The Social Dimension of Sustainable Development
William D. Novelli
Executive Director and CEO, AARP
OECD Forum
Taking Care of Fundamentals: Security, Equity, Education and
Growth
Paris, France
May 14, 2002
One hundred years ago, the average person in the United States lived to the age of 47. Today an average life span is thirty years longer. This "longevity bonus" is now occurring in most parts of the world. Indeed, increased longevity is one of the great success stories of the 20th century, due to the eradication of childhood diseases and improvements in public health systems, diet and standard of living.
At the same time, as birth rates dropped worldwide - below replacement levels in some countries such as Italy - the number of older people as a proportion of the general population has been rapidly increasing. By 2050, demographers tell us, older people will outnumber children for the first time in history. This is the demographic seismic shift that we call Global Aging. We can see it now before our eyes.
We at AARP are focusing considerable effort on global aging issues because we believe they will affect virtually every sector of public life: our economies, our politics, our health care, our infrastructures (such as transportation and housing), our social involvement and in every part of our societies. We believe global aging is a priority issue and needs the careful attention of governments and the public. This panel, for example, is the first one to address the impact of aging on economic and social development in the three-year history of the OECD Forum. This is why I am especially pleased to be able to speak to you this morning.
As many of you may know, "AARP" formerly was an acronym for the American Association for Retired Persons. But a couple of years ago, we changed our name to simply "AARP." And we did that for a couple of reasons:
- Because our activities are increasingly worldwide. We recognize the interconnectedness of aging economies and societies. Aging is a global phenomenon and it both affects and is affected by what we do in the United States to respond to its opportunities and challenges.
- Retirement has never been a condition for membership in AARP. And, as we began this new century, we found that more than half of our members were still working and the number continues to grow.
Though our name has shortened, our mission remains the same as it was when we were founded nearly fifty years ago: to represent the needs and interests of people as they get older. Our 35.2 million members turn to AARP for advocacy on the issues such as health care, pensions, age discrimination, consumer protection, and for information, for volunteer opportunities and for products and for services. Our publications alone reach over 22 million households.
It was not that long ago that AARP was almost a lone voice in talking about the impact that aging would have on our society. Now, it seems that almost everyone has "discovered" aging. Issues related to our aging society have worked their way on to our crowded national agenda and are pressing near the top. Social Security, Medicare, and health care generally are major issues we are trying to figure out today. Long-term care looms large as an issue we must face soon, and transportation is lurking as a major issue just over the horizon. None of these issues is insurmountable. But, they each demand our full attention and our best thinking.
So it is with global aging. It is a phenomenon that raises many questions:
- Can countries sustain social and economic development with fewer active workers supporting a rising number of retirees?
- Can we afford our present levels of social spending on health care, on pensions, and on the special needs of the elderly?
- How do we maintain and promote social inclusion and equality - providing opportunities for people of all ages?
- How do we protect our oldest old as well as the young and the vulnerable?
- How will it affect developing and transitional economies where, in some countries, the rate of growth of older populations is even more rapid?
There are those who look at the demographics and predict catastrophic effects on economies starting as soon as 2011 when the first baby boomers retire. They see public spending on entitlements - Social Security and health care in particular - on a collision course with other national priorities including defense. Others raise the specter of generational battles for increasing limited public resources and mounting public deficits.
Others, including AARP, while recognizing the challenges, see many opportunities and potential in global aging. As I look ahead to those opportunities and that potential, I am reminded of what Edmund Burke wrote more than 200 years ago, "you can never plan the future by the past." That is certainly true in this day and age. If nothing else, advances in health and technology demand that we look at the future through a different set of lens. We need to understand that the old myths and stereotypes no longer apply. There is a new paradigm for growing older.
For example, as people age, they continue to create demand for goods and services. This, in turn creates jobs for people to produce those goods and services. In the United States, marketers are awakening to the fact that people aged 50 and older control 75 percent of the nation's disposable income and own 77 percent of all personal financial assets in the country. As such, they are beginning to target 50+ consumers with new products, new services and new experiences.
According to management guru Peter Drucker, "The youth market is over. It's an old rule that the population group that is both the biggest and growing fastest determines the mood. The fastest growing group in the U.S. is 55+." Of course, there will always be a youth market, and a yearning for youth. But recent trends are proving Drucker right.
The 50+ generation is exercising more than any other age group, and they are driving the dramatic increase in the rate at which people join health clubs (a 21 percent increase over the past three years). They account for 70 percent of all cruise passengers and 72 percent of all recreational vehicle trips. As a result, the Travel Industry Association of America predicts the worldwide income of the global travel industry to grow fivefold in the next two decades.
New paradigms are emerging for senior housing and senior care, all linked to new living, working, and retirement patterns. Since 1995, the 50+ age group has been the fastest growing segment of home-based businesses. As a result, the market for home office supplies and furniture is growing by leaps and bounds, as is the market for new and affordable technology such as computers, Internet service, e-mail, fax machines, copiers, scanners, cell phones, pagers, and phone company based voicemail.
Another aspect of aging that is beginning to receive a lot of attention is grandparenting. There are 60 million grandparents in the United States. To put it another way, 72 percent of everybody over 50 in the US is a grandparent-and grandparents spend time and money with their grandchildren…$30 billion annually.
