102nd Session of the International Labour Conference

Committee on the new demographic context: statement by Ms. Cinzia Del Rio,Workers’ Spokesperson

Statement | Geneva | 07 June 2013
Dear Chairperson, dear delegates,

On behalf of the workers’ group I want to congratulate you to your election and of course also my employers colleague Tanya Cohen . We are looking forward to work with you and all members of the committee on the important and complex issue of demographic change. Let me also thank the office for the background report that provides a useful input for our deliberations. Though we feel that in particular the challenges in developing countries with quite different urgent demographic challenges would have deserved more attention. In our view the report has occasionally also a tendency to overdramatize certain tendencies and challenges. I would like therefore to start our discussion with a few positive remarks.

Number one: Aging is a great success, not a problem. Living longer and more healthy lives is one of the most important indicators of human development. Not aging is the problem , but that still too many die too early because they have no access to essential health care, are forced to works under hazardous working conditions or suffers from malnutrition, curable disease or environmental degradation.

Number two: Many developing countries will have as the office presentation showed a demographic dividend during the next decades

Number three: In the last hundred years economic growth has outpaced population growth. While far too many people are still forced to live in blatant poverty the overall wealth in our societies has grown to a level that we clearly have the resources to put an end to poverty and old age poverty in particular.In short the starting point of our discussion should be that the demographic change is a good trend and aging is not the demographic tsunami that threatens to destroy our societies.

Chair, I don’t want to belittle the challenge, but I also want to refute doomsday scenarios and despair that we get into trouble because we all live longer.It takes political will, employment centered economic policies, fairer distribution, extension of social protection, healthier working conditions, better educational services and universal access to health and care services for all in need and last but not least sustained productivity growth to meet the challenges of demographic change and to improve the quality of life for all.

The first challenge is the need for more, better and stable jobs. For the overwhelming majority of countries not scarcity of labour, but huge labour surplus is the demographic challenge for decades to come. And even in industrialised countries with fewer young people entering the labour market the economic crisis has made mass-unemployment and in particular youth unemployment and not labour shortage the biggest problem If countries fail to generate the required additional 40 – 60 million jobs per year social unrest and desperation will be the consequence. But it would also be an enourmous waste of economic potential and depriving young people of their future. Indeed extending pension coverage to all as suggested in ILO Recommendations 202 will help to reduce the labour surplus in developing countries

High level of aggregate demand based on real income and real private and public investment is the most important precondition for more and better jobs. We are all in support of training, anti-discrimination measures and special active labour market policies addressing the needs of elder workers, but we should also be clear that these measure can only work, if there are sufficient decent employment opportunities in the economy. For this reason the austerity policies pursued currently in Europe are not only morally outrages, but also economically dysfunctional for Europe and for the wider world economy.

Massive expenditure cuts depress the economies even further and therefore tax revenues are falling faster than public expenditures. Even institutions like the IMF who endorsed these policies earlier voice increasing concern. We need a change of policy to escape from this vicious circle.

This needs to start with large scale public investment and an increase in public revenues. The latter requires decisive action against tax evasion. During the last decades pro-capital tax reforms, tolerance against tax havens and a myriad of tax evasion possibilities have resulted in a deeply unfair tax system. In most countries high income earner and private wealth holders are no longer contributing their share to build and maintain fair and inclusive societies. Billions of dollars from developed and developing countries are hidden in tax havens. Actually we are meeting in Switzerland which is the haven for at least 2 trillion USD of global offshore wealth largely hidden from tax authorities. According to the EU commission presented at last week’s European Council the tax revenue lost annually in the EU is roughly 800 billion or nearly twice as much as the total budget deficit in the EU member states.

The demographic change will not be manageable in any country without sufficient fiscal space. For this a broad and sufficiently progressive tax base is imperative. Sustainable pension and public health systems require regular formal employment with fair wages, so that people can contribute to the social security systems on a regular basis We need therefore not just any employment but employment that meets the criteria of Decent Work.

The rise of atypical and precarious forms of employment and the outsourcing into the informal economy are undermining the sustainability of social security systems as well as the capacity for individuals to acquire a decent pension. There is a need to ensure that social security contributions are paid for all forms of employment including bogus self employment or other disguised forms of employment. These contributions need to be fully transferable and the higher social security risks of atypical forms should be reflected in higher social security contributions.

The strengthening of labour market institutions and collective bargaining is crucial in avoiding a race to the bottom through precarious employment and unfair competition. . Governments should provide a conducive regulatory framework that ensure a level playing field, supports extension of collective bargaining agreements and allows employers to engage in collective bargaining without facing unfair competition through exploitive labour practices.

There needs to be policies to formalize step by step the huge informal economy in many developing countries. But the approach should not be “tax first - benefits afterwards”, but genuine incentives for employers and workers to move towards formality. Offering public works programmes like the Mahatma Gandhi Rural employment guarantee are encourag steps towards policies that reach out to the informal economy, provide rights to unprotected workers and ensure a de facto minimum wage.

The second big challenge is the need to put an end to old age poverty. With modernisation traditional family support systems become weaker and there is an urgent need to extent social security system to all in need. The ILO conclusion of the Social Security discussion in 2011, the Recommendation 202 on Social Protection Floors and the ILO convention 102 provide excellent policy guidance for that. We are convinced that member states and the office should give highest priority to put these instruments into practice. I don’t think we have to discuss the need for the vertical and horizontal extension of social security in any detail again in our discussion this year. We achieved a unanimous consensus on this issue last year: a social protection floor for everybody and higher contributory social security systems for as many as possible. What is needed now is decisive political will and action to ensure the rapid extension of social protection systems.

