| Lottomatica Foundation and Percorsi di secondo welfare started a collaboration on the topic of sustainability. Our Laboratory accompanies the Foundation in defining a programme agenda that takes sustainability issues into consideration. Alongside more strictly research activities, we also propose some thematic in-depth studies published on the Foundation’s website. This article is part of a series of articles we’re writing on the various facets of social and environmental sustainability. It has been published on the Lottomatica Foundation website and is also available in Italian. |
The elderly represent 24.1% of the Italian population, which means that about 1 in 4 individuals is elderly. It is now well known that our country is immersed in a demographic winter, trapped in the spiral “few children in the past, fewer parents today, fewer children in the future”. As evidence of the rapid aging of the population, ISTAT’s key demographic indicators show that the old-age index (in italian: indice di vecchiaia, the ratio of elderly people over 65 to the young population aged 0-14) increased by about 60 percentage points between 2000 and 2023, from 131.7 to 193.3 (i.e., for every 100 young people there are 93 elderly people). The ratio of the elderly to the working-age population – the dependency ratio (in italian: indice di dipendenza) – rose by about 11 percentage points, from 27.9 to 38. This demographic imbalance is destined to grow continuously and is therefore an inescapable point of discussion in the public and political landscape.
Challenges for health and welfare sustainability
In this context, an ageing population has been identified as one of the new social risks. However, ageing itself is not a new phenomenon: our societies have gradually become older over the centuries. The welfare state, which emerged in Europe in the late 19th century in response to the challenges associated with the process of modernization, initiated a process of gradual socialization of risks and institutionalization of solidarity between individuals and groups in the event of predetermined events during the course of life, such as illness, unemployment, accident and old age. Therefore, the ageing of the population is one of the traditional risks to which the welfare state has gradually recognized a wide range of social rights, such as social security rights (receiving a monthly income-the pension-in the absence of labor income).
A new aspect in the century in which we live is longevity. The increase in life expectancy to 65 is a consequence of significant advances in medical technologies and improved living conditions (social and economic) in Western societies. Over the past 10 years, life expectancy at age 65 has increased from 18.9 to 20.4 years. In other words, societies are not only older, but longer-lived, i.e. life expectancy is significantly higher than the average a few decades ago.
Longevity, not ageing, brings new social risks. The increase in survival among the elderly, many of whom are in relational poverty because they lack a network of family solidarity, leads to an increase in the need for assistance. Living longer does not necessarily mean living better; social demand for care has increased significantly over the past two decades. According to Istat (2019), there are 3.8 million elderly people in Italy with severely reduced independence in daily personal or household care activities. 32.3 percent of the elderly population has severe chronic and multi-morbidity conditions. This creates great pressure on the national health care system and public social spending dedicated to social welfare benefits for long-term care. The healthcare component of public spending on long-term care in 2022, at about 0.7 percent of GDP, corresponds to 10.2 percent of total healthcare spending. Considering the impact of the demographic factor on health spending, this ratio is projected to increase by about 10 percentage points until 2060 (MEF 2023).
Moreover, as mentioned above, along with the increase in life expectancy of the elderly, a gradual reversal of the population pyramid has been observed since the 1980s: more and more elderly people and far fewer children. The empty cradle effect has highlighted the issue of social security and labor market sustainability: as the working-age population declines, the percentage of those who are (and will be) retiring increases. The intergenerational pact, according to which today’s worker (through the payment of social security contributions) contributes to the payment of current pensions and tomorrow’s worker will as well, has entered a phase of great pressure.
Demographic estimates indicate that by 2100 the elderly-worker ratio will be 1 to 1. A problem that stems not only from demographic dynamics, but also from the institutional history of Italian welfare provision. Italy’s public social spending is unbalanced on pensions, which account for the largest component of it, at a level twice as high as the OECD average. These dynamics have occurred in spite of the introduction of major reforms to the pension system since the early 1990s: the transition from the retributive system (calculated on the wages earned in the last five years of working life) to the contributory system (based on the worker’s contribution history), the raising of the retirement age and the indexation of life expectancy, in order to stem the demographic process underway and make the system more sustainable (the so-called Fornero Law). The ageing of the population thus poses major new challenges for mature social protection systems. It is crucial to promote a paradigm shift: the important thing is not just to live long, but to live well. If ageing is not accompanied by a certain degree of physical, mental and social well-being, longevity takes on the connotations of functional decline and is reduced to a biological involutionary process. On the other hand, an ageing population can generate non-negligible potential and turn into an opportunity for economic growth with spill-over effects on employment as well.
Longevity: starting from the opportunities of the Silver Economy
Italy could serve as a model for initiatives and solutions designed to address ageing in other countries, becoming a European benchmark for evaluating the effectiveness of investments in innovative products and services designed for the needs of senior citizens. The Silver Economy is emerging as a response to the impacts of aging, affecting all sectors of the economy, including housing, transportation, food, insurance, technology, health (e-health), communications, sports, leisure and travel. This new approach is not just a market, but rather a trasversal economy involving the entire society and economy.
According to a study published in Itinerari Previdenziali, the economic impact generated by goods and services for Italians over 50 can be estimated at least 583 billion euros, corresponding to about one-third of GDP in 2021 (32.7%). In the case of the over-65s, the impact on the national economy could range between 297 billion and 350 billion euros, thus representing between 16.6 percent and 19.7 percent of GDP in 2021. The Silver population is emerging as an increasingly significant consumer segment, both in quantitative and qualitative terms, requiring a new approach to ageing in Italy. These data reiterate the importance of overcoming stereotypes related to the elderly focused only on social and health services. In addition to public services, it is crucial to consider the diversity of sectors involved in offering personalized products and services for elderly Italians. Their consumption habits indicate a preference for investments in their homes (furniture and services, but also utilities such as water, electricity, and gas), food products, and health care and prevention activities. Sectors such as home automation, nutraceuticals1, sustainable mobility and personalized services emerge as prospects for innovation and expansion in the near future.