5 per cent of GDP (Khan, prejudice and discrimination (United Na- 2022). Measures to sustain pension ex- tions, 2020d). Strategies centred on these WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 103 three building blocks should help reduce Ensuring healthy ageing should be a key both age-based and broader inequalities. priority. Maintaining good physical and mental health over the life course helps to prevent descents into poverty and promotes the income security of older While no single set of policies applies persons. Health insurance is crucial, since universally, all countries should without it, many people fall more seriously adopt a coherent and integrated ill or end up in poverty due to an inability to afford the cost of health care. Globally, policy strategy to give every person nearly 1 billion (996 million) people face an equal chance to grow older catastrophic levels of health spending, in good health and with defined as out-of-pocket expenditures above 10 per cent of household income economic security (WHO, 2021b). Out-of-pocket health ex- penditures per capita doubled from 2000 to 2019 worldwide,40 spurred in part by privatization. The increased costs of health While intergenerational equity deserves care and other basic services make them greater attention and requires urgent unaffordable for people in poverty or af- policy action in many countries, existing fect the quality of services they receive.41 gaps between rich and poor within one age group or one generation are extreme- Universal health coverage is a necessary ly large and consequential, as reflected step to ensure affordable and equal access in the 2030 Agenda’s call for reducing to health-care services for all. Accelerating economic inequality.38 Yet States have its achievement will reduce out-of-pock- generally been much more effective in re- et spending on health, thereby protecting distributing resources across age groups, vulnerable groups from financial hardship especially from the working-age popula- while improving access to health care. Sev- tion to children and older persons, than eral developing countries, such as Ghana across socioeconomic groups.39 Promot- and Viet Nam, have shown that universal ing equal opportunity requires that all health coverage is feasible at various levels children have an equal chance to advance of development. their capabilities from birth, including through access to quality education and Addressing the social determinants of health care, and later in life to enjoy the health is also important, with education rewards of their education through op- being one of the most critical factors for portunities for decent work. health in old age. A person’s education af- 38 SDG 10 calls for reducing inequality within and among countries. Specifically, target 10.1 calls for progressively achieving and sustaining income growth of the bottom 40 per cent of the population at a rate higher than the national average. 39 Even in Europe, as a Vanhuysse, Medgyesi and Gal (2021) note, States are “better characterized as inter-age redistribution machines, performing lifecycle consumption smoothing rather well” while social policies serve multiple goals in Europe, but “empirically they are neither primarily nor solely responsible for poverty relief and inequality reduction 40 Calculations based on the WHO Global Health Observatory data repository, out-of-pocket expenditure per capita in PPP international dollars. See https://apps.who.int/gho/data/node.main.GHEDOOPpcPPPSHA2011?lang=en, accessed on 15 June 2022. 41 See A/73/396, Note by the Secretary-General on Extreme Poverty and Human Rights on Privatization (26 September 2018). CHAPTER 4 104 fects health not only through its impact on security at older ages. Promoting for- income and access to health care but also malization can expand decent work op- through behavioural and psychological di- portunities and reduce working poverty mensions such as smoking, diet and access across the life course. Stronger labour to social support, all of which influence market institutions, including regulations, physical and mental health in later life. The employment contracts, collective agree- significant education gradient in health ments and labour inspection systems, and well-being across the life course is an along with comprehensive social pro- argument for improving education access tection systems based on solidarity and and quality for all, not only as a goal in and risk-sharing, are essential pathways to of itself but also as a health policy. formalization. Governments can incen- tivize the transition from the informal to Considering rapid changes in labour markets the formal economy for employers and around the world, education should not stop employees alike by improving access to after childhood. All workers, regardless of business services, financing and markets, wages or skills, will experience an increasing coupled with continuing education and number of job transitions. Providing oppor- skills development programmes that re- tunities for learning and skills development duce barriers to entry into formal work. throughout people’s working lives would Formalization is a complex and gradual allow them to adapt to shifts in labour de- process, but some countries, including mand. Education and training systems and Brazil, Thailand and Türkiye, have signif- techniques must be updated to better meet icantly reduced informality over the last the needs of learners at all ages. decade.42 Improved education and potential increas- es in labour productivity will have little ef- 2. iMPROViNG THE LiVES OF OLDER fect on poverty and inequality, much less on PERSONS THROUGH ADEQUATE people’s ability to save for old age, without PENSiONS successful school-to-work transitions and decent job prospects. In recent decades, The struggle against poverty among older real wage growth has not kept pace with persons, aimed at its eradication, is a fun- improvements in productivity, particularly damental objective of the Madrid Interna- in developed countries (ILO, 2018b). In addi- tional Plan of Action on Ageing. Significant tion, wage inequality has grown (ibid). Wage progress in extending pension coverage has adjustments that reflect changes in labour helped protect many older persons from productivity over time and a statutory min- poverty, including during the COVID-19 cri- imum wage are key for workers and their sis. In 2020, 77.5 per cent of older persons families to save. Higher wages would also worldwide received a pension (ILO, 2021c). have a positive impact on public budgets. While the coverage rate was above 95 per cent in Europe, less than 20 per cent of High levels of informal employment limit people above retirement age received a the ability of workers to attain economic pension in sub-Saharan Africa (ibid.). 42 ILO Statistics on the informal economy. See: https://ilostat.ilo.org/topics/informality/ (accessed on 15 June 2022). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 105 Many countries have expanded pension number of countries complement these coverage through tax-funded, non-con- with mandatory or voluntary defined con- tributory schemes. These reach groups that tribution systems (ILO, 2021c). Since most are usually undercovered, namely, women contributory schemes are pay-as-you-go, and workers in informal employment. But where the working-age population funds they often do not provide income securi- current pension benefits, increases in the ty on their own. As regards contributory share of older persons and the number of schemes, most countries have defined years in retirement have caused growing benefit plans in place. A small but growing concerns about pension sustainability. BOX 4.4 THE BUiLDiNG BLOCKS OF OLD-AGE PENSiON SYSTEMS Old-age pensions are payments provided to tions from employers. Contributory schemes people above a specific age. Broadly, there can either be financed on a “pay-as-you-go” are three types of pensions: basis (contributions from the working-age pop- ulation financing pensions of current retirees) or 1. Tax-financed pensions: Often called so- funded by the individual through the investment cial or non-contributory pensions, they are of savings and deferred payment arrangements. financed from general government revenues Funded schemes can be paid for by investment and aim to provide a minimum income in old returns set by the market or by returns set by age. Tax-financed pensions can be universal the Government (in what are called notional (directed at all citizens above a specific age), defined-contribution plans). The basis of the pension-tested (available to older persons pension calculation can be related to labour who do not receive a contributory pension earnings and meant to ensure a specific level of or whose contributory pension benefits are benefits during retirement (in what are referred below a certain threshold) or means-tested to as defined-benefit schemes) or linked only to (for older people whose income is below a contributions made (in so-called defined-con- certain threshold). tribution schemes). 2. Mandatory contributory pensions: These 3. Voluntary or private contributory pensions: schemes are available to workers, generally in Offered to the working-age population and the formal sector, and are meant to partly or elective by design, voluntary or private con- fully (in a few cases) replace labour earnings tributory pensions can take many forms. Some received prior to retirement. Contributory pen- are funded exclusively through individual sav- sions are financed by deductions from employ- ings while others are funded by both employ- ees’ salaries and complemented by contribu- ees and employers. CHAPTER 4 106 Countries usually adopt different combi- sions). Tax-financed pensions are provided BOX 4.4 nations of the above to build their pension through the State. Mandatory contributory systems. In other words, pension systems pensions are usually offered fully or partly usually have several tiers, as described through the State. Voluntary or private con- above: tier 1 (tax-financed pensions), tier 2 tributory pensions are generally operated by (mandatory contributory pensions) and tier the private sector; Governments play only 3 (private or voluntary contributory pen- a regulatory role. To improve fiscal sustainability, many coun- to lower benefits. The ILO recorded 57 cas- tries have raised the age at retirement, es of reforms to reduce pension benefits cut down early retirement provisions or that were introduced from 2018 to 2020 indexed the retirement age to increases (ILO, 2021c). In countries of the European in life expectancy. Others have bumped Union, the average gross replacement rate up contribution rates or reduced benefits of public pensions is projected to decline for future retirees, mostly through chang- from 42.5 per cent of the average wage es in benefit indexation. There is also a in 2013 to 35.9 per cent in 2053 (Europe- trend towards private defined contribution an Commission, 2017). Expected changes pension plans, in which benefits depend in replacement rates vary significantly by on the level of savings accumulated by country: They are projected to fall by more the pensioner, either to complement or than 20 percentage points in Poland, Por- replace public defined benefit plans that tugal and Spain but expected to increase provide minimum income guarantees. slightly (by less than 2 per cent) in Czechia and Denmark (ibid.). Measures to ensure fiscal Measures to ensure fiscal sustainability must be weighed against the need for pub- sustainability must be weighed lic pensions to cover and provide income against the need for public pensions security to all older persons. In countries with comprehensive social protection to cover and provide income security systems, the challenge is to maintain the to all older persons poverty- and inequality-reducing effects of pensions. In countries without them, the focus must be on extending pension coverage, providing adequate benefits and The combination of these reforms, which creating fiscal space to finance public pen- will affect youth and future generations sion systems and meet target 1.3 of the more than older people today, is expected SDGs.43 Early action on these fronts would 43 The aim of target 1.3 is “to implement nationally appropriate social protection systems and measures for all, including floors, and by 2030 achieve substantial coverage of the poor and the vulnerable”. