WDA Forum The WDA – HSG Discussion Paper Series on Demographic Issues
The Russian Federation in an Era of Demographic Crisis: The Special Challenges of Population Aging and Social Security Policy by Nicholas Eberstadt and Hans Groth No. 2010/6 The Russian Federation in an Era of Demographic Crisis: The Special Challenges of Population Aging and Social Security Policy by Nicholas Eberstadt and Hans Groth
The WDA-HSG Discussion Paper Series on Demographic Issues
No. 2010/6
MANAGING EDITORS:
Monika BÜTLER Professor, University of St.Gallen, Switzerland Ilona KICKBUSCH Professor, The Graduate Institute of International and Development Studies, Switzerland Alfonso SOUSA-POZA Secretary, WDA Forum Foundation, Switzerland Professor, University of Hohenheim-Stuttgart, Germany
ADVISORY BOARD OF THE WDA FORUM:
Isabella ABODERIN Senior Research Fellow, Oxford Institute of Ageing, University of Oxford, UK Jane BARRATT Secretary General, International Federation on Ageing (IFA), Canada John BEARD Director, Department of Ageing and Life Course, WHO, Geneva (observer status) Marcel F. BISCHOF Founder of WDA, Spain Richard BLEWITT CEO, HelpAge International, UK David E. BLOOM Clarence James Gamble Professor of Economics and Demography, Harvard University, USA Robert BUTLER CEO and President, ILC, USA Xiao CAIWEI Assistant President, China National Committee on Ageing (CNCA), China Joseph COUGHLIN Professor and Director AgeLab, Massachusetts Institute of Technology (MIT), USA Werner HAUG Director, Technical Division, United Nations Population Fund, New York Dalmer HOSKINS Director, Office of Policy Development and Liaison for Public Trustees, US Social Security Administration, USA Alexandre KALACHE Head, International Centre for Policies on Ageing, Rio de Janeiro, Brazil Ursula LEHR Former German Minister of Health and Family, and founding Director of the German Centre for Research on Ageing, Germany Ariela LOWENSTEIN Head, Center for Research & Study of Aging, University of Haifa, Israel Jean-Pierre MICHEL Professor and Director, Department of Geriatrics of the University Hospitals of Geneva, Switzerland Hubert ÖSTERLE Professor for Information Management, University of St.Gallen, Switzerland Ursula M. STAUDINGER Professor and President, German Psychological Society, Vice President Jacobs University Bremen, Germany Alan WALKER Professor, Director New Dynamics of Ageing Programme and Director of the European Research Area in Ageing ERA-AGE, UK
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This discussion paper series is kindly supported by the Ecoscientia Foundation
The opinions expressed in this article do not represent those of WDA Forum. The Russian Federation in an EraofDemographicCrisis: TheSpecial Challenges of Population Aging and SocialSecurity Policyi
By Nicholas Eberstadt and Hans Grothii
In the taxonomy of boththe UnitedNations PopulationDivision (UNPD) and the US Bureau of the Census (USBC), the Russian Federation is listedasamember of the contemporary world’s “moredeveloped regions”. Thiscategorization looks entirely logical in anumberofimportant respects. Like all other countriesinthis category, for example,modernRussia’s population profile is characterized by relatively low levelsof fertility, and by arelativelyhigh ratioofolder citizens to total population.
But the Russian Federation also exhibits some distinctivefeatures that differentiate it from most of the other “moredeveloped countries” with which it is regularly grouped for purposes of global demographic analysis. For one thing, itsincome level is markedly lower than in most (although notall) countriesofthe “moredevelopedregions”.(In 2005, according to WorldBank estimates, PPP‐adjustedGDP forthe Russian Federation was about $11,800, as against the OECD‐wide averageof$33,500—inother words, barelyone third as high.iii )Hardly less important, Russia—unlike most other“more developedcountries”—is in the grip of an acute demographic crisis. The most important manifestations of this crisis are catastrophically high levelsofexcessmortality for the adult population (a situation especially acutefor the population of conventionally definedworking ages) which has resulted in apronounced and more or less progressive depopulation over the nearly two decadessince the endofthe Soviet era.
Allcountriesinthe “moredevelopedregions” face major challenges in coming to grips with the social security and social protection challenges that await their societiesinthe
1 decadesimmediately ahead.Byand large, thesechallenges are being driven by a common setofdemographic trends: namely, pronouncedpopulation aging, largely generatedbyseveral generations of low (or even sub‐replacement) fertility levels. Russia’sfaces these same challenges—but additional onesaswell.For the Russian Federation mustattempt to provide for the prospectivesupport of agrowing pension‐ age population that stands to be far more frail and infirmthan its counterparts in affluent Westernsocieties—and to do so on the basis of aworkforce that is unusually debilitated, constrainedbyrelativelylow levels of labor productivity,and settoshrinkin absolute size quite rapidlyover thenext several decades. In planning to meet the retirement needs of an aging population over thecoming generation, the Russian Federation’s options are there much more limited—andperhapsunpleasant—than those available for many other countries in the“more developedregions”.
Russia’s Current Peacetime DemographicCrisis: TheBackdrop to Tomorrow’s Social Security Challenges
Overthe decadessince the dissolution of theSovietUnion, theRussian Federation has beeninthe grip of an unrelenting demographic crisis. Admittedly, “demographic crisis” is aterm that is thrown around these days with an all‐too‐promiscuous—and sometimes quite unwarranted—abandon.But the particularsofthe Russian Federation’s demographic travails provide empirical demonstration for the proposition that Russian society is beset by severe demographicparoxysms that aredirectlyand adversely affectingboth individualwellbeing and economic potential.
Sincethe end of the Soviet era, theRussian Federation haswitnessedapronounced and continuing depopulation: from1992 to the present, the country’s total populationhas fallen by about 7million (almost 5%), with almost continuous year‐on‐yearpopulation declines.Russia, to be sure, was by no means the only countrytoexperience population decline during those years—butthe magnitude of this fall‐offwas exceptional. In
2 absolute terms, the only drop largerthan this oneinthe postwar era was the bout China sufferedinthe wake of Mao’s catastrophic “GreatLeap Forward” campaign (a decline in relative termsroughly similar to Russia’s post‐Communist population decline to date).
