Policy recommendations

The reports are not restricted to just presenting facts and projections, as they also contain many policy recommendations. It also includes the advice (not new) to place old-age provision on a broader financing basis in a changing economic and labour market environment and against the background of demographic change, especially through progressive contribution structuring. Wage-related contributions should also be better supplemented by other sources that are less burdensome on earned income, such as investment income or assets. In Germany, this has been the subject of political debate for health and long-term care insurance for many years under the heading “citizens’ insurance.” The French solidarity tax, the revenue from it is targeted at social security systems, was specifically mentioned in the report as an example of funding base diversification and. In contrast, the possible contribution of consumption and especially environmental taxes was discussed with caution. It also calls on Member States to do more to address gender inequality, through extending credits for care-related career breaks. In general, atypical and self-employed working should be better protected.

With regard to the health and care sector, the reports contain passages that can be understood in the sense of a cautious privatisation of the cost burden. This starts with the assessment that the private share might have to increase for non-life-saving treatments. However, at the latest in the long-term care sector, it was explicitly stated how the rise in costs could also be slowed down by concentrating public spending on those people who need care most urgently and can least afford it. This would contradict the approach in Germany as well as in other countries, of not making long-term care benefits dependent on material needs.

Summary

It is hard to do justice to hundreds of pages of careful analysis in a few concluding sentences. If you want to take a few key messages with you, they might be these:

• expenditure on old-age provision will be stable in the long term. This may come as a surprise initially, but it comes at a stiff price: through later retirement and a substantial decline in the wage replacement rate.
  
  
• first among the long-term cost drivers is healthcare spending. However, by no means is it only demographic change that gives cause for concern here.
  
  
• However, the cost of long-term care also contributes significantly to the increase in age-related public expenditure. Pressure also arises from the declining availability of informal care.