The future of ageing: The impact of the 2008 crisis
Nov 4, 2015 | BLOG
Guest Blog: Future of Ageing 2015 series
By: Professor Kathrin Komp
The 2008 economic crisis has a pronounced impact on older people – not only in the present, but also in the future. Although the crisis started out as an economic phenomenon, it quickly began to also affect people’s lives. For example, it shaped people’s workforce participation, family interaction, health status, and identity. Thus, older people experienced changes in their life situations, opportunities and constraints. However, the life-course perspective suggests that the effects of the crisis will not subside when the crisis ends. To the contrary, these effects will carry on into the future. Thus, the 2008 crisis may have already set the tracks for what older people in the future will be like.
Life-course theories stress that the experiences people make can have long-term effects. For example, if somebody becomes unemployed, they are more likely to experienced repeated spells of unemployed at a later time, have a slower career progression, a lower life-time income, and possibly even receive lower pension benefits. As a result, these long-term effects bring out a changing and time-delayed impact of the 2008 crisis for decades to come.
In a short-term perspective, the economic crisis impacts today’s older people. If these individuals are still in the labour market, they are more likely to become unemployed and subsequently experience pressure to retire early. However, retirees are in a relatively stable situation because they already left the labour market, and their biggest risk is to receive less social benefits because of austerity-driven cut-backs.
In the medium term, the economic crisis impacts today’s middle aged individuals, which reach old age in a decade or two. The biggest risk for these individuals is to become unemployed and afterwards have difficulties to find a new occupation. As a result, these individuals may become long-term unemployed or even decide to leave the labour market for good. Either of these development would decrease the pensions they accrue an, thereby, increase the risk for old age poverty.
In the long term, the economic crisis impacts today’s youths, which will reach old age in three decades or more. The crisis increased unemployment rates particularly among youths, and life-course scholars claim that youths will experience the strongest long-term effects of the crisis. These youths have difficulties to even enter the labour market, which has two worrisome consequences. First, their careers start later, have a slower progression, and may consequently lead to lower pension accrual and increased old age poverty risks. Second, the delayed workforce entrance leads to a delayed entrance into adulthood, and possibly also a later family formation. Some researchers find these developments so worrisome that they even go so far as to call today’s youths a “lost generation”.
Taken together, these effects create a shifting profile of crisis impacts on old age. As time goes by, the financial impact of the crisis on older people will increase. Additionally, after some decades we will see how the crisis affected the family constellations of older people. Thus, even when the economic crisis is over and employment levels return to their pre-crisis states, societies will not return to the way they were. Of course it is impossible to make definitive statements on what the future holds, considering how uncertain it is. However, we should keep in mind that the crisis effects will stay with us for decades, and that support to today’s youths and middle aged individuals will lead to a better future old age.
Professor Kathrin Komp
Assistant Professor, Department of Social Research/Sociology, University of Helsinki
Professor Kathrin Komp specializes in population ageing, welfare policies, the economic crisis, and country-comparisons. PhD in sociology from VU University Amsterdam, the Netherlands. Worked as postdoctoral researcher at the University of Umea (Sweden) and the University of Lethbridge (Canada). For more information, see http://www.kathrin-komp.eu