Economic and social sustainability in an ageing society

Finland’s population is ageing rapidly. In the current development context, the number of people of working age is decreasing and the number of users of social and health services and pensioners is increasing which challenges the financial capacity of the welfare state. In terms of sufficient pension income and access to services, it is important that regional inequality does not increase and that different groups of people are treated equally. The goal is to create an ageing society that is socially and economically sustainable.

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SustAgeable researchers create an overview of economic and social sustainability in an ageing society in the Discussions-section of the Gerontologia-journal which publishes articles, reviews and other texts from a variety of perspectives on ageing and the life course.

Population ageing as a success and a challenge

Longevity and population ageing are themselves indications of the long-term increase in well-being and the improvement of living conditions. In Finland, the population is ageing faster, on average, than in the OECD countries as a whole. It is estimated that in 2050, approximately 12 percent of our country’s population will be 80 years old or older, while the proportion in the OECD countries as a whole would be 10 percent. Changes in the age structure of the population will inevitably affect society and the welfare state.

The ageing of the population has made decision-makers and researchers think about what kind of welfare state and social policy enable a fair distribution of income and a high level of well-being in a society where pensions in particular take up a large share of social spending.

In terms of sufficient pension income and access to services, it is important that regional inequality does not increase and that different groups of people, age groups, generations, genders and different minorities are treated equally. The goal is to create an ageing society that is socially and economically, as well as ecologically, sustainable.

Three types of sustainability

In order to protect human life, three types of interdependent sustainability have been conceptually considered: ecological, social and economic.

Sustainability thinking also includes a time dimension: promoting well-being today is not enough, but the aim is to guarantee the conditions for well-being and functioning institutions that support well-being for future generations as well.

Although it is possible to find synergies in promoting economic and social sustainability, it is also necessary to recognise when the two are in conflict with each other. In the world of an

ageing population, for example, the simultaneous lengthening of working careers and increasing family care can be viewed as being in conflict.

Sustainability of ageing societies through different means

In the SustAgeable project, the effects of different factors on the length of working careers and inequality are studied in a versatile manner. The aim is to produce information that can be used to develop social and pension security to promote employment in a socially sustainable way. It is employment and the working-age population that play a central role in responding to the challenges related to an ageing population.

In addition to extending working careers, efforts have been made to increase the number of working people available to the labour market with the help of immigrants arriving from abroad and by promoting the matching of the available labour force and jobs through internal migration. The challenge with immigration in Finland is that unemployment among immigrants is at a higher level than that of the majority of the population, with a lot of human capital remaining unused due to discriminatory structures. The high risk of poverty in the immigrant population can also pose a threat to social sustainability. The project examines the importance of different types of migration in the regional development of the population and the economic dependency ratio, as well as the effects of income transfers between regions and households on migration within the country.

The change in the age structure of the population is expected to increase spending on both health care and long-term care for the elderly. The project explores the connection between the ageing of the population and social and health care costs, as well as the means by which possible cost growth pressure can be curbed in a socially sustainable way.

Efforts have also been made to curb the costs of healthcare and care services in Finland by, among other things, reorganising services based on the principles of marketisation and especially by raising the threshold for access to care services. Such solutions have been rolled out extensively across the Nordic countries, where public responsibility for care has, historically, been significant.

In 2023, the organisation of care services will be transferred to the welfare regions and their production will probably continue in the same way as before, partly public, partly private. The project examines the costs that caregiving incurs for those in need of care and their loved ones, how these costs are covered and the social gender and generational agreements upon which these practices are based.

The SustAgeable project combines social and economic perspectives

The SustAgeable project aims to examine the dimensions of both economic and social sustainability. The research thus touches upon various aspects of the welfare state in a versatile way.

The consortium looks for synergies and contradictions between economic and social sustainability in the context of an ageing population. The dimensions of time and place have been included in the analyses, as they affect the assessment of challenges and the

suitability of solutions and priorities. What works in Helsinki does not necessarily work in Central Ostrobothnia. What is functional and economical now for the different ages of the 2020s, may later prove to be uneconomic and inappropriate, restricting future generations in an unsustainable way.

Read the articel (in Finnish)

Zechner, M., Vaalavuo, M., Linnosmaa, I., Kyyrä, T., & Kauppinen, T. (2022). Taloudellinen ja sosiaalinen kestävyys ikääntyvässä yhteiskunnassa . Gerontologia, 36(3), 317–324.