The third challenge are unhealthy and exploitive working conditions. Premature aging starts with bad working conditions in young age. Far too many workers are dying before retirement age or are forced to accept early retirement because of ill health. With abundant supply of labour employers all too often do not care about the long term consequences of unhealthy working conditions and workers often have no choice, but to accept hazardous working conditions to make a living. The death of more than 1000 garment workers in Bangladesh is a terrible example of such labour practices.

Companies should not be able to externalise the cost of unhealthy working conditions. Dismissing elder workers with health problems and shifting the costs for disability pensions, chronic diseases etc. to society at large is corporate social irresponsibility .

With abundant labour supply also too many employers underinvested in training, life-long learning and health protection of their employees. Employers need to rethink these practices and treat their workers better, in order to avoid premature aging. In particular in light of rapid technological change the need for constant skills upgrading throughout the life cycle is of critical importance.

Ensuring that elder workers maintain their full productive capacity until retirement is best achieved with a strong commitment to healthy and safe working condition, predictable employment conditions and lifelong learning from day one of working life. The Older Workers Recommendation provides already comprehensive guidance in this respect and implementing it would be a major step forward. I think we can considerably shorten our discussions on this aspect by acknowledging the continuous relevance of this Recommendation.

Let me turn to the issue of retirement age. There is a need for a retirement age, for a right to retire for all. It is unacceptable that hundreds of millions are forced to work until they are in need of care or until the die. With growing numbers of older people in many developing countries building universal pension system must be a policy priority.

The other issue is the financial sustainability of comprehensive pension systems in some industrialised countries where strong age cohorts reaching retirement age in the next decades . This is in our view at least as much a distributional problem as a problem of absolute scarcity of resources. After unprecedented corporate welfare with billions of dollars in unconditional cash transfers to the financial sector it is outrageous that people’s welfare shall now be slashed to pay for it. It is an imperative of fairness that private wealth holders who benefited most from the financial boom and not ordinary pensioners are taxed to pay for the bail outs. Indeed we have the impression that the crisis is used as a pretext to attack acquired social protection rights , instead of finding solutions where those with the broader shoulders carry also the heavier burden.

Sure, also without the financial crisis the demographic change increases the pension expenditure and requires policy adjustment. But these kind of adjustments are feasible without the brutal cuts we have seen in particular in Southern Europe.

As long as the rate of productivity growth is higher than the decrease of the active population and overall population growth is below zero per capita income would still grow The challenge is to get back to high levels of employment, maintain the productivity growth and share this gains fairly. This requires the right regulations and institutions and we know from experience that high collective bargaining coverage, comprehensive social protection systems and progressive taxation are efficient tools to secure more equal primary and secondary income distribution.

Going beyond the macro level we must also recognise that there are big difference among retirees. It makes a difference whether someone enters the labour market with the age of 15 or after university studies in his or her late twenties. Many women do not have the opportunity to earn sufficient pension entitlements as a lack of care facilities for children and elderly prevents them for taking up a job. Some profession are physically or mentally more demanding that other. In our unequal societies the most brutal form of inequality is life expectancy. On average the poor die in all societies - developed and developing - earlier than those with higher income. . Extending the retirement age for everybody means that the poor who normally start working early and often face hazardeous working conditions will enjoy retirement for a short period of time, while a disproportionate high percentage of pension expenditure goes to the higher income categories who on average enjoy higher pensions and live longer.

Instead of increasing retirement age for everybody independently of his or her work biography these differences need to be reflected in the discussion of retirement age. There is also a growing number of people working beyond retirement age. But there are two fundamentally different groups. Those forced to continue working out of pure material necessity as well as those who enjoy work and want to continue working out of choice. . As long as it is the free choice of employees to continue working with full employment rights and as long as this is not used as a pretext to undermine the possibilities of others to retire with a full pension at statutory retirement age no one is opposing this opportunity.

Finally Chair, the biggest challenges is in our view the question how our societies will meet the growing care needs for the very old. The needs of those who cannot manage their daily lives and need not only financial resources, but direct personal support. There is currently a lack of knowledge, a lack of ideas and a lack of political guidance how to address this problem. We would hope that this conference can make a major contribution to advance the policy debate about the care economy and give a major impulse to address this issue. We should discuss whether an ILO Standard could provide guidance to member states in this respect. The major issues here are universal access to care services, dignity and respect for those in care needs and , decent work for care givers. Currently the overwhelming share of care work is unpaid family work largely done by women. This is overburdening often families and does not allow for the quality of care people need. In unequal societies high income earners will hire domestic workers for care services. But who will care for the domestic workers themselves. There is a need for universally accessible quality care services. Care workers need to be well trained, and they need to be well paid and enjoying full employment rights. How come that we often value the work of those who care for our closest relatives so little, while professions with far more dubious social benefit are incredibly overpaid.

While better funding will certainly improve care capacity, money cannot solve all the issues. Care work is necessarily emotional work and with all money paid there are limits how much emotional sympathy any person can mobilise day after day. Therefore we need to think about sharing care work as wide as possible in society and to provide incentives that all of us also contribute to meeting the care work. Securing dignity and respect for people with long term care needs is our all responsibility and cannot just be completely outsourced.

Chair, demographic change requires long term decisions and a commitment by all actors towards long term solutions. And long term solutions are only possible, if they pass the fairness test. Public opinion polls in many countries show that people regard the current level of high and growing inequality as unfair. The failure to create sufficient employment, the failure to provide basic social protection to all in need, the failure to raise wages in line with productivity, the failure to provide healthy and safe working conditions, the failure to provide decent work, the failure to stop tax fraud and tax evasion, the failure to set rules for the financial markets to serve the real economy are unjustifiable and need to change. Fairness is nothing that can be decided by decree, it has to be built in society. I hope our deliberation will make a substantial contribution to this building process. That is where productive and meaningful tripartism is about.