TheRussiannation,unfortunately,isnostranger to sudden bouts of depopulation: in fact, it hassufferedfour of these in thepast centuryalone.[SEE FIGURE 1] The first three of these, however, were the consequence of war, political upheaval,and state‐ directed violence; depopulation ceased when the afflicting cataclysms abated.Today’s depopulation by contrast proceeds in atime of peace—and requirements for reversing it are correspondingly notatall obvious.
Figure1:Russia's EstimatedPopulation: 1897‐2008
160
140
120
100 ople pe
of 80
llions 60 Mi
40
20
0 7 7 7 1 5 9 7 1 5 9 3 7 1 5 9 3 7 1 5 9 3 7 189 191 192 193 193 193 194 195 195 195 196 196 197 197 197 198 198 199 199 199 200 200
Source:DalkhatEdiev,“Application of theDemographicPotential Concept to Understanding the Russian Population History andProspects: 1897–2100,” Demographic Research 4(2001)289–336, Figure1.1 This graphic has been updated since itsinitial publication to reflect developments in the 2000–08 period.
3 In arithmeticterms,Russia’s present depopulation hasbeen driven by negative natural increase: morespecifically, by asharpfalloff in births conjoined with an upsurge in deaths. [SEE FIGURE 2] Between1992 and 2008,according to official figures,Russia registered almost 13 million more deaths than births (almost 3funerals for every 2live deliveries). Russia’s negative natural increaseduring these years was of ascale equivalent to eliminatingthe entirecontemporarypopulation of the country of Angola. Net immigration partlymitigated thecountry’spopulation decline over theseyears, but was by no means sufficient to compensate for it entirely.
Figure2:Live Births and Deaths in Russia, 1960‐2008
3000 ds an
2500 Thous
2000 s th ea Live Births dD 1500
an Deaths hs rt
Bi 1000
500
0 0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 196 196 196 196 197 197 197 198 198 198 199 199 199 199 200 200 200
Sources: 1976–2002 data is fromGoskomstat (Moscow), “Demographic YearbookofRussia” (2004),Table 2.25; 2004–07 data is from Goskomstat, “Demographic Yearbook of Russia” (2008);and 2008 data is from Goskomstat website,availableathttp://www.gks.ru/bgd/regl/b09_06/IssWWW.exe/Stg/2/01‐01.htm.
Russiaexperiencedadramatic drop in births during the “transition” period afterthe end of SovietCommunism, to be sure. But Russia’s low levels of childbearingtoday cannot be attributedentirelyto“systemic shock”. To the contrary: low levels of fertilityhave
4 beencharacteristic of modernRussia, both under Communist ruleand in the years since Communism ended. In the daysofKhrushchevand Brezhnev, Russia’speriod (“snapshot”) totalfertility rate (or TFR—asynthetic measure of births per woman per lifetime,taking age‐specific rates of childbearinginall childbearingages for agiven calendaryear) was among Europe’s verylowest. The same is truetoday.And thesame is trueifweexamine “completed”TFRs (a measure which eliminates potential distorting effects of intervening changes in birth timing and spacing decisions):here once again, Russia’s fertility trends have consistentlyranked among Europe’s verylowest. Russia’s long‐term fertility patterns, in short,look entirely“normal” in aEuropean content— although they are close to the lower boundary witnessedinEurope,and stand far below the levels requiredfor long‐term population replacement absent compensatory net immigration.[SEE FIGURES 3AND 4]
5 Figure3:Total FertilityRate ‐ Europe 1960‐2004 7
6
5
4 R TF 3
2
1
0 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 Year Albania Armenia Austria Azerbaijan Belarus Belgium Bulgaria Croatia CzechRepublic Denmark Estonia Finland France Georgia Germany Greece Hungary Ireland Italy Latvia Lithuania Macedonia Moldova Netherlands Norway Poland Portugal Romania Russia Serbiaand Montenegro Slovakia Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom Source:“Recent Demographic DevelopmentsinEurope 2005,”Council of Europe, 2006.
6 Figure4:CompletedFertility by BirthYear of Mothers ‐ Europe 1930‐1971
5.00
4.50
4.00
3.50 tility er
dF 3.00 te le
mp 2.50 Co
2.00
1.50
1.00 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19
Year
Albania Armenia Austria Azerbaijan Belarus Belgium Bulgaria Croatia CzechRepublic Denmark Estonia Finland France Georgia Germany Greece Hungary Ireland Italy Latvia Lithuania Macedonia Moldova Netherlands Norway Poland Portugal Romania Russia Serbia andMontenegro Slovakia Slovenia Spain Sweden Switzerland Turkey Ukraine United Kingdom Source:“Recent Demographic DevelopmentsinEurope 2005,”Council of Europe, 2006.
Whatisentirely distinctiveabout Russia’s vital trends are the country’s mortality trends—which are woefully poor,and havebeen so forliterally decades. Estimates from the Human Mortality Database(HMD),maintained by the University of California and the MaxPlanckInstitute forDemographicResearch (Rostock,Germany), make the point. By thisreckoning,life expectancyatbirth for males and females alikewas lowerin the Russian Federation in 2006 thanithad beenfour decadesearlier: adubious “first” for an urbanized, literate societyduring peacetime. [SEEFIGURE 5]
7 Figure5:Life Expectancy at Birth:Russian Federation, 1959–2006
75
73
71 s) ar 69 Ye h(
rt 67 Bi
at 65 cy
an 63 ct pe 61 Ex fe
Li 59 Female 57 Male 55 59 62 65 68 71 74 77 80 83 86 89 92 95 98 01 04 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20
Source:Human Mortality Database,University of California, Berkeley, and Max PlanckInstitute for Demographic Research,http://www.mortality.org.