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 107 allow a gradual phase-in that may spread have in many countries in recent decades, costs across generations. this regressive effect will increase over time. Yet very few pension schemes take inequalities in life expectancy into account A. A FISCALLY SUSTAINABLE FOCUS ON (OECD, 2017; Diakite and Devolder, 2021; EQUITY AND ECONOMIC SECURITY Ayuso, Bravo and Holzmann, 2020). In addition, low-income workers also have In countries with broad pension coverage, fewer and more precarious employment replacement rates are higher for low-in- prospects, particularly at older ages. come than for high-income earners. In the European Union, replacement rates even Maintaining or increasing the inequali- increased for the bottom income quintile ty-reducing role of pensions while rais- from 2007 to 2015 but declined from 2015 ing the retirement age calls for granting to 2018 (European Commission, 2021b). low-income workers higher accrual rates, lowering minimum contribution thresh- olds, crediting periods of unemployment, improving the portability of pensions and, Beyond concrete measures to above all, strengthening efforts to guaran- safeguard the income security of tee decent work, including decent wages. low-income earners, supporting the More frequent or generous adjustments of retirement incomes to the cost of living (or diverse needs and preferences of indexation) for low-income workers would workers regarding retirement age also help ensure that those in need do not is also key face economic insecurity as they grow older. Beyond concrete measures to safeguard the income security of low-income earn- Reforms to ensure sustainability that are ers, supporting the diverse needs and pref- applied across the board can negatively erences of workers regarding retirement affect the income security of low-income age is also key. Most countries already al- earners. Take increases in retirement age, low workers to continue working beyond for instance. As life expectancy grows and retirement age, with some earnings lim- people’s health improves, they can remain its. Early retirement is strongly restricted productive until later in life. Considering in many countries, although several have that low-income earners have a lower expanded early retirement options since life expectancy than high-income earn- 2020 (OECD, 2021b). Very few countries ers, however, indexing the retirement age allow partial retirement, where employees to average life expectancy has a regres- continue working on a reduced schedule sive effect. Workers with an expectation while starting to draw a portion of their of shorter lives lose a larger proportion pension (OECD, 2017). Taking into con- of their projected lifetime income from sideration the concerns of workers with pensions than those who are expected physically demanding jobs and those with to live longer. If gains in longevity benefit health issues, countries could consider higher-income earners the most, as they more phased retirement arrangements. CHAPTER 4 108 Regarding the move towards defined contri- economically insecure than today’s, ab- bution pension schemes, many of these rely sent major policy correctives, must be on private savings accounts and thus shift factored into pension systems reforms. investment risks from the State to individu- Very generous pensions may not be sus- als. They are less redistributive than defined tainable. At the same time, reforms that benefit programmes and therefore magnify weaken the redistributive power of pen- labour market inequalities, particularly since sions will jeopardize the well-being of a individuals with lower levels of income and growing number of older persons. Such education have less financial knowledge and reforms may further undermine State access to financial services than their more capacity to support pension systems, educated counterparts. Implementation de- particularly if they are perceived to be pends on broadly available and accessible ineffective and unfair. financial services and facilities, which many developing countries currently lack. B. EXPANDING PENSION COVERAGE AND Very few countries rely exclusively on de- ADEQUACY fined contribution schemes today (ILO, 2021c). As a complement to defined ben- Despite efforts to extend pension cover- efit programmes, they can improve the age, access to contributory pensions is adequacy of pension benefits. But some usually limited to waged workers in the do not meet the core principles set out in formal sector. This presents a challenge international social security standards.44 to developing countries with large infor- Specifically, defined contribution schemes mal sectors. But gaps in coverage and in- based on individual savings accounts have sufficient benefits are not only a concern suffered severe losses during recent re- for developing countries. Workers under cessions, therefore failing to ensure pre- non-standard contracts in all countries dictable and adequate benefits until death, face some of the same challenges. And as legal entitlements. around the world, women’s persistent disadvantages in the labour market and The fact that future generations of old- their disproportionate burden of unpaid er persons may be more unequal and care limit their access to pensions and other social protection programmes. The fact that future generations There is no one-size-fits-all process to of older persons may be more increase pension coverage. But action on three fronts can help. The first is to unequal and economically insecure encourage pension savings. The second than today’s, absent major policy is to introduce and expand tax-funded correctives, must be factored into pension schemes, recognizing that these first and second measures are not mu- pension systems reforms tually exclusive. Third, the labour mar- 44 See the ILO Social Security (Minimum Standards) Convention (no. 102) or the ILO Convention on Invalidity, Old-age and Survivors’ Benefits (no. 128). For further analysis, see also ILO 2011 and 2021c. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 109 ket policies discussed earlier alongside with available data. While these schemes are efforts to include non-wage workers in typically designed as basic-income transfers contributory schemes and improve finan- meant to complement, rather than replace, cial literacy will go a long way in help- contributory pensions, they have some im- ing workers and their families save and pact on poverty alleviation among older per- contribute to social protection systems. sons (United Nations, 2018a). Tax-funded schemes have helped expand Reforms to the design and implementation effective coverage around the world and of pension systems may be important. But ensure that all older persons have at least a improving the coverage and adequacy of basic level of income security, particularly pension benefits in the end rests on ex- when they are universal. Chile legislated a panding decent work opportunities and large increase in both the basic (solidarity) strengthening the institutions of work. Pol- pension and the publicly financed pension icies to level the playing field for women supplement in 2019. As a result, the future in the labour market, promote transitions pension of full-career, low-wage earners from informal to formal employment, pro- will increase by one third (OECD, 2021b). vide adequate wages and other measures In Latvia, both the minimum pension and will go a long way towards achieving target non-contributory old-age benefits were 1.3 of the SDGs. raised by 25 per cent in 2020, albeit from a low level. Mexico introduced a tax-based There is also space for opening decent basic pension in 2019, available to all cit- work opportunities for older persons and izens from age 65 since July 2021 (ibid.). eliminating barriers to their participation. Having the option to retire gradually would Many tax-funded schemes are means make staying in the labour market more tested and thereby restricted to older attractive to many older persons. Tack- people with low income, often those liv- ling bias and discrimination against older ing in poverty and who do not pay into workers would also expand job options contributory systems. Means-tested and improve employment conditions. The tax-funded pensions leave older persons UN Global Campaign to Combat Ageism who are neither in poverty nor covered recommends three strategies to com- by contributory schemes (the so-called bat ageism: policies and laws to reduce “missing middle”) without a minimum in- or eliminate it, educational interventions come guarantee. In developing countries, and increasing intergenerational contact this “missing middle” mainly comprises (WHO, 2021a). Much more can also be done workers in informal employment. to adapt jobs and workplaces to people with disabilities, including older persons. Beyond coverage gaps, tax-financed pen- sions are often insufficient to provide income security to their beneficiaries. The ILO (2015) 3. THE POTENTiAL OF PROGRESSiVE estimates, for instance, that from 2010 to TAXATiON 2014, beneficiaries received less than $1.25 a day from tax-financed pensions in more In countries without comprehensive than one quarter of developing countries social protection systems, a critical CHAPTER 4 110 factor for achieving SDG target 1.3 is vocated in the Addis Ababa Action Agen- sustainable funding. Increased public da. Improving compliance and preventing funding can come either from reallo- tax evasion can increase revenue without cating existing resources or generating necessarily hurting people in poverty. Rais- additional revenue. ing minimum income tax thresholds and reducing the burden of indirect taxation In most countries, there is scope for mo- can make tax systems more progressive. bilizing public revenue without imposing a Lower tax rates on basic goods, such