The Elderly – An Inseparable Segment of Israel's Economic Growth
The older population in Israel has a significant and important contribution to the economy, even past retirement age. Now that the Israeli economy is adopting exit measures from the Covid-19 crisis, affirmative action should be afforded this group, just like the "affirmative protection" provided while the virus was raging.
Liad Ortar, PhD.
The Coronavirus crisis has thus far been responsible for severe harm in health, social, and economic respects throughout many sectors in Israel. However, over the past few months, it was made abundantly clear, via all media platforms, that of all population groups, the one most at risk is that of older adults, seniors, and the elderly. The mortality rate among this group is substantially higher than other groups; a fact that instigated social distancing from them (for protective purposes) and their de facto exclusion from the workforce. Many of them referred to such behavior as ageist – age-based discrimination. Now that the Israeli market is adopting exit measures from the crisis, this group should benefit from affirmative action, much like it was awarded "affirmative protection" while the virus was raging. Such affirmative protective action should be expressed by programs to improve the quality of life in residential homes and assisted living facilities for the elderly; promoting loneliness-breaking measures, and ensuring employers strictly adhere to age diversity in their recruitments and during the reintroduction of employment.
Despite the economic slowdown due to Covid-19, Israel presently marks 72 years of globally extraordinary economic growth. From a small and withered Jewish settlement, the State has become a glory of innovation and domestic industry. This growth has been – and still is – closely dependent on population growth and the level of creativity and innovation sizzling from every direction. However, as the population grows, so does the relative share of older people living in it, as part of the global demographic trend of population aging resulting from a tremendous improvement in the quality of available advanced health and social services.
The elderly population in Israel crossed the 1 million mark in 2017, and presently constitutes some 11.6% of the total population. According to the Myers-JDC-Brookdale Institute's Statistical Abstract 2018, since 1955 the Israeli population grew five-fold, whereas the population of people aged 65+ grew 12-fold. In other words, the growth rate of people aged 65 and older, was more than double that of the general population. It further arises from the abstract's data, that by 2035 the population of the elderly in Israel is expected to grow by almost 80%; indicating that Israeli society and its economy will be facing a tremendous challenge, but also a golden opportunity of benefitting from the accumulative wisdom of this important group, which has laid the foundation to all of our lives here, in the precious land of our forefathers.
This group of older adults and the elderly, although passed retirement age, continues to contribute its share to the Israeli economy. Their contribution consists of both accounted and accounted financial contributions.
In the framework of accounted financial contributions, we refer to all areas of economic activity that is valued and registered as part of the State of Israel's national accounts and different statistical systems. These mainly include the working hours that people aged 65 and older supply to the economy, as well as the expenditures intended for their livelihood, whether these are essential expenses, necessary for their health and quality of life, or "disposable" expenses (expenses that on the surface appear to be luxuries rather than of existential necessity, but have a substantial and important health and mental benefit).
In the framework of unaccounted contributions, we address all areas of activity that generate a tangible contribution to the economy, even if these might not be valued under any accounting system.
Love to Work and Love to Consume
Israel is characterized by a remarkably high rate (21.2%) of workforce participation of people aged 65 and older; 30% of the men and 14% of the women. Iceland is the global leader, with a figure reaching as high as 38%, followed by South Korea with 31.5%. Among countries with the lowest participation rate are France with 3.1% and Belgium with a mere 2.5%. There are different reasons for this variation, including the quality of social support systems for the elderly, available employment opportunities, and the state of the economy in general. Between 1970 and 2000 there was a consistent decline trend in the workforce participation rate of men, while since the early 2000s an increase in participation rates is apparent. The rate of workforce participation of people aged 65 and older grows as their level of education increases.
Thus, for instance, in 2016, 10% of people aged 65+ with five to eight years of education participated in the workforce, compared to 34% of people aged 65+ with 16+ years of schooling. This data indicates that age should not be an obstruction for employment whatsoever, and if a barrier does exist, it is one of education. Gerontology activists around the world are calling on governments to understand that the perception that the cycle of professional education ends upon entrance to the workforce (after graduation) is erroneous; and that a new approach must be promoted, one that sees the continuation of the cycles of education and professional training throughout a person's life. The appropriate educational response should be matched with every stage of life.
When examining the consumption habits of the elderly, it should be remembered that the older population in the economy is very diverse in terms of its income levels. According to the data, on average for the period between 2015-2017, 37% of people aged 65 and older vacationed or traveled domestically including overnight accommodations; the decile spending the most resources on such expenses was between the ages of 65-74, 44% of whom vacationed, compared with 25% of people aged 75 and older.
The average general data indicates that the total consumption expenditure for all types of households of people aged 65 and older is estimated at NIS 13,000, while the average income per person is approx. NIS 7,000. This expenditure is directed primarily for housing needs (30%), food (17%) and of course, health (9%). Of the entirety of expenditure data, it can be estimated that some 10% of total expenses are directed toward paying for culture, recreation and vacations, both domestic and international, corresponding to a monthly sum of NIS 1,300. Based on the estimate that there are 682,000 elderly households in Israel, we are discussing an approximated annual sum of more than NIS 800 million, a substantial amount that stimulates these economic fields of activity.
From Babysitting to Invaluable Professional Experience
There are many economic fields of activity that are not being calculated under any public accounting system (unaccounted economic contribution). To the best knowledge of this document's author, no full quantitative evaluation was conducted in Israel thus far regarding the extent of hours allocated by grandparents throughout the country to babysit their grandchildren.
A preliminary estimate indicates that there are tens of thousands of monthly hours during which grandparent take on babysitting roles – watching over and parenting children of different ages. By doing so, they enable the children's parents to make themselves available for activities that further develop their professional careers and productive activities. Additionally, such hours are usually not fiscally remunerated, also saving the parents a lot of money that they would have been required to pay, should they have sought to employ a non-family-member. During the recent period of social distancing forced by Covid-19, we saw how many parents could no longer rely on the assistance of grandparents, which severely damaged their own wage-earning abilities.
There is great difficulty in tracing additional data, such as the ability to evaluate the added value of the veteran experience of older employees. During these contemporary times of unemployment, we are witnessing the prevalence of the ageist perception in the employment market. While it has always been common, it is only intensifying now that tens of thousands of people are desperately in need of means to make a living. We can only hope that many employers will internalize the immense value of multi-age work teams, and the fact that experience has no actual price tag.
The Elderly in the USA
Macro-economic tools used to measure economic activity, such as the GNP (Gross National Product), are very limited tools. In the USA it is estimated that the 50+ age group is responsible for 40% of the American GNP, reaching a sum of more than NIS 8 trillion. By 2050 that figure is anticipated to triple, reaching more than NIS 28 trillion (according to The Economic Impact of Age Discrimination, AARP, 2020). This fiscal data is fortified by the knowledge that this population group constitutes only 35% of the entirety of the American population. In Israel no such macro data is available, but even the most comprehensive database cannot replace the knowledge and the understanding that people aged 65 and older were the ones to establish the economy here using their bare hands, and that their contribution to our lives has been immense. There is no reason for it to longer be so.
Dr. Liad Ortar is a gerontologist (expert in aging sciences), Head of the Corporate Social Responsibility Institute at the College of Law and Business, Ramat Gan