In aEuropean context, moreover, the Russian Federation has beengradually emerging as an extreme“underperformer” in life expectancyfor men and womenalike—even by comparison with other post‐Communist societies suchasBelarusand Ukraine, which havealso struggled with marked setbacksingeneral levels of public health during their respective “transition” periods. [SEE FIGURES6AND 7]
8 Figure6:Life Expectancy in Europe, 1959–2006 (males)
85
80
75 s year cy,
an 70 ect exp fe
Li 65
60
55
9 1 3 5 7 9 3 5 7 9 1 3 5 7 1 3 5 7 9 1 3 5 6 6 6 71 8 8 8 89 9 0 0 0 95 96 96 97 97 97 97 98 99 99 99 99 1 1 1 19 19 19 19 1 1 1 1 1 19 19 19 19 1 1 1 1 19 20 20 20
Austria Belarus Belgium Bulgaria CzechRepublic Denmark East Germany Englandand Wales Estonia Finland France Germany Hungary Iceland Italy Latvia Lithuania Netherlands Norway Poland Portugal Russia Slovak Republic Slovenia Spain Sweden Switzerland Ukraine West Germany
Source:Human Mortality Database,University of California, Berkeley, andMax PlanckInstitute for Demographic Research,http://www.mortality.org.
9 Figure7:Life ExpectancyinEurope,1959–2006 (females)
85
83
81
79 rs
yea 77 cy,
an 75 ct pe
ex 73 fe Li 71
69
67
65
5 7 7 9 7 9 9 1 59 61 63 71 73 75 83 85 93 95 97 05 9 96 96 969 9 97 97 981 9 9 98 98 991 9 9 99 00 003 19 19 1 1 1 1 19 19 1 1 1 1 1 1 1 1 1 19 1 1 1 2 2 20
Austria Belarus Belgium Bulgaria CzechRepublic Denmark East Germany Englandand Wales Estonia Finland France Germany Hungary Iceland Italy Latvia Lithuania Netherlands Norway Poland Portugal Russia Slovak Republic Slovenia Spain Sweden Switzerland Ukraine West Germany
Source:Human Mortality Database,University of California, Berkeley, andMax PlanckInstitute for Demographic Research,http://www.mortality.org.
Post‐Soviet Russia’s current peacetimedemographiccrisis, in short, is centrallyacrisisin health mortality. Health conditions were by no means glorious during thedays of Communist rule—but thetoll of “excess mortality”since 1992 has beennothing short of horrendous. Measured against thehardly exacting standard of survivalpatterns in the earlyGorbachevera, Russiawould havesufferedatotal of 6.6 million “excess deaths” between 1992 and 2006 alone, according to HMD life tables (a total,incidentally,almost identicaltothe country’s absolute population declineover thosesame years). Measured against ahigher, Western European bar—suchassurvivalschedulesinFrance circa 1992—Russian “excess mortality”for 1992‐2006 would haveapproached18million: a tallyofpremature mortality that would,ifonly in arithmeticterms,havematched or exceeded the territories population losses during the catastrophic years of the Great Patriotic War, as it is called in Russia(WorldWar II as it is known elsewhere).
10 Mortality and Morbidity forWorking‐Age Adults in the Russian Federation: ACrushing Burden
The Russian Federation’s peacetimedemographiccrisisischaracterizednot only generalized mortality crisis, but by an especially severehealth crisisconcentratedinthe adultpopulation of workingages (as conventionally defined).This working‐age health crisishas importantramificationsfor Russia’s old‐age supportcapacities, both todayand in the years to come.
The extraordinaryseverity of thiscurrent health and mortality burden weighing upon Russian working‐age adults is suggested by the proxyoflife expectancyatage 15. [SEE TABLE 1]
By the WorldBank’s schema for rankingcountries by levels of per capita income, contemporaryRussia qualifies as an “Upper Middle Income Economy” (indeed, after PPP adjustments, as one of themore affluentstates within this grouping).iv Yet Russia’s estimatedlifeexpectancy at age15was far lowerthan would have been expected for a country withsuch arelatively favorable economic ranking. For females, life expectancy at age 15 was adecadeormore below levels prevailing among “high income economies”—but it was also lowerthaninmany “upper middleincomeeconomies” (such as Turkey and Brazil),and in fact lowerthaninanumberof“lowermiddle income economies”(such as China or Morocco). Evenmore striking, combinedmale andfemale life expectancyatage 15 was lowerfor the Russian Federationthan for such “lower middle income economies” as India—ranking only just slightly higherthanthe levelfor impoverished Haiti. As for malelife expectancyat15, Russia’sappears to be one of the world’s very lowest—markedlylower, indeed, than in many of the World Bank’s “low income economies”,including such desperate placesasBenin, Haitioreven the“failed state”ofSomalia.
11 Table 1: EstimatedLife expectancyatage 15 vs.PPP‐AdjustedGDP per capita, 2006: Russiaand selected andcountries by income groupings (as categorized by the World Bank)
GDP Per Capita, PPP, Males and 2006 (constant 2005 Country Males Females Females international $)
“High Income Economies”
Singapore 63.5 68.2 65.8 $43,328 United States 61.266.163.7$42,610 Switzerland 64.769.667.3$36,046 Germany 65.262.567.7$31,324 Italy 63.869.366.7$28,156
“UpperMiddleIncome Economies”
Russian Federation 46.3 59.2 52.5 $12,711 Malaysia 55.460.057.6$12,149 Iran* 56.961.258.9$9,600 Brazil 55.161.658.3$8,673 Turkey 57.862.360.0$8,157 Jamaica 56.262.359.2$7,333
“Lower MiddleIncome Economies”
Tunisia57.261.559.3$6,648 China 58.462.560.4$4,501 Morocco 58.162.260.1$3,794 India52.255.153.6$2,393
“Low Income Economies”
Cambodia 50.555.653.2$1,569 Benin 49.250.950.1$1,224 Haiti 50.054.452.2$1,186 Somalia 48.651.550.0$600
Source:Estimated 2006 life expectationatage 15 from “LifeTables for WHOMember States”, World Health Organization, available at http://apps.who.int/whosis/database/life_tables/life_tables.cfm.;PPP‐ adjustedper capitaGDP data from 2008 World BankWorld DevelopmentIndicators, CD‐ROM. Note: Somalia GDP per capita PPP fromCIA World Factbook
*Note: The WorldBankofficially classifies Iran as alower‐middleincomecountry,eventhough its per capita GDPranks among countries in the upper‐middleincomecategory.
