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Pensions reforms have slowed in OECD countries but need to continue

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Further reforms are needed across OECD countries to mitigate the impact of population ageing, increasing inequality among the elderly and the changing nature of work, according to a new OECD report.

Pensions at a Glance 2017 says that public spending on pensions for the OECD as a whole has risen by about 1.5% of GDP since 2000. However, the pace of spending growth is projected to slow substantially. 

 At the same time, recent reforms will lower the incomes of many future pensioners. People will live longer and to ensure a decent pension would have to postpone the age of retirement.

“The challenges of financial sustainability and pension adequacy mean that bold action from governments is still needed,” said OECD Secretary-General Angel Gurría. “The world of work is changing fast and policy makers must ensure that decisions made today take this into account and our pension and social protection systems do not leave anyone behind in retirement.”

 The net replacement rate from mandatory pension schemes for full-career average-wage earners entering the labour market today is equal to 63% on average in OECD countries, ranging from 29% in the United Kingdom to 102% in Turkey. On average, replacement rates for low-income earners are 10 points higher and range from under 40% in Mexico and Poland, to more than 100% in Denmark, Israel and the Netherlands.

 Over the past two years, one-third of OECD countries changed contribution levels, another third modified benefit levels for all or some retirees and three countries legislated new measures to increase the statutory retirement age. Under legislation currently in place, by 2060 the normal retirement age will increase in roughly half of the OECD countries, by 1.5 years for men and 2.1 years for women on average, reaching just under 66 years. The future retirement age will range from 60 years in Luxembourg, Slovenia and Turkey to 74 in Denmark, according to the latest estimations.

 The projected increase in retirement ages will be exceeded, however, by expected advances in longevity, meaning that the time people spend in retirement will increase relative to people’s working lives. Employment at older ages will need to increase further to ensure adequate pensions for many people, according to the report.

 Pensions at a Glance 2017 also looks at ways countries can meet the growing calls for more flexible retirement options. Rigidly set retirement ages might not be beneficial for society as a whole. Currently, only around 10% of Europeans aged 60-69 combine work and pensions. Of those that do work beyond the age of 65, half work part-time — a share that has been stable since the 1990s. Several countries including Australia, the Czech Republic, France and the Netherlands allow for early partial-retirement schemes.

 Obstacles to combining work and pensions after the official retirement age exist, for example through earnings limits in Australia, Denmark, Greece, Israel, Japan, Korea and Spain. Barriers to continuing to work beyond the retirement age also exist outside the pension system, especially through age discrimination from employers or in cultural acceptance of part-time work.

 Overall, for people with full careers, retirement is more flexible around the retirement age in Chile, the Czech Republic, Estonia, Italy, Mexico, Norway, Portugal, the Slovak Republic and Sweden.

 Policy makers need to ensure that postponing retirement should be sufficiently rewarding while not overly penalising people who retire a few years before the normal retirement age. In Estonia, Iceland, Japan, Korea and Portugal, the financial incentives to continue working after the retirement age are large but costly for pension providers. Flexibility should be conditional on ensuring the financial balance of the pension system, with pension benefits actuarially adjusted in line with the flexible age of retirement.

 Pensions at Glance 2017 provides comparative indicators on the national pension systems of the 35 OECD countries, as well as for Argentina, Brazil, China, India, Indonesia, the Russian Federation, Saudi Arabia and South Africa.

 Country notes are available for Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland, the United Kingdom and the United States.

 A recent OECD report, Preventing Ageing Unequally, also analysed the impact of rising inequalities and population ageing. It found that younger generations will face greater risks of inequality in old age than current retirees and for generations born since the 1960s, their experience of old age will change dramatically relative to that of previous generations.

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Green Deal: €1 billion investment to boost the green and digital transition

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The European Commission has decided to launch a €1 billion call for research and innovation projects that respond to the climate crisis and help protect Europe’s unique ecosystems and biodiversity. The Horizon 2020-funded European Green Deal Call, which will open tomorrow for registration, will spur Europe’s recovery from the coronavirus crisis by turning green challenges into innovation opportunities.

Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education and Youth said: “The €1 billion European Green Deal call is the last and biggest call under Horizon 2020. With innovation at its heart, this investment will accelerate a just and sustainable transition to a climate-neutral Europe by 2050. As we do not want anyone left behind in this systemic transformation, we call for specific actions to engage with citizens in novel ways and improve societal relevance and impact.

This Green Deal Call differs in important aspects from previous Horizon 2020 calls. Given the urgency of the challenges it addresses, it aims for clear, discernible results in the short to medium-term, but with a perspective of long-term change. There are fewer, but more targeted, larger and visible actions, with a focus on rapid scalability, dissemination and uptake.

The projects funded under this call are expected to deliver results with tangible benefits in ten areas:

Eight thematic areas reflecting the key work streams of the European Green Deal:

  1. Increasing climate ambition
  2. Clean, affordable and secure energy
  3. Industry for a clean and circular economy
  4. Energy and resource efficient buildings
  5. Sustainable and smart mobility
  6. Farm to fork
  7. Biodiversity and ecosystems
  8. Zero-pollution, toxic-free environments

And two horizontal areasstrengthening knowledge and empowering citizens, which offer a longer-term perspective in achieving the transformations set out in the European Green Deal.

The €1 billion investment will continue building Europe’s knowledge systems and infrastructures. The call includes opportunities for international cooperation in addressing the needs of less-developed nations, particularly in Africa, in the context of the Paris Agreement as well as the Sustainable Development Goals (SDGs).

The deadline for submissions is 26 January 2021, with selected projects expected to start in autumn 2021.

A Horizon 2020 Green Deal Call Info Day & Brokerage event will take place as part of the virtual European Research & Innovation Days that will take place from 22-24 September 2020.

Background

The European Green Deal is the European Commission’s blueprint and roadmap to make Europe the first climate neutral continent by 2050, with a sustainable economy that leaves no one behind. 

To reach this 2050 goal, action will be required by all sectors of our economy, including:

  • investing in environmentally-friendly technologies;
  • supporting industry to innovate;
  • rolling out cleaner, cheaper and healthier forms of private and public transport;
  • decarbonising the energy sector;
  • ensuring buildings are more energy efficient;
  • working with international partners to improve global environmental standards.

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Equal pay essential to build a world of dignity and justice for all

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The United Nations is marking the first ever International Equal Pay Day, on Friday, drawing attention to the gender pay gap – the difference between what a woman earns compared to a man, for work of equal value – and the systemic inequalities it is rooted in.  

Globally, despite decades of activism, and dozens of laws on equal pay, women still earn less than 80 cents for every dollar men do. For women with children, women of colour, women refugees and migrants, and women with disabilities, that figure is even lower. 

Women’s unequal status at work “feeds inequality” in other areas of their lives, UN Secretary-General António Guterres said in a message.  

“Women’s jobs are less likely to come with benefits like health insurance and paid time off. Even when women are entitled to a pension, lower salaries mean lower payments in their old age,” he said. 

Noting that equal pay laws have failed to address the problem, the UN chief called for greater effort to find solutions. 

 “We need to ask why women are relegated to lower-paid work; why professions that are female-dominated have lower salaries – including jobs in the care sector; why so many women work part-time; why women see their wages decrease with motherhood while men with children often enjoy a salary boost; and why women hit a ceiling in higher-earning professions,” he stressed. 

End harmful gender stereotypes 

Mr. Guterres also underlined the need to end harmful gender stereotypes and remove institutional barriers, as well as sharing family responsibilities equally. 

“We need to recognize, redistribute, and value the unpaid care work that is disproportionately done by women,” he urged. 

Such efforts are all the more urgent given signs that the gender pay gap may worsen due to COVID-19 and its fallout, including because so many women work in service, hospitality and informal sectors which have been hardest hit. 

“The COVID-19 pandemic has exploited and exposed inequalities of all kinds, including gender inequality. As we invest in recovery, we must take the opportunity to end pay discrimination against women,” said the Secretary-General. 

“Equal pay is essential not only for women, but to build a world of dignity and justice for all,” he underlined. 