Population aging is not only creating demand for goods and services, but increasingly, older workers are helping to meet that demand by producing and delivering them. There has been a dramatic shift in the workplace from physical work to knowledge work that allows people to remain in the workplace longer.
More flexible working arrangements also contribute to this trend. The increased use of telecommuting, job sharing, and part-time scheduling are particularly appropriate for midlife and older workers who want to stay in the workforce longer, but more under their own terms.
This in turn, is beginning to affect attitudes and behaviors toward retirement. Retirement is no longer seen as an end to work, but as a transition. In fact, AARP's own research shows that 8 in 10 baby boomers plan to work at least part-time, and only 16 percent say they will not work at all.
As Richard Hobbs, resident fellow at the American Institute of Architects wrote recently, "The impact of the aging population on markets, employers, and culture cannot be overstated. Just as the baby boom flooded maternity wards, ignited school construction, and made 'youth' the cultural icon of the 1950s, '60s, and 70s, the 'senior boom' of this century will shape the 2010s, '20s, and '30s."
Treating global aging as a negative chapter in human development is simply far too narrow a premise. The aging population, both in the U.S. and worldwide, is extremely diverse, ethnically and culturally. Older people have different life experiences, different attitudes, different outlooks, different expectations, and different economic status. In short, aging in all its components is hardly static. Accordingly, there is a need to look beyond just the numbers.
If we view global aging only through a demographic lens, we get a conventional - though distorted - picture of what the future holds. We can project the size of the older population using various models and determine the size of the older population in ten, twenty, or thirty years with a considerable degree of accuracy based on reasonable assumptions. But we cannot predict what it will be like to be 70 or 80 or 90 in those years. There are far too many unknowns. We do know it will be different than it is today.
Moreover, advances in medical sciences and development of new technologies have led to declining disability rates among the older populations in the United States, Japan, and a number of European countries. People in various countries now spend well over half of remaining life expectancy at age 65 without disability. And, there is no reason to believe that disability-free life expectancy won't continue to increase, thus extending productive life.
Whether we look at global aging as the glass half full or half empty, the critical point I wish to emphasize today is that we now need to move from debating the issues surrounding global aging to developing international and national policy which to deal with its impact. There is already an extensive body of good research on the subject - with many fine studies by the OECD on pensions, health care, older workers and retirement patterns. The EU and the US have produced extensive studies as well.
Unfortunately, for all this fine research, governments - for political and structural reasons - have been slow to implement findings into their short-term or long-term planning. Pension reform is probably the most pressing issue, in France and Germany in particular. But there are other equally important economic issues including extension of the working age - approved in principle at the recent EU Barcelona Summit - the introduction of flexible working opportunities for older workers, as well as social legislation such as harmonizing EU age discrimination legislation into national frameworks and legislation against elder abuse.
Policy-makers need to start work on these issues now, as we prepare for the retirement of the leading edge of the baby boomer generation. We need a new Three Point Global Aging Plan that includes the following:
First point: we need policies to insure than Social Security and health- care systems do not collapse under the weight of the baby boomers. We need to protect pensions, promote economic growth and the expansion of labor market, improve the health and well-being of aging populations, encourage lifelong learning, ensure full integration and participation of older people is society and promote intergenerational approaches to aging problems. This is not as difficult as it may sound because, according to EU experts, even small, incremental adjustments several EU member states have already made to pension reforms-Sweden and Austria, for example-are beginning to bear fruit. If reasonable steps are taken now, the problems will be not so great ten years from now.
Second point: for too long the global aging dialogue took place primarily within the aging community. National policy-makers need to find broader venues and better ways to exchange information, best practices, and research. We need more opportunities to bring together experts in all fields of aging, through meetings such as this one which involve a broad range of business, labor, media, environmental, educational, health care, civil society and people from other sectors that have some investment in older people including - perhaps most importantly - older people themselves.
The recent UN 2nd World Assembly on Ageing, which just concluded in April in Madrid, is a step in the right direction. AARP played an active part in the Assembly. The President of our Board of Directors was a member of the US Representation, and we provided comments to the International Action Plan on Ageing. This document outlines the objectives, goals and strategies to promote productive ageing policies around the world and will serve as the basis for implementation worldwide through the UN Economic Commission and it five regional offices.
This process will start in Europe…in Berlin, when the European Economic Council (ECE) will act on specific recommendations it develops in its 55-country region - including East and Central Europe and North America. Among its recommendations is a proposal to directly involve members of civil society in the planning and implementation process including: NGOs, business associations and unions and older people as integral partners. AARP strongly supports this idea.
Third and last point: In order to achieve sustainable development, we need to create positive social change. We need to change individual behaviors to help people age better and to change social attitudes to help view age more positively and more creatively and to change the environment in which we age through policies, practices and through the communities in which we live.
As the OECD Finance Ministers meet this week, we suggest it is time that "aging" rightly becomes an independent agenda item, and that these three points…
- Enacting aging policies that ensure economic and social sustainable development
- Initiating a broad and inclusive dialogue among all "aging" stakeholders, and
- Creating and supporting positive social change… serve as milestones in economic and social policy planning. AARP is pleased to participate in this effort and to contribute its knowledge, experience and support. We thank you for the opportunity to participate in today's discussion.