as heavier tax burden on low-income work- staple foods, may be warranted. That said, ers or the middle class (UN IATF, 2022). given the increasingly globalized nature For the most part, the effect of taxes and of trade and business, there are limits to social protection systems on poverty and what countries can achieve on their own. inequality depends on how progressive Recent multilateral initiatives aimed at im- taxes are. Income and property taxes are proving coherence and transparency in usually progressive while indirect taxes, addressing tax avoidance are steps in the such as consumption taxes, are general- right direction. ly regressive; that is, they take a larger percentage of income from low-income Ultimately, progressive fiscal policies and households than from high-income ones. a well-functioning tax system can encour- age a virtuous cycle of social solidarity, In developed countries, top income tax where comprehensive social protec- rates could be higher, as they were in the tion systems, including pension systems, 1980s, with little impact on economic strengthen public support for redistribu- growth (IMF, 2017). Strengthening taxation tion. In contrast, inadequate benefits and on wealth and property could generate regressive reforms jeopardize progress new revenue if countries devote sufficient towards reducing old-age poverty and the resources to enforcement, given the op- overall well-being of future cohorts of old- portunities for avoidance. er people. Such reforms may undermine trust in Governments and the willingness In developing countries, reducing levels of of citizens to pay taxes and contribute informality will go a long way in expanding to pension schemes during their working tax bases, as will tackling capital flight and lives. They may further erode the capacity illicit financial flows and enacting reforms of social protection schemes to ensure to strengthen tax administration, as ad- income security. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 111 ANNEX 1. ASSET OWNERSHiP AMONG PEOPLE LiViNG iN RELATiVE POVERTY Figure 4.1.1 Types of assets owned by people living in relative poverty by age in eight developed countries, 2019 (or latest year with data) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80+ Age group Financial assets (excl. pensions) Main residence Vehicles Other durables and valuables Other non-financial assets Source: Calculations based on data from the Luxembourg Wealth Study Database (multiple countries; surveys conducted between 2010 and 2020). Available at https://www.lisdatacenter.org/our-data/lws-database/. Note: Estimates are calculated using harmonized survey data on wealth reported at the household level for eight developed countries (Australia, Canada, Finland, Germany, Italy, Norway, the United Kingdom and the United States). Households in relative poverty are those living under 50 per cent of the median income of the total population. Types of assets (per cent of total assets) CHAPTER 4 112 ANNEX 2. THE LiKELiHOOD OF FUNCTiONAL DiSABiLiTY BASED ON WORK HiSTORY Figure 4.1.2 Logistic regression predicting functional disability based on work history, by sex, adults aged 50 and older in Europe, 2018 Male Female ODDS 95% ODDS 95% RATIO CONFIDENCE RATIO CONFIDENCE INTERVAL INTERVAL Main job physically demanding (ref=no) Yes 1.35 *** (1.19,1.54) 1.41 *** (1.26,1.58) individual covariates Age 1.05 *** (1.04,1.05) 1.06 *** (1.06,1.07) Rural 0.94 (0.84,1.05) 0.95 (0.85,1.06) Education (ref=tertiary) 1.Less than upper secondary 2.05 *** (1.69,2.49) 1.55 *** (1.31,1.84) 2.Upper secondary and vocational training 1.49 *** (1.26,1.78) 1.38 *** (1.17,1.62) Country covariates (ref=Northern Europe) Central Europe 1.61 *** (1.38,1.86) 1.52 *** (1.32,1.76) Southern Europe 0.91 (0.76,1.09) 1.20 * (1.01,1.43) Eastern Europe 1.86 *** (1.60,2.15) 1.87 *** (1.63,2.14) N 19283 22535 r2_p 0.049   0.071 Source: SHARE, Gateway to Global Aging Data. Available at https://g2aging.org/. Notes: Estimates are age adjusted and weighted to correct for sample design. * p < .05, ** p < .01, *** p < .001. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 113 CHAPTER 5 A CRiSiS OF CARE KEY MESSAGES they comprise the majority of both care recipients and paid and unpaid █ Demand for long-term care is rising caregivers. due to population ageing and chang- es in the living arrangements of older █ Rethinking how to provide long-term persons. The COViD-19 crisis exposed care will benefit today’s older persons weaknesses in long-term care, yet and those who care for them as well care and support systems continue to as future cohorts of older persons. receive insufficient policy attention. Countries should pursue a more eq- uitable, person-centred approach █ The absence of accessible and equi- involving governments, businesses, table long-term care services takes civil society, communities and house- a heavy toll on older persons, their holds, and addressing needs in paid, families and whole societies. Wom- formal forms of care as well as unpaid, en bear the brunt of deficiencies as informal ones. CHAPTER 5 114 A CARE CRISIS IN NUMBERS 1 in 3 the number of women 65 and over that need long-term care in the EU. and 1 in 5 men 13.6 80% MILLION of all long-term care in the estimated deficit of Europe is provided by long-term care workers. informal caregivers. 9 in 10 1.5% the number of formal the average percentage long-term care workers of GDP in OECD countries that are women in spent on long-term care OECD countries. in 2019; down from 1.7 per cent in 2017 despite growing demand. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 115 Rapidly ageing populations have increasing- well-being. Without accessible and eq- ly complex health care as well as care and uitable formal care services, older adults support needs. Traditionally, for better or confront unmet health and care needs worse, co-habiting extended families have that prevent them from realizing dignity met the care needs of older persons. Liv- and inclusion in their community. Fami- ing arrangements for families and older in- lies, particularly women, and health-care dividuals, across developed and developing systems struggle to keep up. During the countries, have changed in recent decades, COVID-19 crisis, existing weaknesses in however. These shifts, combined with ageing both paid and unpaid and formal and in general, have heightened demand for dif- informal long-term care systems surged ferent forms of care. For societies and indi- to the surface, with devastating impacts. viduals, the implications of increased demand To solve the crisis of care, the chapter depend significantly on what type of care is proposes different strategies for meeting being provided and by whom. Women are the the long-term care needs of older adults main stakeholders in long-term care, com- more fairly and sustainably. prising the majority of both care recipients and paid and unpaid caregivers. The mechanisms of care and support for older populations are increasingly impor- A. tant policy concerns. Yet across developing and developed countries, long-term care AS POPULATiONS AGE, has suffered a lack of concerted policy at- CARE HAS NOT KEPT UP tention. Government spending on quality long-term care has rarely been sufficient to cover mounting demand. Paid care work is notable for its low wages and difficult work- 1. CARE NEEDS ARE GROWiNG ing conditions, leading to poor outcomes for recipients and an insufficient supply of People in almost all countries are living well-trained caregivers. longer. Globally, babies born in 2022 are expected to reach 72.3 years on average, A lack of regulation of service provision has 25 years longer than those born in 1950.45 also undermined quality. Living more years does not necessarily mean enjoying a better quality of life, however, This chapter describes how rising needs especially at older ages. In fact, living longer for long-term care, combined with is associated with increased non-communi- changes in living arrangements, impact cable disease and disability. Older persons families and societies, particularly wom- often experience hearing loss, cataracts and en. It shows how disparities in both who refractive errors, back and neck pain and os- provides care and the primary sources teoarthritis, chronic obstructive pulmonary of care available to older adults affect disease and diabetes, and they are at greater 45 United Nations, World Population Prospects 2019. Available at https://population.un.org/wpp/ (accessed on 3 March 2022). CHAPTER 5 116 Because they live longer and spend a the same path to older ages. While many older persons enjoy relatively good health relatively longer period of their lives into their later years, others may experience in poor health, older women are chronic diseases and other health risks. more likely to need long-term care For societies, an upward shift in the popu- services compared with older men lation age distribution means that shares of older persons are expected to grow in coming decades. In Europe and Northern America, risk of depression and dementia. As people population ageing is already well advanced. age, they are also more likely to experience In Eastern and South-Eastern Asia, popula- several conditions at the same time. tions are ageing rapidly. Although individual older people may not require additional care Biological changes and increasing needs or support, societies as a whole still face for support as people age have different rapidly increasing demand for care services implications for individuals and societies. for older persons. In Japan, for instance, the At the individual level, people do not follow number of older persons in need of care is Figure 5.1 Share of women among long-term care recipients in institutions other than hospitals and at home, aged 65 or above and aged 80 or above, selected OECD countries 90 80 70 60 50 40 30 20 10 0 Receive long-term care in institutions other than hospitals Receive long-term care at home Aged 65 or over Receive long-term care in institutions other than hospitals Aged 80 or over Source: OECD Health Statistics 2021. Available at https://stats.oecd.org/ (accessed on 9 March 2022).  Note: Countries are selected based on data availability.  