Saturday 22 October 2016

We will live to count the cost of failing to prepare for the greying of society

Published 11/06/2015 | 02:30

Pensioners protesting outside the Dáil after the Budget in October, 2013. Photo: Colin Keegan, Collins
Pensioners protesting outside the Dáil after the Budget in October, 2013. Photo: Colin Keegan, Collins

Last year the number of people aged over 64 living in the republic exceeded the number of twenty-somethings. This is an astonishing state of affairs. Not since the exodus of the 1950s have the aged outnumbered the young.

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As the accompanying chart shows, the reason for the incredible shift in the balance between the youngest and the oldest adults is twofold. First - and very positively - people are living healthier and longer lives. As a result, the numbers in traditional retirement age (65 and over) have soared. In the past decade alone it has increased by almost one-third.

Although discussion on the increase in older folk is often focused on the challenges it presents, it is, first and foremost, something to be celebrated. Life is precious, and it is a wonderful thing that more people are enjoying more of it.

The second reason for the changing balance between old and young is less welcome. Last week, this column discussed the collapse of the twenty-something population. It fell by almost one-third in just six years to 2014, according to the State's statisticians.


To recap very briefly, most of the 230,000 decline in the 20s age cohort is the result of a sharp fall in the number of babies born in the 1980s and first half of the 1990s. The contribution of emigration is considerably less than one might think - net emigration of 'only' around 70,000 twenty-somethings has taken place since the economy crashed.

But regardless of cause, the changes to Ireland's demographics are big. And although Ireland is far from alone in having to face the challenges of an ageing society, there is a lot of adjustment to do - by everyone.

The Government's record in this regard is patchy. Just last week, the independent watchdog overseeing the Government's handling of the public finances issued a quite scathing report in many respects. Among the criticisms of the Government's budgetary projects for the rest of the decade were that they "do not take full account of the likely costs of demographic ageing and cost pressures in delivering existing programmes".

So far, so bad.

If the slapdash approach to medium-term planning is a cause for concern, some ministries appear better prepared. The Department of Education has to plan for the numbers of children, teenagers and college students going through the system well in advance.

This has been particularly challenging owing to Ireland's volatile baby count. The fall in births in the 1980s and early 1990s meant a dwindling demand for primary and secondary education, but when the Celtic Tiger showed up in the mid-1990s, births started to boom along with the economy.

As these baby boomers grow up, they are collectively moving through the population like a pig being digested in an anaconda's gut. This bulge will raise particularly serious challenges for the third level sector, which has already been squeezed, and for the non-academic training system, which has long been the weakest part of Ireland's overall education picture.

At the other end of life, issues around pensions dominate. The mess that is the pension system is more a private failing than a public one. The previous government, to its credit, began the roll out of a gradual raising of the retirement age to 68. Though not popular, it must be done. Living longer has to be paid for by working longer - there are no free lunches in this life.

Later retirement will ease the already considerable pressure on both public and private sector pension schemes. But if public workers are still looking forward to comfortable retirements, the same cannot be said for many in the private sector - thanks in large part to the mess that the financial services industry has made of defined benefit pensions.

The financiers who were, and mostly still are, paid very well to invest peoples' pensions did not foresee a range of changes that they should have seen, including demographic change. The result has been the collapse or closure of nearly all defined benefit pension schemes. This will have big consequences in the decades to come.

One of the (many) dimensions of the problem will be political.

An abiding image of the economy's crash came in its early months, when in the autumn of 2008 a demonstration of angry older folk marched in Dublin against a proposal to reverse the earlier granting of free, non-means-tested healthcare for the over 70s. The then government quickly backed down.

The "grey power" movement has been gaining ground in all countries experiencing ageing. Not only are there more older people, but they are increasingly of the "me" generation of the 1960s, which grew up protesting, making them particularly feisty.

The fact that they are more likely to turn out at election time than other age groups and that they have very well organised lobbyists gives them even more clout. This is in contrast to the young, who are less well organised and much less likely to turn out to vote.

In the future, when it comes to choices between investing in education and giving more to pensioners, an astute politician will be inclined to go for the latter. All the conditions exist for intergenerational conflict. It could be quiet explosive.


Yesterday's publication by the ESRI of its quarterly analysis of the economy included criticism of the Government's planned budget give-aways. This echoes last week's criticism to the same effect by the aforementioned budget watchdog.

While everyone working would like a tax cut and everyone on benefits would like more welfare, it should be remembered that everything the Government "gives back" now is borrowed on your behalf. This makes little sense on many fronts. People need to be aware that they are being sweetened up with borrowed money which increases the risk of a return to austerity if the economy stalls. Don't say you haven't been warned.

Irish Independent

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