12 Russia’s peacetime deteriorationingeneral health conditions hasbeen concentrated in its population of workingages, as Figure8demonstrates. [SEEFIGURE 8] Overthe four decadesbetween 1965 and 2005, in fact, age‐specific mortality rates for men in their 30s and 40s typically rose by around100%.Scarcely less stunning, mortality levels for women in their 30s and 40s shot up by nearly 50% during that same period.
Thedeterioration of health conditions for Russia’sworking age population hasbeen a primarydriver of divergenceinoverallhealth trends between Russia and the rest of Europe.By2006, accordingtoWHO,age‐standardized mortalityinthe Russian Federation wasover twice as high as in “pre‐accession” statesofthe European Union (i.e., Western Europe). Hardly lessnoteworthy is the divergence in mortalitypatterns that has emerged between Russiaand the “new” EU members(in the main, former Sovietbloc statesfrom the Balticand Central Europe). At the end of the Sovietera, age‐ standardizedmortality rates were similar for the aggregated“new”EUstates andthe Russian Federation. Just fifteenyears later, mortality levels were about40% higherin Russia: while thenew EU statesrecorded substantial improvementsinoverallmortality levels after the demise of Soviet‐stylerule, Russia’s death rates veered erratically upward.v [SEEFIGURE 9]
Whataccountsfor Russia’s strange newpatterns of health reversal?Wecan answer this question in ageneral manner by referring to cause‐of‐death data. Overwhelmingly, the mortality divergencebetween Russiaand the restofEurope can be accounted for by mortality from cardiovascular disease (CVD—heart attacks, strokes etc.) and deaths from “external causes” (injuries, including suicide, homicide, accidents, poisoning,etc.). CVD mortality appearstobethe single greatest driverofRussia’sadverse mortality trends: while thishas beendeclining in therest of Europe (andthe rest of the OECD,as well as in many lower‐incomesocieties), it hasbeen grimlyrising in Russia.By2006, age‐ standardized CVD mortality was fullyfour times as high in Russia as in the“old” EU—and
13 fully50% higherthan in the “new” EU states. Russia’s CVD mortality wasfar higher than would be predicted on the basis of per capita incomealone—indeed, accordingtoWHO estimates for 2002, the Russian Federation was adreadful“outlier”from the overall international relationship betweenincomeand CVDmortality.[SEE FIGURES 10 THROUGH 11]
Entirely apart fromits humanitarian meaning, thisheavy mortality burden, concentrated in working age groups, has ominous economicimplications.Theseextend well beyond theimmediate losses in potential manpower suchfigures suggest.
Severe and extreme levels of prematureadult mortality, for example,cannothelpbut havedirect and unforgiving effects on the cost‐benefitcalculus for investments in higher education and otherforms of post‐secondary training. In 2006, on current survival schedules, 7out of 8Swissmean aged 20 could expect to celebrate a(notional) retirement at age65—whereas their Russian counterparts facedless than even odds of makingitfrom 20 to 65. Less breathtaking,but nonetheless dramatic, disparities betweenSwiss and Russian working‐age women were also apparent. [SEEFIGURES 12 AND 13] Since “humancapital” investmentsundertaken after the completionof secondary education may provekey in eliciting higherlevelsofproductivity in modern societies, Russia’sadverseadult survival trajectories may therefore have an additional, unfavorable impact upon future growthprospects.
In consideringthe broadereconomicimplications of Russia’shealth andmortality problems with respect to the outlook for laborproductivity, we may also wishto consider demographic trends for urbanareas (insofar as economic growthinthe modern era has beendisproportionately generated by urbanrather than rural populations). Although Russia todayisoften classified as a“BRIC” country (an acronym coined for the emerging market economies of Brazil, Russia, India and China) overall life expectancylevelsinurbanRussia appear to be significantly lowerthan in China or
14 Brazil—and mayalso be lower than in urban India, as well as otherurban agglomerations in contemporary low‐income societies. Further: where the other BRIC countries are experiencingcontinuing population growth—and whereas affluent OECD countries currently on the cusp of depopulation (e.g. Germany, Italy, Japan) still see their urban centerincreasing in size, Russia’s total urban population hasbeen falling since at least1995. [SEETABLE2AND FIGURE 14]Thesebroadmetrics for health and population change,tobesure,can only approximateinternational health differentials for the population of workingage—or for differentials in international growth rates for the urban labor force.Yet these differentials are, we contend, both meaningfuland indicative—and they do not portend auspiciously for Russiawith respect either to labor productivity or to economicgrowth.
In theory, technologicalinnovation andinstitutional/economic policy reforms could substantiallyimprove the prospects for laborproductivity andeconomicgrowth in Russia, despite thepoor health situation of the Russian workforce. Given Russia’s present‐day particulars, however, the outlook here is less promisingthan might be ordinarily assumed.
Russia’s current capacities for knowledge generation are distinctly limited:despite the country’s Soviet era achievements in scienceand high‐technology (mainly in the defense area), modern‐day Russia is aconspicuous international underperformer in knowledge generation today. The Russian Federation,for example,accounts for about6%ofthe world’s totalpopulation of university graduates—but between 1995 and 2008 Russia was awarded just 0.1% of all patents issues by theUSPatent and TradeOffice (PTO), roughly the same international fraction as the US state of West Virginia.vi (Thisis, admittedly,an“America‐centric” measure of knowledgegeneration—but asimilar pattern is seeninabroader measure: international patent applications, as registered by the World International Property Office(WIPO).vii)Moreover, while the totalworldwide numbers for scientific articlespublishedinper‐review journals has beenrising
15 exponentially since 1990, the number of such studies publishedbyRussiannationals has stagnated overthe past twodecades, and in fact wasslightly lowerin2008 than it had beenatthe end of the Sovietera.viii In addition,broadembraceofhigher technological standards within the Russianworkforce in the yearsaheadstandstobeconstrainedby two demographicfactors: 1) the steepdrop‐off in Russian fertility since 1992,which will sharplyreduce the absolute and relativesize of the pool of young entrants (typically,the group with thehighest level of educational and technical attainment in all modern societies) into the labor force in the years immediatelyahead, and 2) Russia’s extremely high levels of prematuremortality for its current manpowersupply, which discourages investmentsinhigher education and training for reasons alreadymentioned.
Afull discussionofRussia’sprospects for institutional and economicpolicy reform is beyond the scope of thisstudy. We may note,however, that Russia’s international rankings by somehighly pertinentmeasures hereremain very low, despite thecountry’s transition from Communistcentral planning to amarketeconomy. In Transparency International’s2009 CorruptionPerceptionsIndex,for example,the Russian Federation rated 148 out of 180 countries surveyed—below Indonesia,Nigeriaand the Philippines, among many other countries.ix In the FraserInstitute’s 2009 Index of Economic Freedom, Russiaranked somewhat higher—butitwas still only 83 out of 141 countries surveyed (below Egypt, Uganda, and Ghana, among others).x And in the Heritage Foundation’s2010 Index of EconomicFreedom, Russia ranked 143 out of 179—well below Kenya, Tanzania, Pakistanand Yemen, to name only afew.xi Thereisan inescapably subjective elementinall these indices, of course. Notwithstanding:these international surveys consistently depictRussia as acountrywith aforbidding “climate” as regards returns to humancapital—andsuch aclimate may be expected to discourage both investments in human capital andeconomicgrowth,all other thingsbeing equal.
16 Figure8:DeathRate RatiobyGender, Ages 20–65: Russia, 2005 vs.1965 (1965=100)
250%
Males 200% 965 e1 at hR at
De 150%
005/ Females e2 at
hR 100% at De
50%
20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64
Age
Source:Human Mortality Database
17 Figure9:Deathrates from all causes,1980–2006: Russia vs. EU (malesplus females)
1600
e 1400 at Russia hr at 0000) de 1200 10 ed iz er rd sp da th EU member ssince 2004 an
ea 1000 st (d e- Ag
800 EU member sbefore2004
600
1980 1985 1990 1995 2000 2005
Source:EuropeHealth forAll Database, World Health Organization, August 2009. http://www.euro.who.int/HFADB.
18 Figure10: Death Rates from Cardiovascular Disease, 1970‐2006: Russia vs.EU(males plus females)
900
800 te ra
) 700 th 000 ea
00 600 dd r1 ze pe di 500 ar hs nd eat ta
(d 400 e-s
Ag 300
200 1970 1975 1980 1985 1990 1995 2000 2005
RussianFederation EU EU membersbefore 2004 EU memberssince 2004
Source:EuropeHealth for All Database, World HealthOrganization, August2009, http://www.euro.who.int/HFADB.
19 Figure11: Age‐standardized Mortality Rates from Cardiovascular Disease vs.PPP Adjusted PerCapita GDP, 2002 0 80 )
00 Russia 00 10 0 er 60 sp th ea (d ate 0 yr it 40 al rt mo ed
iz Germany rd 0 da 20 an st
e- Switzerland Ag 0
6 8 10 12 Lo gofPer Capita GDP, PurchasingPower Parity,2002 ($)
Note: Mortality rates in this figureare weighted against theWHO’s “World StandardPopulation”model; age‐standardized mortality figuresfrom the WHOEuropeanHealth for AllDatabase andfrom Goskomstat are adjusted against the“European StandardPopulation” model.
Source:World Development Indicators2008; and “WorldHealth Report 2004 Annex Tables.”
20 Figure12: Male Survival Schedules, Ages 20‐65: Russian Federation vs. Switzerland, 2006
100000
90000
80000
70000
60000 Russia Switzerland
50000
40000 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64
Source:Human Mortality Database, University of California, Berkeleyand MaxPlanck Institutefor Demographic Research, http://www.mortality.org.
21 Figure13: FemaleSurvivalSchedules, Ages 20‐65: Russian Federation vs. Switzerland, 2006
100000
90000
80000
70000
60000 Russia Switzerland
50000
40000 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64
Source:Human Mortality Database, University of California, Berkeleyand MaxPlanck Institutefor Demographic Research, http://www.mortality.org.
22 Table 2: Life Expectancy in Urban Areas and Selected Cities: Russia andSelected Other Countries (most recentyear available)
Male Female Total Russia (2006) 61.03 73.70 67.29 Moscow (2006) 67.17 76.50 71.81 St. Petersburg (2006) 62.84 74.83 68.90
China (2000)73.11 77.51 75.21 Shanghai (2000)77.49 81.19 79.36 Beijing (2000)76.13 79.92 77.96 India(2002‐06)67.10 70.00 68.80 Chennai (2004) 77.15 77.56 ‐‐ New Delhi (2000) 69.50 69.50 69.50 Kolkata (2001) 74.00 75.00 ‐‐ Maharashtra (1998‐02)68.70 72.00 70.30 Mumbai (2007) ‐‐ ‐‐ 71.00 Brazil (2005)68.35 75.93 72.05 São Paulo(1970) ‐‐ ‐‐ 58.50 RioDeJaneiro (1970) ‐‐ ‐‐ 57.10 São Paulo(2005) 69.49 78.03 73.66 RioDeJaneiro (2005) 68.08 77.02 72.44 Brasilia (2005)71.19 78.74 74.87
Mexico (2004) 71.79 77.21 74.50 Nuevo Leon (2004) 72.69 77.79 75.24 Mexico City (2004) 72.81 78.00 74.58 Turkey (2002) ‐‐ ‐‐ ‐‐ ‐‐ Istanbul (2002) 69.00 74.20 72.40
Indonesia (2002) 64.20 68.10 66.20 Jakarta(2002)70.30 74.20 72.30 Egypt (2006) 68.98 73.60 71.30 Cairo (2006) 70.20 74.80 71.40
Note: Total Mexico and Brazil not dividedbyurban andrural. Sources: Russia:Russian Demographic Yearbook, 2007,Goskomstat; China: China HumanDevelopmentReport, 2005;India: Chennai–CityReport of Chennai 2005;Kolkata–West Bengal Human Development Report 2004;Urban Maharashtra–F. Ram, Chander Shekharand S.K Mohanty, Human Development: Strengthening District Level Vital StatisticsinIndia; India Total–Dr. D.K. Dey,ORGI, MHA, GOI (NewDelhi),“Life expectancy at birth by sex and residence, India1970‐75 to 2002‐06”;Brazil: Indicadores Sociodemograficos, IBGE, 2006; Brazil 1970 Data (Note: Total LE,not divided by male/female): “Mortality, Income Distribution, and Rural‐Urban Residence in Brazil”;Jose Alberto M. de Carvalhoand Charles H. Wood, Populationand Development Review 4, no. 3 (Sep.,1978): 405‐420; Mexico: Conapo (2006a). Indicadores de mortalidad yfecundidad, 1990‐2006.Serie histórica basada en la conciliacióndemográfica apartir del XII Censo General de PoblaciónyVivienda 2000 yelIIConteo de PoblaciónyVivienda 2005.; Indonesia: Human DevelopmentReport 2004;Turkey:Human Development Report 2004;Egypt:Human Development Report 2008.
