What We Owe Each Other – A New Social Contract A book review by Jem Golden

Nemat (also known as Minouche) Shafik, Egyptian-born and at only 36 years old, became the youngest ever Vice President of the World Bank and has held many prestigious positions since including Deputy Governor of the Bank of England. She is currently, Director of the London School of Economics. If this brief ‘resume’ makes her sound like the ultimate establishment ‘insider’ it also gives credibility and sustenance to the sober analysis; the moral outrage Shafik projects when assessing the debris that accumulates when global capitalism has careered right off the tracks and needs to be reassembled somehow.?

In What We Owe Each Other (published in UK by The Bodley Head, 2021) Shafik starts by stating what she means by the social contract; the collective actions and decisions that establish the distribution of benefits everyone can or should expect to receive in life. In short, these are intended by her to be broader than the welfare state to include the set of tax and benefit mechanisms for pooling economic risk while establishing social cohesion.?

Given my specific interest on age-friendly care and supporting ageing in place in particular, I scrutinised Chapter 6 - Old Age – very intently. Firstly, I appreciate her humane, moderate contextual analysis in reference to our rapidly ageing societies as compared to many commentators’ extreme language used to get your attention with terms like ‘demographic time bomb’ and so on.?

Shafik assesses the worldwide challenge of providing reasonable pensions for all and says:

“The problem here is not that people are living too long, it is that they are not saving enough and retiring too soon. At the same time, ageing societies have fewer children, so they need to invest more in the younger generation so that they are productive enough to be able to take care of a larger population of elderly people. In both dimensions, more saving and investment are essential”.?

She recommends that over time, it makes sense for pension systems within a country to harmonise coverage, contributions and entitlements between traditional and flexible workers, for example by having the state contribute to pensions of those self-employed including those who are very low earners to encourage them to save for retirement. This makes sense for a host of reasons: it reduces the risks associated with poverty in old age, ensures fairness, pools risks more efficiently and enables greater mobility of workers between types of employment.?

In the same chapter, Shafik examines the challenge of making ageing at home viable and to do this she says we must turn unpaid work into something that is valued and paid for, whether it is provided by a professional or a family member, or a combination of both. In all countries it is women who benefit most from the provision of support to informal carers. Women carry most of the burden of caring for the elderly in the form of lost income and mental health problems, which ironically can contribute to their own impoverishment when they themselves become old.?

Policies that support informal carers like cash benefits, pension credits, respite care to give informal carers breaks and flexible working arrangements that enable them to take time off from caregiving are all beneficial and help women especially.

It should not come as a surprise that the countries that have the best-funded systems for long-term care such as Denmark, Netherlands, Sweden and Switzerland, also have the highest rates of female employment and the lowest gender inequality, relatively speaking.

Shafik makes strong and compelling use of data and the graphics are attractive and ‘analysis friendly’ for the non-specialist. I find the book provides a strong case for social renewal underpinned by economic pragmatism.