Jose Maria Labeaga: «Longevity is being perceived as a threat, but it really should be understood as an opportunity»

Increasing life expectancy has economic consequences for society. In the forthcoming edition of the Longevity World Forum, UNED professor Jose Maria Labeaga will analyse these challenges and needs.
Increasing life expectancy has economic consequences for society. In the forthcoming edition of the Longevity World Forum, UNED professor Jose Maria Labeaga will analyse these challenges and needs.

Increasing life expectancy has economic consequences for society. In the forthcoming edition of the Longevity World Forum, UNED professor Jose Maria Labeaga will analyse these challenges and needs.

In general terms, what have the main economic effects of the increase in life expectancy been to date?

Increased life expectancy should be seen as a very positive development. What has undoubtedly not been all that positive is the way in which countries have faced this challenge, which has taken place at the same time as the fertility rate has declined. Essentially, the worst consequence of not having taken measures to deal with these changes has been that, from an economic point of view, the effects of increased longevity have not been very promising until now. As a result, companies have not taken advantage of the skills of the working population of a certain age, and governments have not taken steps to deal with the added and growing pressure that benefit/subsidy programmes are exerting on public accounts.

In your opinion, is longevity a threat or an opportunity for the economy?

Generally speaking, longevity is being perceived as a threat, but my view is that, with the right changes, it really should be understood as an opportunity. Why is that? The introduction of improvements related to health and to how the workplace operates, as well as the change from work that currently requires effort to work that fundamentally requires knowledge, means that an increasing percentage of people in the 60s and 70s age group, who in the past (and even today) did not contribute to the economy, will be able to do so.   If the trend continues, we know that a significant percentage of workers in this age group prefer to work part-time. Therefore, if there is a demand for this type of employment, the retirement age should be increased and the pressure on public spending at this age should be reduced. In addition, older workers have a wealth of experience and vast knowledge that can be very useful. Of course, this desire to stay in the labour market also requires a certain balance with the need to keep up to date and, consequently, such workers need to recycle or update their knowledge through continuous training.

Spain has one of the highest life expectancies in the world. What specific economic implications does this entail for our country?

As the necessary changes have not been made to adapt to the new times, and  moreover, we have had to face a serious economic crisis, expenditure on health and dependency, which affects the elderly in such a relevant way, has been affected. In this context of austerity and increased spending on pensions, health care benefits, including dependency benefits, have suffered significant budget cuts and we have still to fully implement the Dependency Care System. Users of medicines also saw their benefits cut and a co-payment was introduced which even affected (with a spending threshold) expenditure on medicines. Pensions were frozen during the first years of the crisis. In short, in a context of such high life expectancy, if the necessary reforms are not addressed, these budgetary imbalances may be affected in the coming years.

Could it be argued that longevity is being capitalised, or is it another business?

Both issues are happening at the same time. As far as Spain is concerned, both in terms of income and wealth, it’s the older generations that have best endured the economic crisis and, consequently, several sectors (tourism, insurance, even certain sectors involved in the sale of both non-durable and durable goods and services) consider these groups to be a market segment in which to do business.

If it were up to you, what short-term measures would you take to make the most of this phenomenon?

There is no simple way to meet the challenge, partial or short-term measures are not enough. We need a global strategy that cuts across many policies. It would however seem advisable to reach agreements on the sustainability of the pension system and on tailoring the amounts paid out to the needs of the recipients.

Why did you decide to participate in a congress such as the Longevity World Forum, and what idea would you like to put across?

I believe that ageing is one of today’s most important challenges. It is exciting from the analysis (research) point of view of and it is important from the point of view of economic and social policy measures. I would like to put across an idea that clearly reinforces the need for inter-generational equity, and that requires awareness and solidarity between the different generations.