Linking retirement to life expectancy ‘saves welfare’

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As the French government reels from a series of strikes and protests over its plan to raise the retirement age from 60 to 62, a leading Brussels policy expert warns of more trouble ahead across Europe unless governments are frank with voters about the fundamental reforms required to grapple with the looming demographic crisis. 

Hans Martens, chief executive of the European Policy Centre (EPC), said the French plan to increase the pension age by two years "barely touches on the real problem" that an ageing Europe will face.

He proposes linking retirement to life expectancy – a proposal that would see France have one of the oldest pension ages in Europe. Martens said political leaders must take the bull by the horns and openly discuss the threat facing the welfare state.

"The combination of a rapidly ageing population combined with low birth rates will give us a completely new relationship between those in work and those not in work. The first thing that needs to be done is that these serious challenges to Europe are communicated to people – which takes some political bravery – and then that modernisation of Europe through structural reforms is put high on the political agenda," Martens told EURACTIV in an interview.

The EPC chief described the situation in France as "disturbing", adding that the longer it takes to have a serious debate on the demographic problem, the more difficult reforms will be.

"We might need to introduce the concept of second careers at a certain age to avoid having the average age of leadership in organisations creep up too high," he added.

Martens also said reform of the public sector is "unavoidable" and that while improving the way services are delivered would be better than cutting down on services, a combination of measures may well prove necessary.

"It's important that we begin to have a very serious look at the delivery from the public sector, and first of all try to get some solid measurements of the public sectors output and not just its input, and also on the pace of innovation in public sector, including in particular process innovation," he said.

The debate on innovation, which has dominated the EU agenda in recent times, has focused too much on private sector research and development and paid too little attention to innovations in the public sector, according to Martens. 

"We need to introduce a culture of innovation in our public sectors at all levels, we need to find ways of rewarding innovative behaviour and we need robust ways of measuring public sector innovation to be able to follow progress and benchmark with best practices across Europe. Activities in that direction have, by the way, been initiated by the European Commission," he said.

Asked how reports of pay cuts of 0.4% for staff at the EU institutions would go down with workers across Europe who have faced deeper salary reductions, Martens said it would be seen as reasonable that EU employees are treated similarly to public sector staff in member states.

To read the interview in full, please click here.

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