Percentage Australia (2019) Denmark (2020) Estonia (2019) Finland (2019) Germany (2019) Hungary (2019) Israel (2019) Republic of Korea (2019) Lithuania (2019) Luxembourg (2019) Netherlands (2018) New Zealand (2020) Norway (2020) Portugal (2020) Slovenia (2018) Sweden (2019) United States (2016) WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 117 projected to rise from 8.3 per cent of the tions. Some individuals may start to have total population in 2020 to 14.4 per cent in limitations that prevent them from carrying 2065 (Marukawa, 2022). out daily routines, such as getting out of bed, taking baths or showers, using the toilet, Because they live longer and spend a rel- dressing and preparing meals. Functional atively longer period of their lives in poor limitations may not immediately require care health, older women are more likely to need services for extended periods but may call long-term care services compared with old- for assistance with some activities of dai- er men. Women are also usually frailer and ly living. In the United States, for instance, have worse health at the end of life than men about one third of people aged 65 or older (Hägg and Jylhävä, 2021). As a result, they report functional limitations of some kind, a tend to account for a higher proportion of share that rises to two thirds among people care recipients at home and in institutions aged 85 or older (United States, Congres- (figure 5.1). For instance, in the European sional Budget Office, 2013). Union, at ages 65 or over, 33 per cent of women needed long-term care compared Functional limitations can also increase with 19 per cent of men (European Com- demand for more extended services over mission, 2021c). Moreover, greater female time. For example, decreased mobility and longevity means that a larger proportion of falls among older persons can result in older women are widows and lack potential needs for hip and knee replacements and support from a spouse. extended recovery, increasing demand for palliative, rehabilitation and ongoing care services (Pacific Prime, 2013). 2. CARE NEEDS ARE CHANGiNG Ageing amplifies the risks of cognitive im- High-quality care and support systems pairments; 50 million people worldwide mean that older people can live more now live with dementia (Casafont and oth- independently, with dignity and choice, ers, 2020). Still with no cure, dementia is personal safety and the ability to partici- linked to ageing and most commonly man- pate in their communities and society. In ifests as Alzheimer’s disease. As dementia return, societies realize the rights and full progresses, it results in increasing cognitive, potential of their ageing populations. As psychosocial and eventually physical disa- older people with different health condi- bilities requiring enhanced support. tions may have different needs, care and support systems should cover a wide spec- For people who grow older with chron- trum of activities, including primary, acute ic or disabling conditions, the focus may and end-of-life care, and assistance with shift from finding a cure to providing qual- meals, housekeeping, bathing and other ity of life and relief for disease-related activities of daily living. symptoms as well as ensuring dignity and comfort during an individual’s final days. As populations age, needs evolve. Older End-of-life care, which includes pallia- persons may have specific care or health- tive and hospice care, is expected to see care requirements, including those that stem a surge in demand yet countries remain from having two or more long-term condi- largely unprepared for it (box 5.1). CHAPTER 5 118 BOX 5.1 ACUTE END-OF-LiFE VULNERABiLiTiES REQUiRE SPECiALiZED CARE Countries are particularly unprepared for families (Gillan, van der Riet and Jeong, 2014). an expected jump in demand for end-of-life With people dying further into old age, when care as populations age and the burden of dementia, multimorbidity and frailty are more non-communicable diseases rises. Only an common, and spousal, social and other forms estimated 1 in 10 people needing palliative of support are less available, end-of-life care care worldwide is receiving it, even as de- provision requires urgent policy attention. mand is expected to double by 2060 (WHO, 2022). This type of care requires specialized Countries could pursue several directions to skills, services and infrastructure, at a time improve and expand access to end-of-life in human life when vulnerabilities are acute. care. Critical factors encompass adequate Even in countries with universal health cov- funding for formal end-of-life care infrastruc- erage, however, the quality of end-of-life ture, training and education for care provid- care varies dramatically. Shortfalls add to ers, and the availability and appropriate use the burdens of those who are already expe- of essential medicines, including controlled riencing severe pain and discomfort (Sallnow medicines for pain and symptom manage- and others, 2022). ment. Families, community volunteers and other individuals acting as end-of-life caregiv- Because end-of-life care needs are complex, ers need much more financial and logistical common care-related issues, such as insuf- support, especially under the supervision of ficient training, high staff turnover, inade- trained professionals. This would help to ex- quate support for carers, a lack of access to pand the opportunity to die at home, as many medical or specialist support and high staff people wish. The rapid spread of COVID-19 workloads, become especially concerning. in long-term and end-of-life care facilities Research on undergraduate nursing students, highlighted the risks of concentrating those for instance, suggested they feel largely un- who are most vulnerable in one place while prepared by their formal training to provide also robbing many older persons of the chance end-of-life care to dying patients and their to die among loved ones. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 119 B. may not be one’s own home. It highlights that the “right place” must satisfy the social, economic, health and infrastruc- ture needs of older women and men, PROViDiNG BETTER CARE: and offer adequate services, safety and DETERMiNANTS, STATUS AND affordability (Golant, 2015). Figure 5.2 CHALLENGES shows that the share of people receiving long-term care at home is much greater than in institutions, for those aged 65 or above and aged 80 or above. 1. AGEiNG iN THE RiGHT PLACE Multiple factors influence older persons’ Rising care needs for older persons calls choices about where to receive care ser- for providing quality care services. Grow- vices. First, care options for older peo- ing old at home or “ageing in place” is ple and their families vary significantly by a central desire for most older women country and personal circumstances. Ser- and men, all over the world. A recent vice availability and accessibility, cultural survey in the United States showed that beliefs (such as the notion that the family nearly 80 per cent of adults aged 50 and is best placed to take care of its older over want to remain in their homes over members) and the financial situation of the longer term, a proportion that has older persons and their families all affect been consistent for more than a decade care choices. Where older persons receive (Davis, 2021). “Ageing in place” refers to long-term care may also depend on their the ability to live in one’s own home and disease profile. Institutionalized care is community safely, independently and typically reserved for frailer individuals comfortably, regardless of age, income who have difficulty managing on their own or capacity. “Ageing in the right place” or need specialized medical services. Care extends the concept to the ability to live services also have inextricable links with in the place most suited to a person’s the living arrangements of older persons, needs and preferences, which may or as discussed below. CHAPTER 5 120 Figure 5.2 Long-term care recipients at home and in institutions other than hospitals, selected countries, latest available year  A. Total recipients aged 65 and over, as a share B. Total recipients aged 80 and over, of total population aged 65 and over, percentage  as a share of total population aged 80 and over, percentage  Lithuania 39.3 Lithuania 78.4 Switzerland 23.4 Switzerland 53.2 Germany 18.4 Sweden 41.7 Sweden 16.1 Germany 41.2 Norway 14.5 Australia 39.1 Australia 14.1 Norway 38.3 Finland 13.4 Finland 37.4 Luxembourg 12.7 Czech Republic 35.2 Czech Republic 12.1 New Zealand 33.4 Netherlands 11.9 Netherlands 33.4 Hungary 11.8 Luxembourg 32.4 Slovenia 11.6 Slovenia 30.5 New Zealand 11.4 Korea 27.8 Spain 11.3 Spain 27.8 Estonia 10.8 Hungary 21.6 United States 9.9 Estonia 21.4 France 9.9 United States 21 Korea, Republic of 9.6 Portugal 3.3 Portugal 1.7 0 10 20 30 40 0 20 40 60 80 LTC recipients at home LTC recipients in institutions (other than hospitals) Source: OECD Health Statistics 2021. Available at https://stats.oecd.org/ (accessed on 9 March 2022).  Note: The numbers next to each bar indicate the share of older persons receiving long-term care in each age group. The share is the sum of those receiving long-term care at home and in institutions other than hospitals. Countries were selected based on data availability.  2. LiViNG ARRANGEMENTS DEFiNE CARE from 2 to 12 persons, on average (United PROViSiON Nations, 2019c). Living arrangements strongly determine In more developed countries, such as in the care services that older people re- Western Europe and the United States, ceive. In many societies, co-residence with intergenerational co-residence has de- adult children is a common support mech- clined dramatically. Most older persons anism. Adult children may be expected live either in single-person households or to remain with and support their ageing in households consisting of a couple only or parents as part of “lifetime reciprocity” a couple and their unmarried children. In or “filial piety”. Co-residence is also a way 2019, the average size of such households for parents to support adult children who was 1.9 persons in France, Switzerland and have never left the parental home or have the United Kingdom and 2.1 in the United returned to cope with economic hardship States. In countries with more older persons or adverse life events. An older person living in small households, especially many may also move into the household of an developed countries, people tend to marry adult child to help care for grandchildren later, have fewer children and have them or following the death of a spouse. Such later in life. While older people may choose living arrangements vary. According to the to live close to their children or relatives most recent global estimates, older per- to receive care and support when needed, sons live in households that range in size as in some European countries, social pro- WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 121 grammes typically offer financial assistance continuing care homes, and assisted liv- or health-care benefits to retired adults. ing communities and nursing homes that This can make it more affordable and con- provide 24/7 care and support.46 Addi- venient for older people to stay in their own tional options are residential communities homes and to live by themselves or only with for older persons that typically cater to a spouse (United Nations, 2019c, 2020e). the wealthy with amenities such as club houses and golf courses, fitness centres and tennis courts. Fewer options exist in intergenerational co-residence rapidly growing cities, especially in de-veloping countries, where poor and dis- has declined dramatically in advantaged older persons often live with developed countries extended family in overcrowded homes with minimal financial resources. While some rural areas can be places of In most developing countries, older persons great natural beauty and offer a wide range are most likely to live with a child or extended of recreational activities for active ageing, family and to receive care and support within finding health-care services can be a chal- the family. Higher fertility in the recent past lenge for older persons, more so in remote provides more opportunity for older persons areas. Outpatient and hospital-provided to co-reside with their children and grand- specialty care may not be available. At- children, potentially including one or more tracting and retaining formal and informal children in the same household. Countries caregivers may be an ongoing struggle. with the highest prevalence of this type of Well-lit and safe walkways away from traffic; co-residence are in Africa, Asia and Latin accessible, reliable and affordable public America. In Africa, for instance, all countries transportation; adequate housing; public (except Burundi, Egypt and São Tomé and and commercial services and opportunities Príncipe) have at least half of older persons for social participation are often lacking. living in households with extended family members (United Nations, 2019c, 2020e). 3. DEMAND FOR CARE OUTSTRiPS THE Urbanization can affect the living arrange- SUPPLY OF CAREGiVERS ments of older persons and the care ser- vices they receive. Cities usually offer a Long-term care is a major component of wide range of choices for housing and care services for older persons. It refers living configurations tailored to individual to a broad range of personal, social and health, social and infrastructure needs medical services over an extended period and the economic means of older per- to “ensure that people with or at risk of sons. Available options range from ageing a significant ongoing loss of intrinsic ca- in one’s own place to retirement homes, pacity can maintain a level of functional senior homes, residential care homes, ability consistent with their basic rights, 46 Residential care homes provide assistance with meals and the activities of daily living. Continuing care homes offer nursing services as needed, allow residents to transit into facilities on the same premises that provide more assistance if and as needed, and can accommodate couples with different care needs. CHAPTER 5 122 fundamental freedoms and human dignity” ring. Some European countries, for instance, (WHO, 2017). This includes care provided at provide cash payments directly to informal home, in the community or in institutions. caregivers to incentivize and support them (Zigante, 2018). Long-term caregivers can be employed in the formal or informal economy, and their Amid rising demand for long-term care, services may be paid or unpaid. A formal growth in the number of caregivers is not caregiver delivers professional and usual- keeping pace. As of 2015, the world was ly paid services to an individual or group experiencing a shortage of about 13.6 mil- of individuals. Informal caregivers provide lion formal care workers, according to a care to those who need it, generally based study of 46 countries with 80 per cent on an existing relationship, such as with a of the world’s population.47 The shortage family member, friend or neighbour (AIHW, was largest in Asia and the Pacific (8.2 mil- 2021). They are typically unpaid but not all. In lion workers) and smallest in Africa and some cases, people without necessary travel the Americas (1.5 million and 1.6 million documents, training or credentials move to workers, respectively).48 In Europe, the other countries to provide care services, shortage amounted to 2.3 million workers meaning they can only work in the informal (figure 5.3). Such deficits mean that half sector and are usually poorly remunerated. the older population globally does not have That said, the distinctions between formal access to quality formal long-term care.49 and informal, paid and unpaid care are blur- Figure 5.3 Estimated numbers and deficits in formal long-term care workers, the world and by region, 2015 World 11.9 13.6 0.1 Africa 1.5 Americas 3.4 1.6 Asia and the Pacific 4.5 8.2 Europe 3.9 2.3 0 5 10 15 20 25 30 Estimated number of formally employed long-term care workers, millions Estimated deficits in formal long-term care workers, millions Source: Adapted from Scheil-Adlung (2015).  47 An ILO study estimated the shortfall in the numbers of long-term care workers based on a relative threshold of 4.2 formal long-term care workers per 100 persons aged 65 or above in 2015. The threshold derives from the population-weighted median value of formal long-term care workers per 100 persons aged 65 or above in a group of 18 selected countries in the Americas, Asia and the Pacific and Europe. Given scarce data on long-term care workers, the study followed several assumptions. For countries where data were not available in Africa, the number of formal care workers was estimated at 0.4 workers per 100 persons aged 65 or above. The related values for the Americas, Asia and the Pacific, and Europe were 1.69, 2.34 and 2.9. They were estimated based on a population-weighted average number of formal long-term care workers in countries with available data in respective regions (Scheil-Adlung, 2015). 48 The Americas include both North America and Latin American and the Caribbean. The ILO’s study does not provide disaggregated estimates within the Americas. 49 Scheil-Adlung (2015) set a threshold for the basic provision of care services at 4.2 workers per 100 persons aged 65 or above, which is the median population-weighted number of formal long-term care workers in 18 selected countries in the Americas, Asia and the Pacific and Europe. If a country does not meet 4.2 care workers per 100 persons aged 65 or above, its people do not have access to quality formal long-term care provision. WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 123 The paucity of formal long-term care pro- rising demands for care and the unwilling- vision is expected to continue in coming ness of native-born populations to take up decades. In the United States, an estimat- what they see as low-status and poorly paid ed 3.5 million additional workers or more work (Sowa-Kofta and others, 2019). In Italy, will be needed to provide long-term care an estimated 73 per cent of the paid care to older people by 2030 (Spetz and others, workforce in 2017 was foreign born (Boniz- 2015). The number of formal jobs for these zoni, 2019). Some migrant care workers are workers is projected to increase by only 1 undocumented or arrive in a country with a million over the same period, however. In visitor or tourist visa. This strands them in the Japan, the Government (2015) estimates informal economy with limited protection that the demand-supply gap in 2025 will be and below official minimum wages. about 380,000 care workers, especially in metropolitan areas. By 2030, Germany will Without enough formal caregivers, many need additional care workers equivalent countries, even rich ones, will continue to to around 263,000 to 500,000 full-time rely on informal care provision in private workers (Gerlinger, 2018).  homes. In Europe, for instance, informal carers provide up to 80 per cent of all Foreign-born migrants have filled care gaps long-term care. They comprise from 10 in many countries. While comprehensive per cent to as much as 25 per cent of the data on the migrant status of care workers total population (Zigante, 2018). While the are very limited, piecemeal evidence sug- number of informal care workers varies gests the proportion of foreign-born care significantly across countries (figure 5.4), workers in high-income countries is great, most are unpaid family members, often having grown sharply in recent years amid also aged 65 or more. Figure 5.4 Number of informal long-term care workers per 100 persons aged 65 or over, 2014 Netherlands 144.9 United States 122.8 Norway 87.2 Australia 83.8 Canada 60.9 United Kingdom 55.6 Italy 37.2 Ireland 35.5 Poland 23.9 Belgium 23.2 Austria 21.4 France 20.7 Germany 19 Czechia 17.6 Greece 17.6 Sweden 12.8 Slovak Republic 8.6 Spain 4.9 New Zealand 4.8 Luxembourg 3.3 Denmark 2.3 0 20 40 60 80 100 120 140 Source: Adapted from Scheil-Adlung (2015).  CHAPTER 5 124 A. LONG-TERM CARE STILL DEPENDS ON spent by men. In some cases, social and WOMEN AND GIRLS  cultural expectations that women can and should care for older relatives and Most caregivers, paid and unpaid, in for- family members with disabilities may mal and informal sectors, are women. This make women reluctant to seek support phenomenon persists across regions and from formal or informal care services. countries at different income levels. As Greater longevity also means that older figure 5.5 shows, women globally spend women increasingly provide care to their over 250 minutes per day on unpaid parents and relatives in the oldest age care work, on average, triple the time categories. Figure 5.5 The time that women and men spend on unpaid care work for all household members 500 400 300 200 100 0 Europe Asia and High- Middle- Low- Arab and the Central income income income World Africa Americas States Pacific Asia countries countries countries Unpaid care work Paid work Source: ILO, Models of care employment around the world. Available at https://www.ilo.org/global/about-the-ilo/multimedia/ maps-and-charts/enhanced/WCMS_721442/lang--en/index.htm (accessed on 11 March 2022).  Minutes per day Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male Female Male WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 125 Among unpaid caregivers aged 50 years or pay of care work as well as cultural and more in OECD countries, 62 per cent are social norms that women should carry out women. (OECD, 2020b).50 Globally, women care-related activities, whether paid or contribute 71 per cent of the estimated unpaid (Addati and others, 2018). Paid care time devoted to unpaid care for people work is also unevenly distributed across with dementia, a share that increases the female workforce, often drawing wom- to 80 per cent in low-income countries en from ethnic minority backgrounds. In (Alzheimer’s Disease International, 2018).51 the United States, black and Hispanic Significant cross-country variation ex- women make up almost half of paid care ists, however, even among high-income workers despite being only 14 per cent countries with similar markers of gender of the total workforce (Gould, Sawo and equality. For instance, the share of unpaid, Banerjee, 2021). informal carers aged 50 or more who were women ranged from 53 per cent in Austria to 76 per cent in Spain (OECD, 2021c). The B. CARE WORK IS UNDERVALUED, amount of unpaid caregiving is also une- UNDERPAID, UNDERTRAINED venly spread within and across households and families. Women in wealthier families One reason for the general undervaluing are more likely than poorer women to pay of care work is that so much of it takes a formal non-family caregiver to support place at home without pay, even when it the care needs of older relatives (Shah and entails complex medical and nursing tasks. others, 2012; Ozen, 2020). Inequalities also The actual value of unpaid care work is occur within families, with research from massive, with 16.4 billion hours spent on Mexico and Peru suggesting that unpaid it every day, equivalent to 2 billion peo- care work is sometimes imposed on less ple working eight hours per day with no powerful family members, such as daugh- remuneration (Scheil-Adlung, 2015). The ters-in-law and younger granddaughters Ministry of Economy in Argentina (2021) (Lloyd-Sherlock and others, 2017). estimated that unpaid care and domestic work accounted for 15.9 per cent of GDP in Women are also more likely to perform 2020, making it arguably one of the largest paid care work, in both the formal and sectors of the economy. In 2015, 15.9 mil- informal economy. Nine in 10 long-term lion family members and friends provided care workers in OECD countries are wom- 18.1 billion hours of unpaid care to people en. Even in countries considered some of with Alzheimer’s and other dementias, with the world’s most gender equal, Denmark an estimated economic value of $221.3 and Norway, women comprise 95 per cent billion (Lord, 2016).  