13 June 2011
All OECD countries are experiencing unprecedented demographic change characterised by increasing longevity, a growing older population and falling birth rates. While significant differences remain between different OECD countries, the long term trends are similar and convergence looks likely to occur in the coming decadees. These demographic changes are leading to a lower old age dependency ratio (the ratio of working age to non-working age people), which presents challenges for the social solidarity and long-term sustainability of health, social care and pensions systems.
The paper outlines two philosophically different ways of approaching the challenge of demographic change. The first, which the paper calls the "zero sum approach" is to see it as a problem that requires today's working people to pay more and those drawing on social security systems to receive reduced benefits and to rely more on themselves. This approach risk intergenerational conflict as "productive" working people are asked to pay more to support the healthcare, social care and pensions of non-working people who may be perceived as having had an easier life.
The second way of looking at the problem is to take a life course approach. The life course approach sees demographic change as a challenge and an opportunity. Different generations do not compete for resources and all can play constructive albeit different roles in society. The life course approach believes that policy reform should be innovative and seek to support active and healthy ageing rather than simply increase contributions and cut benefits.
The paper looks at a number of innovative policy reforms in different OECD countries including health checks for the over 40s in the UK, Japan's long term care insurance system and the use of mobile phone technology to support older people or people with chronic diseases.