23 Figure14: EstimatedAnnual UrbanGrowth Rates, 1995‐2005, Russia and selected othercountries
China
India
Brazil
Japan
Italy
Germany
RussianFederation 2000-2005 1995-2000
-1.00 -0.50 0.00 0.501.00 1.50 2.002.50 3.00 3.50 4.00
Urbanannual growth rate (%)
Source:Population Divisionofthe Department of Economic and Social Affairs of the United Nations Secretariat,World Population Prospects: The2006Revision and WorldUrbanizationProspects: The2007 Revision, http://esa.un.org/unup.
Russia: aRapidly GrayingSociety
Paradoxical though it maysound, given modern Russia’s horrendous mortality record, the Russian Federation is asociety characterizedbypronounced population aging,with much more graying still in prospect. The reasonissimple:apopulation’sage profile is very largely determinedbyits fertilitypatterns (which, so to speak,set the width of the base for society’s “population pyramid”). With low or sub‐replacementfertilitylevels, theoverallcomposition of society shiftstoward theolderage groups—even when mortality rates for thosesame adults are fearfully high.
24 Table 3presents some basic dataonRussia’s population aging situation, placing the phenomenon in aglobal perspective.
Table 3: Russian FederationPopulation Aging in Global Perspective: 1980 vs.2005
Median Age (years)1980 2005 Change (years) Russia31.3 37.3 6.0 World 23 27.9 4.9 LessDeveloped Regions 20.1 25.4 5.3 More Developed Regions 32 38.6 6.6
Percentage of Population 65+1980 2005 Change (percentage points) Russia 10.2 13.8 3.6 World5.9 7.3 1.4 LessDeveloped Regions 45.4 1.4 More DevelopedRegions11.7 15.3 3.6
Source:Population Divisionofthe Department of Economic and Social Affairs of the United Nations Secretariat,World Population Prospects: The2008Revision, http://esa.un.org/unpp.
As of the year 2005, Russia’s median age—theage marker that would bisect the entire population into twoequally sized groups—wasjust over 37 years. By way of comparison,that wasnearlyadecade higherthan the median age for the world as a whole andalmosttwelve years higherthan the median age prevailing in less developed regions. Russia’smedian age wasvery slightlylowerthan the average for the more developed regionsasawhole (37.3 years vs. 38.6 years),but well within the range that characterized the affluent graying societies in Europe,NorthAmerica,and elsewhere.
By the benchmark of median age,Russia has beenagingfairly rapidly in recent decades. Between 1980 and 2005, median ageinthe Russian Federationrose by 6years—thatis to say, by almost three months each and every calendar year.Inabsolute terms, Russia’s riseinmedian age over thepast generationexceeded the global average (roughly 5 years), fallingjust belowthe overallaverage for the more developedregions(6.0 years vs. 6.6 years). But by thiscriterion,Russia’s trajectoryofpopulation aging is not appreciablydifferent fromthose of other, Westernsocietiestoday.
25 Another aperture on the aging phenomenon is afforded by proportion of total populationcomprisedbypeople 65 years of age and older.In2005, just under14 percent of Russia’s totalpopulation was 65 or older—roughly speaking,every seventh citizen. As recentlyas1980, the corresponding fraction would have beenevery eleventh citizen. In fact, Russia is now on theverge of becoming an “aged society”—a term commonlyapplied to populationswhere 14 percent or more havereached their 65th birthdays.xii
Overthe coming generation,Russia stands to become aprogressively more aged society. We can be fairly confident aboutthis outlook,insofarasthe country’s future senior citizens arealreadyinRussia hereand now—theyare thecohortscurrently advancinginto middleage. The prospectisillustrated by projections to the year 2030 produced by the US Census Bureau’s International Programs Centerand theUnited Nations’ WorldPopulation Division. Over thegeneration 2005‐2030, median age in Russiaisenvisioned as increasing by another sixyears,tojust under44years.The percentageofpopulation 65 and older,for its part, is seenasjumping from today’s 14 percent to about 21 percent—meaning over one Russian in every five—by2030.
26 Figure15, Projected Median Age, 2005‐2030: Russia in International Perspective (Median age in years)
55 United States of America Russia Japan Germany 50 More developed regions WesternEurope Switzerland
45
40
35
30 20052010 20152020 20252030
Source:Population Divisionofthe Department of Economic and Social Affairs of the United Nations Secretariat,World Population Prospects: The2008Revision, http://esa.un.org/unpp.
27 Figure16, Projected PercentageofPopulation aged 65+, 2005‐2030: Russia in InternationalPerspective
35% WesternEurope More Developed Countries Japan Russia United States Germany Switzerland 30%
25%
20%
15%
10% 2005 2010 2015 2020 20252030
Source:U.S.Census Bureau, International Data Base,available at http://www.census.gov/ipc/www/idb/, accessed on April 2, 2010.
By these projections, Russiawill certainly not be the most elderly society on earth—that accolade lookslikelytorest securelywith Japan’s populace, at least for the coming several decades. But Russia is not likelytobethe mostyouthful of the developed region’s steadily aging societies, either. Russia’s median age is currentlyhigher than correspondinglevelsinanumberofWestern societies—the most populous of these being theUnitedStates. That gap in median ages between Russiaand America, in fact, is slated to wideninthe years ahead: from justover ayear in 2005 to roughly 4yearsin 2030. In 2030, Russia’s 65‐plus group is likewise seen as accounting for asomewhat greatershareoftotal population than America’s (21 percent versus 19 percent). In termsofits degreeand paceofaging, then, Russia’s prospective trajectory is expected
28 to remainslightly below the average for the more developed regions as awhole over thecoming decades, but it is atrajectory that is unmistakably characteristic of the more developed societies.
Unhealthy Aging: aRussian Specialty
Viewed in thecontext of the more developedsocieties, in short, there is absolutely nothing exceptional about themagnitude of the graying that Russiaisset to experience in the years immediatelyahead. This is very bad news for Russia—forthe health of Russia’s older menand women is exceptionally poor.The elderly tend to be weaker and frailerthan younger adults in every society, but Russia’selderlyare unusually unhealthy and infirm.For Russia, theprospectofpopulation aging on amajor scale almost certainly portends aseriousincrease in debilitation and dependence with which Russian society‐‐alooming realitywith which Russian policywill be forced to contend.
In Western Europe,NorthAmerica,and the rest of the affluent West,the past several generations havebeen aperiod of progressiveand appreciable improvement of health for older persons.xiii (As bestwecan tell, in fact, continuing andmeaningful improvements in elder health havebeen characteristicinmost modern societies, both rich and poor, in recent decades.). But Russiapresents as astriking exceptiontothis general globalrule. Russia’spredicamentishighlightedbylong‐term trends in life expectancyfor people 65 years of age, as estimated by researchers in the Human Mortality Databaseproject. Over theperiod 1965‐2006, Russian life expectancyatage 65 fell for men and womenalike. For older Russianmales, theestimateddecline (a drop of alittle more than oneyear) amounted to areduction of nearly one tenth of remaining lifeexpectancy—a more thantrivial compressionatthat stage of life.But older women in Russiaalso facedareduction in life expectancy, although of less severe magnitude.
29 Figure17: Male Life Expectancy at age65: Russiaand selected countries,1965‐2006 (life expectancyinyears)
19 EGermany Russia Italy Portugal 18
17
16
15
14
13
12
11
10 1966 1969 1972 1975 1978 1981 1984 1987199019931996 1999 2002 2005
Source:Human Mortality Database.University of California,Berkeley and Max PlanckInstitute for Demographic Research.http://www.mortality.org.
30 Figure18: FemaleLife Expectancy at age 65: Russiaand selected countries, 1965‐2006 (life expectancyinyears)
24
EGermany Russia Italy Portugal 22
20
18
16
14
12
10 196519681971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004
Source:Human Mortality Database.University of California,Berkeley and Max PlanckInstitute for Demographic Research.http://www.mortality.org.
Meanwhile, elder lifeexpectanciesinmost of the European countries with which Russia mightbecompared underwent tremendous improvement. The contrast with Italy, Portugal and former East Germany seemsparticularlyapposite.Italy and Portugal were still relativelypoor Western societies as lateas1965, and 1965 EastGermanywas, like Russia, under thecommand of aMarxist‐Leniniststate that wasdirecting (or perhaps misdirecting)its planned socialisteconomy.
In the mid‐1960s, furthermore,life expectancyfor their older populations looked pretty similar in Russia, EastGermany, Italy and Portugal. In 1965, female life expectancywas actuallyhigherinRussia than in Italy, PortugalorEast Germany; malelifeexpectancy was abit higher in Italythan Russia, butwas in fact slightlyhigherinRussia than in Portugal or East Germany. By 2006, female life expectancyatage 65 was three anda half years lowerinRussia than in EastGermanyorPortugaland four years lowerthan in Italy. Elder malelife expectancyinRussia was fully five yearslowerthan in East Germany
31 or Portugal by 2006, and it wasalmostsix and ahalf years lowerthan in Italy. Nowadays, older men in Italy can expecttolive fully half again as long,and Italian women can expecttolive well overathird longer, than their counterpartsinRussia.
Elder life expectancyinRussia today, indeed, appearstobeakintolevelswitnessedin contemporary ThirdWorld countries (settings, incidentally, where the65‐plus population accounts for afar smallershareoftotal population than is the case for the contemporary Russian Federation).According to “life tables”preparedbythe WHO Statistical Information System (WHOSIS), for example,asofthe year 2006, life expectancyatage 65 was lowerinRussia than in Paraguay for men and womenalike. Elder life expectancyinRussia was higher than in Bangladesh for females, but forelder males, life expectancyactually wasestimatedtobehigher in Bangladesh than in Russia.xiv But of course Paraguay and Bangladesh are far poorer than Russia. According to the reckoning of economic historianAngus Maddison, as of 2006 per capita GDP in Paraguay wasless than two‐fifths the Russian level; Bangladesh’s wasnot even one seventh Russia’s.xv
In Western Europe (and in major parts of post‐Communist Europe), mortality levels for older people today are much lowerthan they were 40 years ago, irrespective of the numberofcandles on the birthday cake.This fact is even true at age 90: accordingto estimatesfrom the HMD, death ratesfor those nonagenarians were on average 25 percent lower in Portugal in 2005 than in 1965,40percentlowerinItaly, andalmost45 percent lower in the former East Germany. On the other hand,deathrates in the Russian Federation were higher—oftendramaticallyhigher—in2005 than in 1965 at every calendarage from 60 through 90 forbothmen and women.Consequently, the risk of death for older people is now vastly higherinRussia than in the developed West. This may be seenbycontrasting age‐specific death rates at older ages in Russiaand Portugal, as in Figure 19. The contrapositionisespeciallymeaningful, as Portugal currentlyseems to havepoorest health and thelowest lifeexpectancyofany state in Western Europe.
32 As of 2005, therisk of death at age 60 in Russiawas over three timeshigher for women andover fourtimeshigher for men than in Portugal (Western Europe’s ‘poorest’ society). Those differentials diminish with age but stay very high nonethelessover the remainder of the life cycle.Atage 75, for example,deathrates for men and womenare overtwice as high in RussiaasinPortugal. By age 90, death rates are “only”35percent higher for women, and 15 percent higherfor men, in Russia than in Portugal, butthen againpeople in thisage group tend to be hardy survivors, especially in Russia.
