Abstract
The aim of this study is to evaluate and provide an overview of the significant impact of the increasing mean age of the communities on social insurance as well as the effects of COVID-19, which has turned into a pandemic, on social security rights of elderly. In this framework, strategies are suggested to minimize the negative effects of the issue on social security. This study aims to investigate the effects of aging of the population on social security systems in line with the reformist approach to social security systems, to seek an answer to the question of how social security systems will respond to this transition in the demographic structure and to suggest solutions against the effects of COVID-19. In addition, the authors discuss the implementation methods of a three-pillar social security model proposal, which is based on individual pension programs within the scope of social security reforms. Finally, flexible retirement plans developed in order to keep the aging workforce in employment for longer periods are discussed.
TopIntroduction
Developments in modern life and medical technology prolong life expectancy and consequently elderly population is gradually increasing today. The share of the population aged 65 and over is increasing faster than any other age group all over the world (United Nations, 2019). The number of elderly people in the world is expected to reach 1.4 billion as of 2030, 2.1 billion as of 2050 and 3.1 billion as of 2100 (United Nations, 2017: 11).
The number of the population aged 65 and over in our country, which is referred to as the elderly, was 6 million 192 thousand 962 people as of 2014, whereas this figure increased by 21.9% over the last five years and reached 7 million 550 thousand 727 people as of 2019. Hence, the share of the elderly in the total population which was 8.0% as of 2014, increased to 9.1% as of 2019. As of 2019, 44.2% of the elderly population is male and 55.8% is female. Population-based projections reveal that the share of elderly population will be 10.2% by 2023, 12.9% by 2030, 16.3% by 2040, 20.8% by 2050, 22.6% by 2060 and 25.6% by 2080 (Turkish Statistical Institute [TURKSTAT], 2020a). However, it is expected that the rate of young population will decrease to 11.8% by 2060 (TURKSTAT, 2020b), whereas the rate of the population is expected to reach out to 22.6% by 2060 (TURKSTAT, 2020a).
This change in the demographic structure, which is generally defined as the elderly-aging population problem due to lower birth rates and longer life expectancy has a multi-dimensional negative effect on the functioning of social insurance, which is the most common technique of the social security system. First of all, when the labor force participation rate of individuals decreases, the number of active insured workforce paying social security premiums will decrease which subsequently will result in a decrease in income. It is accepted that there is an agreement between generations in society as such: The working generation provides care for children and youth; when they get older, they are entitled to be cared for by the generation whom they had previously taken care of (Tufan, 2016: 125).
Secondly, as the average life expectancy prolongs and the elderly population increases, the passive population that social insurance pays salaries, thus their monthly expenses will increase accordingly. The most important expense item among the total expenditures of social security systems is expenditures for the elderly, with a ratio of nearly 60%. In brief, aging population will disrupt the income-expenditure balance of the social security system and a structure that will make the financial sustainability of the system difficult will emerge (Arıcı and Alper, 2018: 220).
Demographers refer to this new century as the century in which the population will age rapidly. The aging population is attributed to two main reasons: The first is the decrease in birth rates while the second is the increase in life expectancy. The average age of the world's population, which was 23.6 in 1950, will rise to 26.5 by 2000 and to 36.2 by 2050. For developed regions such as Europe and North America, this figure is even higher. While the share of child population (0-14 years old) in the world, which was 34% as of 1950, decreased to 30% in 2000, the share of the elderly population (60 years and older) increased from 8% to 10%. Over the next 50 years, the rate of child population is estimated to decrease by 21% while the share of the elderly population is estimated to double, i.e., increase to 21% (Gündoğan, 2001: 97).
Older population reduces the productivity of the economy to the extent that it reduces the labor force participation rate. The aging of the population is not a problem that concerns only the social security system, so raising the retirement age alone will not be sufficient to solve this problem. The problem of change in the demographic structure and aging of the population is the common problem as of the 21st century of all countries independent of their level of development and it is not possible to limit their effects only to the social security system (Arıcı and Alper, 2018: 220).
Key Terms in this Chapter
COVID-19: Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus.
Social Security: It is a scheme of actions assumed by the government to ensure the well-being of huge and potentially vulnerable population including children, the elderly, the sick and the unemployed through measures to ensure their access to food and shelter and to provide adequate resources to promote health and well-being for the population.
Retirement: It is the term attributed to the situation that begins when people who pursue their lives by working quit working in a planned way, assuming that they cannot work due to old age. Pension, which is referred to as the amount of money a retired person needs to live without working, is usually paid to the retiree as a permanent income, sometimes as a lumpsum payment or sometimes as a combination of these.
Corporatist Welfare Regime: It is less dependent in terms of connection with the market, but there is a gradual process in terms of benefits provided to its citizens; its re-distributing effect is negligible. In many cases these corporatist regimes are shaped by Church traditions. Affiliation with the church is determinant in their perspectives on social policy besides determining their conservative attitudes towards family and gender.
Old Age: It is defined as a stage, as an extension of adulthood, in which physical and mental changes are seen in the later period of life. State grants an old-age pension to citizens aged 65 and over, who do not have any social security and are in poor financial condition.
Social Insurances: Workmen’s insurance is the insurance made by deducting a portion of their earnings in order to secure the health and future of the employees working in return for wages.
Demographic Window of Opportunity: The period during which a country's working-age population is higher than the sum of the young and elder populations. The most significant characteristic of this period is that it lasts for a certain period of time (about 30-40 years).
Welfare State: Welfare state or social state means the state that accepts primary responsibility for the welfare of its citizens beyond the minimum level and suggests that the State should play a main role in protecting and promoting the economic and social well-being of its citizens.
Elderly Workforce: While the elderly workforce is statistically defined as the workforce in the 55-64 age group, it is sometimes referred to as the individuals between 50-64 age group or even between the 45-64 age group.
Aging: It is a universal process that is observed in every living creature over time and causes a decrease in all functions. Today, the terms “young old age” is used for 65-74 years of age, “mid old ages” is used for 75-84 years of age and “old age” is used for over 85 years of age when describing the stages of old age. It is a biological process that occurs in all organisms depending on the effect of time and is characterized by progressive loss of functions.