and 92 per cent of paid care workers, re- spectively (OECD, 2021c). This is closely Paid care workers receive wages but often related to the low social status and poor at marginal levels, coupled with little job 50 These estimates likely undercount the amount of total caregiving and perhaps the extent of the gender divide in care, due to data limitations. The only nationally representative surveys that ask these questions are retirement surveys of people 50 and older (HRS/SHARE) so younger women are not included. 51 This is consistent with global findings on unpaid care work more broadly – encompassing childcare and routine household work – where women dedicate, on average, over three times more hours than men to unpaid care work: 4 hours and 25 minutes per day for women against 1 hour and 23 minutes for men (Addati and others, 2018). CHAPTER 5 126 security, poor working conditions and few Lack of adequate training commensurate or no benefits. Across the 27 members of with the needs of care recipients is a signif- the European Union, non-residential long- icant barrier to high-quality care services term care workers make 80 per cent of the and higher wages. Long-term care services average national hourly wage (Gould, Sawo require a broad spectrum of professional and Banerjee, 2021). Caregivers tend to be skills, such as helping older persons with underpaid even compared to other occu- dressing, bathing and eating; assisting pations where workers have similar skills, with mobility; providing physical and oc- education and experience; this is referred cupational therapeutics; and supporting to as the care penalty (England, Budig and them with nutrition and food preparation. Folbre, 2002). Wage penalties in care work Quality services also call for knowledge reflect the fact that most care workers are in geriatrics, aimed at the unique health women (Addati and others, 2018). needs of older people. Most caregivers, paid and unpaid, have insufficient train- People, especially women, from coun- ing, however. In OECD countries, about tries with few economic opportunities 70 per cent of formal care workers are may migrate to higher-income countries personal care workers with no mandatory and work in the care sector. Migrant car- standard or minimum qualifications; the egivers are more likely to hold short-term remaining 30 per cent are nurses with temporary visas, however, limiting their a minimum number of years of training rights in the host country and amplifying (OECD, 2020b). Family caregivers typically their vulnerability to exploitative practic- have little care literacy or understanding es (IOM, 2010). Shorter in-country work of the ageing process and how it evolves. histories combined with lesser value They may not understand frailty or what given to education credentials obtained caregiving entails, and not know where to abroad also place migrant care workers turn for services and information or how at a disadvantage relative to native-born to monitor and improve the quality of care caregivers (Behtoui and others, 2020). (Lloyd-Sherlock, 2017). Foreign-born care workers in China, Tai- wan, Province of China, for instance, only Undervalued and unappreciated care work receive 86 per cent of the minimum wage has spurred various physical and mental of their native-born peers. health issues among caregivers, negative- ly impacting the quality of care.  In care Ethnic minorities and foreign-born migrant facilities, paid workers with low levels of caregivers may experience discrimination training often experience a high burden of at work from co-workers and recipients of stress as they care for older people with care, often caused by cultural or language the most complex needs and challenging differences and reflected in the prefer- behaviours. Paid home care work often ences of care-receivers for support from involves complicated, poorly defined roles people who are “more like them” (IOM, and responsibilities within the family. Female 2010). At the same time, as caregivers mi- care workers, in particular, may experience grate to higher-income countries, they isolation, harassment and violence. All these leave behind a growing gap in care provi- factors feed the undesirability of long-term sion in their countries of origin. care jobs, high turnover and low morale WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 127 (United Nations, 2018b). Paid carer stress ers choose to remain in part-time jobs with skyrocketed during the COVID-19 pandemic, lower salaries that are easier to combine with especially early on when supplies of person- care responsibilities (Barslund and others, al protective equipment, vaccinations and 2021). Family caregiving is also associated other protective measures were limited or with additional expenditure, including pur- non-existent (Smith and others, 2020). chasing medical supplies, assistive technol- ogies and physical adaptations to homes, Although providing care to a family member putting further financial pressure on family may have some positive aspects, including caregivers. Such strains can spark family satisfaction in helping a loved one, unpaid tensions and caregiver-recipient confron- family caregivers can experience mental tations, including elder abuse (Burnes and stress and poor physical health, similar to others, 2015; Fang, Yan and Lai, 2019). paid workers. This may come, for example, from lifting and carrying older persons and a Insufficient numbers of caregivers and lack of rest and recuperation breaks (Qualls, low-quality services reflect a general lack 2021). Older caregivers may find tasks par- of strategic policy planning much less mean- ticularly challenging, such as those caring ingful consultations with older persons, the for a spouse. Family caregivers may expe- group most affected by such policies. Many rience multiple care-related burdens. For countries across regions lack a specific policy, instance, when caring for older relatives, plan or strategic framework for long-term they may also tend to dependent children, care (figure 5.6). The situation is particularly manage household chores and finances, critical in South-Eastern Asia where popu- and engage in income-generating activities. lation ageing is occurring rapidly. Missing or inadequate regulations on long-term care Paid leave entitlements as well as flexible and their enforcement can impair quality, working arrangements for family or other put prospects for decent work at risk for informal caregivers to provide care can care workers, and increase the vulnerability protect the economic security and men- of older persons to abuse. A lack of legislation tal health of caregivers. Yet even among on labour standards, for instance, has left wealthier OECD countries, a third do not care workers without guarantees of minimum offer paid leave benefits to care for an daily and weekly hours and little employment ill family member (non-child). Among the protection or assistance in case of unemploy- two thirds that offer such benefits, there ment. This situation drives rising inequality in are varying amounts of pay and leave pe- working conditions and therefore high turno- riods and qualifying “family members” are ver and low morale (Addati and others, 2018). in most cases limited to partners/spous- es, parents and sometimes siblings only Even in countries that do have care pro- (OECD, 2020b). Temporary respite care vision policies, poor implementation has could provide relief for caregivers but is often left caregivers with benefit packages not available in all countries, especially in that do not meet minimum requirements. developing ones. Older persons, especially the most vul- nerable, are stranded amid fragmented, An individual’s unpaid care responsibilities confusing and inadequate care options may limit their time for paid work. Many car- (Scheil-Adlung, 2015). CHAPTER 5 128 Figure 5.6 Number of countries with a long-term care policy, plan, strategy or framework, standalone or integrated within an ageing and health plan 0 50 100 150 200 2018 2020 0 10 20 30 40 50 60 2018 2020 2018 2020 2018 2020 2018 2020 2018 2020 2018 2020 Yes No Not reported Source: WHO, Maternal, Newborn, Child and Adolescent Health and Ageing data portal. Available at https://platform.who.int/ data/maternal-newborn-child-adolescent-ageing/ageing-data/ageing---long-term-care-for-older-people (accessed on 1 March 2022). Note: The “Americas” includes both Northern America and Latin America and the Caribbean. Western South-East Europe Eastern Americas Africa Global Pacific Asia Mediterranean WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 129 C. NOT ENOUGH PUBLIC SPENDING, HIGH ment of formal long-term care systems. OUT-OF-POCKET COSTS In 2019-2020, the Netherlands and Scan- dinavian countries (Denmark, Norway and As societies age, pressure grows to en- Sweden) spent the most by far on long- sure the availability and affordability of term care, at around 2.5 to 3 per cent of long-term care services for all people in GDP. Elevated spending mirrors the more need. Spending must keep pace. Global- developed formal long-term care systems ly, however, average public expenditure in these countries. A second group of on long-term care is low, remaining be- high-income countries, including Finland, low 1 per cent of GDP from 2006 to 2010 France, Germany, Japan, Switzerland and (Scheil-Adlung, 2015). Little has changed the United Kingdom, allocate between over the past decade. Among OECD coun- 1 and 2 per cent of GDP to long-term tries, average public expenditure for for- care. In some South-Eastern European mal long-term care was just above 1 per and Latin American countries, which have cent of GDP in 2016 and 2020.52 relatively younger populations, formal provision of care is less comprehensive. Public spending on long-term care varies People with long-term care needs rely to a across countries, reflecting differences greater extent on unpaid family members in population structure and the develop- (figure 5.7). Figure 5.7 Government spending and household out-of-pocket payments on long-term care, share of GDP, latest available year  3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 Government/compulsory schemes Household out-of-pocket payments Source: OECD Health Statistics. Available at https://stats.oecd.org/ (accessed on 9 March 2022).  