Training could aid EU pension crisis - institute

EUROPE – Life-long training could help solve the European Union’s pension problem, the European Institute of Public Administration says.

EU workers should embark on a life-long training process to improve their employment prospects and help solve the pension problem, Roger Hessel of the Maastricht-based European Institute of Public Administration told a conference.

Speaking at an event organised by the institute’s Milan branch, Hessel presented the results of a study he has prepared for Ireland’s Ministry of Finance entitled ‘Implications of demographic changes on pension systems within the public sector of EU member states’.

Hessel said peoples’ lives have three periods: education, work and pension time, which could last up to 30-35 years.

This mentality, he said, implies a 'vertical distribution' of time and does not help securing longer working life spans.

Workers should start instead a 'life-long learning process', which would allow them to be more flexible and employable for longer. This change would boost employment rates, economic growth and productivity, ultimately improving the pension situation.

The study warns that in 2050 the EU will only have two workers for each retired person, while the average gross domestic product expense on pensions amounts today to 12.7%.

Italy, which has 1.4 children per woman, tops the pension expense list with 15.1% of GDP. France, where a woman has on average 1.9 children, spends 13.5% of its GDP on pensions, while Ireland with an average of two children per woman has the lowest expenditure ratio: 3.8%.

Ireland, with the UK and the rest of Northern Europe, also lead the over 55 employment category with an average of 60% compared with the EU average of about 40%.

Hessel also said the ‘negative aura’ hanging over reforms must be overcome.

Citizens should be given more information about their pension entitlements, Hessel said citing as an example the Swedish orange envelope informing workers on their pension situation.

"While people are generally aware of that current reforms are a necessary first step, they will hardly welcome specific, painful reductions in there personal purses unless they are convinced that such reductions are needed," the study said.