ECONOMY

OECD official sounds warnings on pension systems and climate

The prolongation of working life is one of a number of reforms that should be seriously considered in dealing with the increasingly endangered viability of social insurance systems due to aging populations, the secretary-general of the Organization for Economic Cooperation and Development (OECD), Donald Johnston, said in Athens yesterday. «People no longer need to do physical, tiring work in today’s information society and advanced technology. There are some professions in which one cannot be older than a certain age, but also others in which one can continue working even past the age of, say, 60. I wonder whether our pension benefits are not excessively high and generous,» he said in an address to a joint session of the Greek Parliament’s Economic, Social and European Affairs committees. Johnston also noted that in the OECD’s ministerial summit meeting in May 2004, it was decided that dealing with the problem needed family-friendly measures that would allow more women to work, as well as others for the further integration of immigrants – «a big challenge.» The OECD official said the problem of low fertility rates is seriously affecting many countries’ economically active populations, most notably Japan. «Italy and Greece are not far behind… The Greek population is aging dramatically and this will have huge repercussions on pension systems and public finances,» Johnston warned. «We must persuade people not to retire early and see what we can do as regards the number of work hours. Greece is somewhere above the OECD average; it has, therefore, done well in this field,» he said, also noting that although the country has a high rate of early retirees, people on the whole work longer in Greece, beyond the official retirement age. Johnston related the rather controversial answer, given by a Russian student at a business administration school in Paris, to a remark by a US senator that no government would be prepared to adopt such unpopular measures, being bound to meet fierce reaction at the polls: «Young people should be given the vote at an earlier age, at 15, so that they may have a voice on the issue, but should not be allowed to vote when they retire.» «When I reported this idea at a seminar of the richest eight nations (G8), I must say that they treated it with all seriousness due. It is, indeed, necessary for young people to be able to raise their voice and present their views on something the burden of which they will shoulder given the problem of aging population,» Johnston said. Dire climate warning Referring to climatic change and the greenhouse effect, he said the phenomenon is now universally recognized, except in certain circles in the US. He cited the dire warning of scientists, including OECD ones, that at the present rate, carbon dioxide emissions will reach the lowest levels of irreversibility, and that their stabilization at such levels appears «unrealistic.» Johnston said that with an agreement on emission quotas, we could achieve a stabilization at levels that would offer hope for climate control. Even so, given ever-rising energy requirements and the inadequacy of renewable sources, he said «it seems that the issue of nuclear energy will return to the negotiating table.» «It is a global issue which we have ignored to our detriment. I am not going to be an ardent supporter. I know there is no nuclear power in Greece but I think that we all ought to be thinking openly about the alternative solutions at our disposal,» Johnston said. Earlier, after a meeting with economy ministers, Johnston expressed the view that Greece had done very well with regard to the steep rise in oil prices, compared to advanced European economies. Responding to questions, he said how much oil prices will keep rising is a very big question mark and «you cannot offer many forecasts.» «What I can remark on is that it is surprising how well the global economy has absorbed the steep rise in oil prices, indeed, by countries that are totally dependent on this source of energy, such as Japan and Korea. Of course, we can say that the eurozone is in a relatively advantageous position because, let’s not forget, the euro is much stronger than the dollar and oil is priced in dollars. So, the impact on the European economy has not been so strong as in other economies,» Johnston said. Johnston, who assumed office in 1996, is to retire next year.