52 The calculation is based on OECD Health Statistics. Available at https://doi.org/10.1787/health-data-en (accessed on 1 March 2022). Percentage Australia (2018) Austria (2019) Belgium (2019) Brazil (2019) Canada (2019) Colombia (2017) Czechia (2019) Denmark (2019) Estonia (2019) Finland (2020) France (2019) Germany (2019) Hungary (2019) Ireland (2019) Israel (2017) Italy (2019) Japan (2018) Korea, Republic of (2020) Latvia (2019) Lithuania (2019) Luxembourg (2019) Netherlands (2020) Norway (2020) Poland (2019) Portugal (2019) Russian Federation (2019) Slovenia (2019) Spain (2019) Sweden (2019) Switzerland (2019) United Kingdom (2019) United States (2019) CHAPTER 5 130 Insufficient public expenditure leads to vide financial protection to older adults, inadequate care infrastructure, indicated, some countries have instituted manda- for instance, by a low number of beds in tory participation in it while people are residential long-term care facilities (fig- still employed, such as Germany and the ure 5.8). Long-term care infrastructure Republic of Korea (Scheil-Adlung, 2015). is limited in most countries in Africa, Asia Yet insurance coverage has remained low. and Latin America, and in some Europe- In the United States, private long-term an countries (Lloyd-Sherlock and others, care insurance covered only 11 per cent 2019). In Brazil, fewer than 1 per cent of of adults aged 65 or above in community older people have the option to live in a settings (not nursing homes) in 2014, often nursing home. Long-term care institutions because of unaffordable premiums or the are concentrated in urban areas and are mistaken belief that standard health insur- relatively small, accommodating only 23 ance would cover long-term care expenses people on average. Long-term care ca- (Johnson, 2016). pacities are even more limited in many African countries (Scheil-Adlung, 2015). Older persons in many countries face high out-of-pocket payments for long- Overall, most countries provide investment term care, including home and institu- falling far short of the real costs of long- tional care. Over half of the older per- term care services. Since participation sons in some countries, including Austria, in long-term care insurance could pro- Italy and Spain, had to spend their own Figure 5.8 Public spending on long-term care and long-term care beds in 2019 (or latest available year)  3.5 NOR 3.0 SWE NLD 2.5 BEL DNK 2.0 JPN ISL DEU 1.5 CAN FRA CHE FIN GBR IRL CZE AUT 1.0 LUX SVN ITA KOR ESP 0.5 USA POL ISR LTU LVA EST HUN GRC AUS 0 SVK 0 10 20 30 40 50 60 70 80 Number of beds in residential long-term care facilities, per 1 000 population aged 65 years old and over Source: OECD Health Statistics 2021. Available at https://stats.oecd.org/ (accessed on 24 March 2022).  Note: The dotted line is a fitted one.  Government spending on long-term care as a percentage of GDP WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 131 funds on long-term care with payments that can top 10 per cent of household income or more (Scheil-Adlung, 2015). C. Household out-of-pocket payments on long-term care are equivalent to over COViD-19 CUT A DEVASTATiNG half of public spending in some coun- SWATHE THROUGH LONG-TERM tries, including Brazil, Estonia, Portugal CARE  and Switzerland (figure 5.7). 1. CLUSTERED iN FACiLiTiES, OLDER High out-of-pocket long-term care PEOPLE WERE MORE VULNERABLE expenditures are likely to push older persons into poverty Serious illness and deaths from COVID-19 infection have been highly concentrat- ed among the oldest people. Those with some conditions that are more prevalent High out-of-pocket long-term care ex- in older ages, such as diabetes, were more penditures are likely to push older per- likely to die from the virus. In high-income sons into poverty. In the United States, countries, 89 per cent of both official nursing home stays have strong negative deaths and excess deaths from the pan- effects on total household wealth. One demic occurred among those over age study found that after the first entry into 65 (Demombynes and others, 2021). In a nursing home, a resident’s total house- Italy, 35 per cent of older persons aged hold wealth fell steadily over a six-year 80 or over who contracted COVID-19 died period, in contrast to those who stayed in from the disease, compared to 1 per cent their (owned) homes, the value of which of people aged 40 to 49 (Signorelli and may appreciate and increase household Odone, 2020). wealth (Banerjee, 2012).53 In other countries, the picture has been slightly different. Roughly 40 per cent of official deaths and excess deaths were under age 65 in upper-middle-income countries with data, and 54 per cent in lower-middle-income countries. A similar pattern of much younger death profiles in middle-income countries holds when adjusting for differences in age distribu- tion across countries (Demombynes and others, 2021). Age-disaggregated data on COVID-19-related deaths in low-income 53 In some cases, older persons in the United States transfer their assets to their children to qualify for Medicaid, which covers the costs of a long nursing home stay. Research finds that such Medicaid-induced asset transfers may be fairly small but not insignificant (Bassett, 2004). CHAPTER 5 132 countries are more limited but in 17 of In countries where a greater proportion these countries with data, an estimat- of older people live in institutions, such ed 52 per cent of COVID-19 deaths were as Australia, Denmark and Switzerland, among people aged 65 or over.54 they are 60 times more likely to die from COVID-19 than people at younger ages. The types of care that older persons re- By contrast, in countries with a smaller ceive influence the risk of getting and dying proportion of older persons living in insti- from a COVID-19 infection. A large propor- tutions, such as China, Mexico and Nigeria, tion of deaths have occurred in long-term older persons are eight times as likely to care facilities. This reflects how the old- die from COVID-19 compared to those at est people with comorbid conditions are younger ages (United Nations, 2020f). more highly care dependent as well as the heightened risk of infection in communal Higher COVID-19 mortality rates in care facil- settings (Graham and others, 2020). ities are associated with poorer quality rat- ings and overcrowding (Weech-Maldonado Two recent studies using COVID-19 data and others, 2021). Multiple room occupancy disaggregated by age and care home resi- tends to be more common in developing dential status confirmed that the two main countries, and facility staffs generally have determinants of elevated risk of death in more limited training, possibly impeding care homes were the underlying frailty of infection control (Roqué and others, 2016; older persons and higher infection prev- Mapira, Kelly and Geffen, 2019). The practice alence in care homes, in addition to old of transferring COVID-19-positive older peo- age (Hardy and others, 2021; Lai, 2022). ple from hospitals to care facilities without The underlying frailty of older people in due precautions as well as failing to prioritize care homes accounted for 46 per cent of the provision of protective equipment to the difference in mortality rates between care facilities during the early phase of the care home residents and non-residents pandemic contributed to higher death rates in Belgium, while in England and Wales, it (Gibson and Greene, 2021). accounted for 66 per cent of the differ- ence in the first wave and 88 per cent in the Across all countries, fewer data track COV- second wave (Lai, 2022). Higher infection ID-19 infections among older people out- prevalence accounted for 40 per cent of side facilities. Previous research suggests the difference in mortality between care that those in multigenerational house- home residents and non-residents in Bel- holds often have extensive and frequent gium, while in England and Wales, it ac- contacts with other household members, counted for 26 per cent during the first which heightens the risk of disease trans- wave and was negative during the second mission. This was especially so for low- wave. Higher immunization rates among er-income families, who were more likely care home residents and better infection to have a household member classified as control procedures in care homes helped to an essential worker, reinforcing overlapping curb infection in England and Wales (ibid.). and compounding health and economic 54 Max Planck Institute for Demographic Research, COVerAGE-Database. Available at www.demogr.mpg.de/en/publications_ databases_6118/online_databases_6676/ (accessed on 30 June 2022). WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 133 inequalities. Even when multigenerational medical and psychological toll of higher families do not co-reside, older persons exposure to the virus. Throughout the pan- who live close to extended family mem- demic, care workers remained in close bers may have frequent contacts with them contact with those most susceptible to (Tomassini, Wolf and Rosina, 2003). Older infection, thus raising their own risks. Due persons living alone or with their spouse to low wages, some carers took on mul- only would be expected to have the lowest tiple part-time jobs at different facilities infection rates due to their ability to limit while a lack of sick pay discouraged many social contacts (United Nations, 2020f). from caring for themselves when ill. Travel between care facilities on crowded public Taken together, these findings suggest that transport may have heightened exposure if countries continue to incorporate large and the chance of carers becoming vec- long-term care institutions into their care tors for viral entry into facilities (Chen, provision strategies, they must remain aware Chevalier and Long, 2020). of how these concentrate vulnerabilities and require extra care and precautionary meas- Such factors have contributed to high ures to stop the spread of new pathogens.  rates of burnout, illness and death among care workers, especially migrants (White and others, 2021). A survey of migrant 2. LONG-TERM CAREGiVERS health and care workers across 32 coun- PAiD A HiGH PRiCE, MANY TiMES tries found that 40 per cent experienced OVER increased job insecurity, 48 per cent had inadequate access to personal protec- The pandemic had profound impacts on tive equipment and 27 per cent were only caregivers. It increased caregiver stress offered unpaid leave when infected with and reduced the quality of care by limiting COVID-19 (Pillinger, Gencianos and Yeates, families’ access to external support such as 2021). In the United States, for example, home visits, day centres and respite facil- Filipinos make up 4 per cent of nurses but ities (Kostyál and others, 2021; Onwumere accounted for 32 per cent of COVID-19 and others, 2021). It also likely exacerbated deaths among nurses in 2020 (ibid.).  pre-existing inequalities in informal care. The poorest families and caregivers of older persons with the most complex needs like- ly suffered most from compounding eco- nomic and other pressures and disruptions D. in health and care services (Lorenz-Dant and Comas-Herrera, 2021; United Nations, MORE EQUiTABLE CARE CENTRES 2020f). Disadvantaged families without ac- ON WHAT PEOPLE NEED –  cess to digital technology faced obstacles AND DECiDE to alternative virtual services where these were introduced.  