Unequal pay a stubborn and universal problem 

According to UN Women, the UN Entity for Gender Equality and the Empowerment of Women, in spite of significant progress in women’s education and higher female labour market participation rates in many countries, closing the gender pay gap has been too slow. 

At the current pace, it could take 257 years to achieve economic gender parity. 

Women workers’ average pay is generally lower than men’s in all countries, across all sectors, for all levels of education, and age groups. While gender pay gap estimates can vary substantially across regions and even within countries, higher income countries tend to have lower levels of wage inequality compared to low and middle-income countries.  

However, estimates of the gender pay gap understate the real extent of the issue, particularly in developing countries, because of a lack of information about informal economies, which are disproportionately made up of women workers, so the full picture is likely worse than what the available data shows us, says the UN agency. 

The International Day 

The International Equal Pay Day, to be commemorated on 18 September annually, was established in 2019 by the UN General Assembly, which voiced deep concern over slow progress in women’s economic empowerment, the undervaluing of work traditionally held by women, and the difficulties in tackling pay inequality. 

The General Assembly urged action to reach the goal of equal pay for work of equal value for all, and encouraged all stakeholders to continue to support the goal of equal pay for work of equal value. 

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Protect lives, mitigate future shocks and recover better

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A healthcare worker checks the temperature of a patient at a hospital in Nonthaburi Province, Thailand. UN Women/Pathumporn Thongking

Over the course of 2020 thus far, the coronavirus has taken hundreds of thousands of lives, infected millions of people, and wreaked socio-economic, humanitarian and human rights havoc, the United Nations said in a new report released on Wednesday.

According to the September update of the UN Comprehensive Response to COVID-19, no country has been spared; no population left unscathed. 

Among other things, the update outlines the steps needed to save lives, protect societies and recover better while pointing the way to addressing future shocks, above all from climate change, and overcoming the universal inequities.

Three-point response

UN Secretary-General António Guterres has often said that the pandemic is a human crisis that has laid bare severe and systemic inequalities.  

“No country has been spared. No population group remains unscathed. Nobody is immune to its impacts”, the report spelled out.

To address this, the UN is pursuing a three-point comprehensive response focused on health, safeguarding lives and livelihoods, and addressing underlying vulnerabilities to rebuild a more resilient, inclusive and sustainable world.

Health first

The update revealed that the UN system led the global health response early on, providing life-saving humanitarian assistance to the most vulnerable, establishing rapid responses to the socio-economic impact and laying out a broad policy agenda.

Solid science, reliable data, and analysis are critical for policy- and decision-making, especially for the tough choices required during a pandemic, according to the report. 

To help create a knowledge base and provide support to national policymakers, the UN has also issued a series of policy brief that examines the pandemic’s diverse impacts and offers relevant information and advice. 

Containing the virus

The most urgent course of action in dealing with COVID -19 has been to suppress transmission of the virus, through detecting, testing, isolating and caring for those affected. 

This requires physical distancing, fact- and science-based public information, expanded testing, increased health-care facility capacities, supporting health-care workers, and ensuring adequate supplies. 

Some countries can or have already achieved these conditions with their own resources but developing countries continue to need considerable support, the report noted.

Universal access

The update shone a spotlight on the need for the biggest public health effort in human history.

That means a vaccine, diagnostics and treatment for everyone, everywhere. 

At the Global Vaccine Summit in June, the UN chief spelled out, “A COVID-19 vaccine must be seen as a global public good”.

Battling twin crises

As climate change is not on hold, recovery from COVID-19 must go hand-in hand with climate action.

And addressing both simultaneously requires a response stronger than any seen before, upheld the report.

It saw recovery as an opportunity to address the fragilities laid bare by the virus, including the climate crisis.

Moreover, it outlined the steps needed to move forward, such as decarbonizing transport, buildings and energy sectors; transitioning away from fossil fuels; and creating jobs to build resilient and sustainable infrastructures. 

Sustaining the response

As the world is still in the acute phase of the pandemic, the UN update maintained the importance of sustained political leadership, unprecedented levels of funding, and extraordinary solidarity between and within countries to recover. 

The Organization will continue to consult with Member States and all partners on how best to support these efforts over the long term.

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