Thursday, April 19, 2007

Commentary: Older Workforce a Competitive Advantage for Europe

Nicholas Eberstadt, senior adviser to the National Bureau of Asian Research, and Hans Groth, member of the Board of Directors for Pfizer-Switzerland AG, suggest in a commentary in the the International Herald Tribune that while Western Europe demographic pressures are undoubtedly heavy, the aging population does not meen that the Continent need not become a glorious rest home. Since its aging population is exceptionally healthy, its people are more capable of remaining productive into their advanced years now than they used to be--perhaps even more so than their American counterparts--so that "healthy aging" may turn out to be a trump card for enhancing prosperity and international competitiveness.

In their essay, adapted from an essay to appear in the May-June 2007 issue of Foreign Affairs, Eberstadt and Groth state that, for example, Western Europeans have distinctly better odds of surviving their working years than do Americans. The prospect of living longer generally encourages investment in learning and skills and thus facilitates higher productivity. "Western Europe must therefore figure out how to capture more of the economic opportunities allowed by healthy aging."
Encouraging older people to work is an obvious and necessary step to unlocking the economic potential of good health over the next generation. But it is only one step. Making fuller economic use of this comparative advantage will require nothing less than a fundamental re-examination of many basic policies, especially regarding labor markets, education and health.

If Western Europe hopes to benefit from its growing pool of older workers, its labor markets must become far more flexible, and economically rational, than they are today. Less cumbersome regulations and less costly obligations would make it more attractive and less risky for potential employers to hire all prospective workers, including older ones. Some orderly transition to a pension system with a greater measure of direct personal responsibility in the financing of retirement would also be in order.
Source: International Herald Tribune "Healthy old Europe" (April 19, 2007)

No comments: