Welcome though it is, greater longevity throughout Europe is creating “massive unfairness.”
That is one of the keynote messages to emerge from a new book on ageing, launched in Brussels on Tuesday (10 June).
Ageing is beginning to destroy Europe’s social structures and threaten the continent’s political stability, according to its British-born author.
It also, says Giles Merritt, raises “uncomfortable questions” about social justice and the “looming bankruptcy of pension funds” in the years ahead.
In Timebomb: When Ageing Explodes, published on 27 May, Merritt sounds an important warning that, unless Europe defuses “ageing’s explosive force”, within two decades its societies will be “devastated by it.”
He asserts that:
- Millennials and Gen-Zers are condemned to pay much higher taxes to fund pensions and healthcare for older people, but will receive far less when they retire.
- The longstanding ratio of four taxpayers supporting each pensioner has shrunk to less than 3:1, and by mid-century will be an “unsustainable” 1.7:1.
- Average European family size has reduced to 1.5 children per couple, so fewer young people entering the taxable workforce: by 2060 it will have shrunk by a quarter.
- There will be 60 million more pensioners in Europe by 2050 which means older people can easily outvote younger taxpayers.
- Europe’s under-35s own less than 5% of all net wealth, whereas ‘Baby Boomers’ at the same age had 20%.
- Up to two-thirds of ‘Generation Rent’s income can be swallowed by housing costs. Mortgages are often unattainable, costing up to 15 times earnings, up from four times in 1980.
- Europeans’ healthcare costs will have doubled by mid-century, averagely taking up more than a quarter of governments’ budgets.
- Squeezed tax revenues along with increased public spending are a recipe for serious trouble ahead and a review of taxes on property, companies and financial transactions is needed, to put an end to cross-border loopholes for tax dodgers.
Merritt believes, however, that it is not too late to address these problems “because although we can’t divert the demographic tsunami rolling towards us, we can surf it rather than sink and drown.”
He goes on, “Ageing’s impact could be softened by an array of policy measures that would adapt our 20th-century structures to the exigencies of the 21st.
“The snag is that doing so would impose an immediately heavier tax burden to alleviate the crushing costs awaiting the taxpayers of tomorrow. The other option of borrowing to add to European countries’ teetering debt mountains would cynically aggravate the financial troubles we are imposing on today’s youth.
When asked about the future, most young people see climate change as their toxic legacy. There’s no disputing that mankind s failing to tackle global warming with the necessary speed and determination, but that doesn’t lessen ageing’s threats. Both are massively disruptive forces.
“My modest hope is that this book will help to draw more attention to ageing’s consequences and will stimulate efforts to counter them.”
- Merritt, a journalist specializing in Europe’s policy challenges, has been based in Brussels since 1978 and writes a fortnightly ‘Frankly Speaking’ commentary for ‘Friends of Europe’, the think tank he founded. He is also a Senior Associate Fellow at Belgium’s Egmont Institute.