Most paid care workers have faced both Population ageing, combined with changes the economic impact of the crisis and the in older persons’ living arrangements, is CHAPTER 5 134 increasing demand for different forms of culture, life history, social support network care and has left many countries grappling and identity, and giving recipients of care with the implications. Reducing care de- control over decisions that affect them. It pendency in later life requires a life course would be holistic, involving governments, approach to promoting healthy ageing and businesses, communities and households, preventing poverty. Adequate care and and addressing needs for both paid, formal support systems for people in need of care and informal, unpaid care. care – especially women and those from marginalized groups – could help reduce existing inequalities among older persons. 1. REGULATiNG iMPROVEMENTS iN CARE QUALiTY AND CONDiTiONS Reducing care dependency in later Governments need to develop and im- plement long-term care strategies that life requires a life course approach include a sound regulatory framework, to promoting healthy ageing and training and support for caregivers, co- preventing poverty ordination and integration across sectors, and mechanisms such as accreditation and monitoring to ensure quality. Older persons should be systematically involved Across countries, the COVID-19 pandemic in policymaking to ensure that policies exposed existing weaknesses in approach- meet their health and care needs. Popu- es to long-term care and showed how lation-based studies of older persons living these can aggravate inequalities. Poor at home, in communities and in institutions quality and underfunded care facilities, could inform policymaking by identifying insufficient provisions for care at home, the levels and distribution of care servic- and low wages and precarious conditions es, how they change over time, and the for paid care workers all increased the extent to which they meet the needs and threat to older persons. The scale of the expectations of older people. crisis has sounded a call for fundamental reform of care and support systems, in- For paid care workers, a range of meas- cluding long-term care. Failure to do so will ures can enhance the quality of their jobs harm today’s older persons and those who and, therefore, the quality of long-term care for them, as well as future cohorts care services. Many countries need to pass of older people. legislation consistent with international labour standards to recognize and protect A more equitable approach to providing care workers and end inequalities in work- care and support systems, especially for ing conditions. Care jobs should provide long-term care, would be person-centred, at least the legal minimum wage. Higher and tailored to the needs, values and pref- wage levels should align with an expand- erences of care recipients and their car- ed job scope, upgraded skills or career egivers. This goes beyond the medical as- progression. Measures to improve work- pects of care, encompassing an individual’s ing conditions may include guaranteeing WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 135 minimum hours for care workers, many of ments; and access to justice and effective whom have no guaranteed hours and are redress mechanisms. Host and sending paid per client visit. It could also mean countries need to discuss responsibilities ensuring that care workers making home in providing and ensuring access to ade- visits are paid for the time and fuel used quate social protection and health-care in travelling between homes. Providing services for migrant caregivers. weekly rest days and paid annual vacation, reducing the maximum duration of shifts and adopting flexible work arrangements 2. iNVESTiNG iN can all improve job retention and morale. LONG-TERM CARE National legislation should also guaran- Expanding and improving long-term care tee care workers’ rights to access social provision, care-related infrastructure,55 protection coverage. Care worker partic- social protection coverage for caregivers ipation in collective action and consul- and care-related training all entail addi- tations between employers and worker tional investments. The COVID-19 crisis organizations should be encouraged. In underscored the critical importance of addition, national training standards can investing in emergency preparedness articulate core skills and competencies for long-term care. Many high-income for care work, which could then be devel- countries are projected to boost public oped through regulated training facilities spending on long-term care over time. that provide training and certification to For countries of the European Union, promote proper recognition and career public long-term spending is estimated advancement. to rise from 1.6 to 2.2 per cent of GDP between 2016 and 2040. In Australia, Supportive migration policies through reg- national government expenditure on care ular channels can improve the supply of services for older persons accounted for skilled care workers from other countries 0.9 per cent of GDP in 2014-2015 and is when the domestic supply is insufficient. projected to rise to at least 1.7 per cent Such arrangements must not be extrac- of GDP by 2054-2055. These increases tive, however. Making migration partner- are attributable to population ageing, ships mutually beneficial requires efforts a decline in informal family caregivers to build skills and talent within countries and the greater availability and costs of of origin. Countries should also consider formal long-term care as well as growing policies, including labour laws, to pro- household wealth (WHO and OECD, 2021). tect migrant caregivers’ rights, such as Raising public spending is challenging, to adequate housing and living conditions; however, especially in the wake of the health care; rest and recuperation peri- pandemic, which has devastated fiscal ods, encompassing weekly time off and space and worsened debt situations in paid annual leave; recognition of existing most countries, developing ones, in par- qualifications and credentials; continued ticular (see chapters 3 and 4 on financing possession of travel and identity docu- policy responses). 55 This includes infrastructure related to obtaining water, improving sanitation and providing energy. CHAPTER 5 136 To complement public programmes, indi- explore innovative community-based ser- viduals could purchase private long-term vice models, such as integrating social care insurance. In some countries, such as care services through co-location and France and the United States, individuals collaboration with community service enrol in such insurance on a voluntary organizations, developing case manage- basis (WHO and OECD, 2021). Yet private ment capacity, and promoting healthy long-term care insurance markets remain and active ageing. Sharing lessons and relatively small (Fang, 2016); they do not good practices from community-based represent a major source of funds to fi- service models could foster their transfer nance long-term services. To bolster a and uptake across countries. larger private market, Governments can incentivize participation by regulating long-term care insurance pricing and Governments can do much maintaining market stability. In tandem, they can take measures to improve per- more to recognize the value ceptions of risk by the working-age pop- of unpaid care and reduce ulation and their ability to estimate long- its financial, physical and term care dependency. Tax exemptions for long-term care facilities, equipment, mental burdens medicine and other health-care auxilia- ries could encourage private investment. Extending paid leave entitlements as well as flexible working arrangements for family 3. HELPiNG PEOPLE AGE caregivers enables older people to remain iN PLACE at home and reduces the need for more ex- pensive residential care. At the same time, Countries should provide additional sup- financial support for family caregivers can port to help people age in place, so that help with the ongoing costs of providing they can retain family and other social care – for example, by replacing lost wages connections. An important element is and tax deductions – while helping to avoid to better support unpaid care provid- more costly interventions, such as hospi- ers. Governments can do much more to talization. Governments can also provide recognize the value of unpaid care and training for unpaid caregivers to improve reduce its financial, physical and mental the quality of services as well as encour- burdens. This includes establishing and age investment in new technology to sup- expanding formal long-term care sys- port them, for instance, by easing physi- tems that provide a continuum of res- cally challenging tasks, facilitating online pite care, either at home, in day centres learning and dissemination of information or in residential institutions. Accessible about worker rights and mobilization, and housing and transportation services can improving communication, including with also help ease the burden on caregivers. family members. Use of digital long-term National ministries, local governments, care services, such as remote telecare, non-governmental service providers and rose during the pandemic. It may not be other stakeholders could collaborate and practical to deploy all new technologies in WORLD SOCIAL REPORT 2023: LEAVING NO ONE BEHIND IN AN AGEING WORLD 137 the care sector, however. Countries should More data on gender norms in care are ensure that such innovations help to break needed to inform governments and other down, rather than reinforce, the digital stakeholders. Formalizing care work can divide affecting older persons. create jobs and trigger new opportunities for women to participate in the econo- Government policies need to complement my. A sustainable and equitable system for measures adopted by businesses. Private long-term care needs to free women to long-term care insurance could protect pursue what they value, such as education older persons from high out-of-pocket or participation in the workforce, while costs if they need assistance at home or in encouraging men to assume their fair share nursing or assisted-living facilities. Incen- of care duties, including those at home. tivized by government policies, employ- ers could offer access to long-term care insurance through workplace retirement Formalizing care work can plans on an opt-out basis. create jobs and trigger new opportunities for women to 4. CREATiNG AN ENViRONMENT THAT participate in the economy FOSTERS BETTER CARE A combination of these measures can en- hance the well-being of caregivers and Finally, better oversight and regulation of improve care outcomes. They can chal- care facilities can help address inequal- lenge gender norms around caregiving by ities in care provision. 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