Figure 19: Ratio of Age‐standardized death ratesin2005: Russia vs.Portugal, ages60‐90 [Portugal =100]
450%
400%
350%
300%
250%
200%
150%
100% Females Males 50%
0%
4 0 8 60 62 6 66 68 70 72 74 76 78 8 82 84 86 8 90
Source:Human Mortality Database.University of California,Berkeley and Max PlanckInstitute for Demographic Research. http://www.mortality.org.
Today’s Russia‐Portugal mortality differentials mean that aPortuguese man will not face the same risk of death as a65‐year‐old Russian until he is around 75 years of age (and for Portuguese women, not until they are 73).xvi Thesedisadvantageousdisparities in deathrates for older Russians may suggest that thehealth status of Russia’s senior citizens has beencorrespondingly compromised. Drawing such inferences, of course, requires some presumptionofhomogeneityand representativeness: thatistosay,
33 presumptions that the recorded death rates actuallymirror underlyinghealth risks amongthe population of survivorsrather than reflecting the problems of some specific high‐risk sub‐population withRussia’s growing pool of elderly men and women.Tobe sure: there is plentyofevidence to indicatethat Russiaisacountry withtremendous heterogeneity in socioeconomichealth patterns. Butthereisalso compellingevidence that the overall health status of Russia’s older cohorts of menand women is far more unfavorable todaythan their counterparts in other countries undergoing big surgesin population aging.
Forexample, in a2004 study ledbyMartin Bobak of the University College of London, basedonsurvey data from the late1990s, foundthat Swedes and Russians assessed their own health overall health statusand difficultieswith physical disabilitiesvery differently.The results implied that men and womenwho managed to survive to older ages werefar more brittle in Russiathan in Sweden.InSweden, for instance, just over a fourth of men in theirearly 70s, and just underathird of women,rated theirown health as “poor.” In contrast, over half of Russian men in their early70s rated their own health as “poor,” whileover two‐thirds of Russian women in their early 70s said they suffered from “poor”health.The surveyalso showed thatRussians, whether maleorfemale, reported amuch higher prevalenceofimpairment with “physical functioning” at ages 65‐74 than didpeople fromSweden.xvii
By the same token, a2009 studybyVladimir Shkolnikov of the Max Planck Institute for Demography and colleagues investigated differences in grip strength between older (ages55to89) populationsinMoscowCity,Denmark, andEngland and found that older Muscovites,male andfemalealike, demonstratedless physical strength by thismeasure than counterpart populations of the same ageinWestern Europe.xviii Theseresults appear especially meaningfulnot only becausegripstrength is afair predictor of cardiovascularrisk but also becauseMoscow is one of Russia’s most prosperous, best educated,and healthiestregions.
34 Notleastimportant, survey data on lifestylepatterns andbehavioral healthrisksseems to corroboratethis picture of exceptional health risks at older ages in Russia. As T. Paul Schultz of Yale University showed, risky health behaviorsamongRussian adults are pronouncedeven among senior citizens. Schultz’s analysis of the 2004 round of the Russia Longitudinal Monitoring Survey (RLMS) found that older people in Russiawere reporting remarkablyhigh alcohol consumption and remarkably low consumptionof health and medicalservices.xix In hisanalysis of the 2004 RLMS survey, shown in Table 4, Russian men 65‐74 years of age reported an average alcohol intake equivalent to a liter of vodka per week—the equivalent of over22liters of pure alcohol peryear. Further, only 10 percent of Russian men 65‐74 and12percentofRussianwomanof thosesame ages said they had undergone any sort of medical check‐up or treatment in the three months before they were surveyed in 2004.Extrapolating on the assumption thatsuch medical treatmentpatterns were probabilistic withrespect to time, these results would imply that at nearly 60 percent of Russian men 65‐74 and overhalf of Russian women of thosesame ages would have no medical contactover thecourseof that given year. By wayofcomparison, for the calendar year2005, only 6percentof American menand women aged 65‐74 said they had no medical check‐ups or treatment by health professionals.xx
35 Table 4: Selected Health‐Related Characteristics and Behaviors of Older Russians,bySex and Age: 2004
Years of Cigarettesper Alcohol Medical schooling day intake(grams checkup in last per day) 3months (per 1000) Males 65–74 9.46 6.48 62.2 123 75+ 9.52 2.67 36.2 171
Females 65–74 9.44 0.24 12.0 105 75+ 7.34 0.12 5.0 70
Note: One liter of 40°vodka contains approximately 400g pure alcohol.
Sources: RussiaLongitudinal MonitoringSurvey 2004;Derived in T. PaulSchultz,“HealthDisabilities and LaborProductivity in Russiain2004: ConsequencesBeyondPremature Death”,inCem Mete, ed., Economic implications of chronic illness anddisabilityinEastern Europe andthe former SovietUnion, (Washington,DC: WorldBankPublications, 2008), Table 3, p. 94.
Russia’s Dilemma: Pervasive Population Aging in theFace of Low Incomes and Poor Health
The lackofcontactbetween Russia’s sickand aged citizens and the Russian health care systemmay partly be amatter of ill‐advised custom and habit,but it alsospeaks to the severeresourceconstraints that press elderly menand women in Russiatoday.Older men and womeninRussia are not only much less healthythan their Western counterparts—they arealso much poorer.Infact, Russia may virtually be the world’s poorest aged society—atleast, to date.Certainlynone of the now‐affluent Western societies ever entered into the grey terrain that Russia is now traversing on such low levels of per capita income.
Figures20through 22 make this point. They trace theaging‐to‐incometrajectories of Russiaand the affluent Western societies overthe postwar era, utilizing UNPD estimates for median age and percent of population 65+ and theeconomic historian Angus
36 Maddison’s estimatesoflong‐term international trendsinPPP‐adjustedGDP per capita. (Weexclude Maddison’s estimatesofoutput trends in theRussian Federation forthe Soviet era, owing to the problems of comparability between market‐orientedand centrally‐planned economicsystems.)
Figure20: Median Age vs. Per CapitaGDP PPP, 1950‐2005: The Russian Federation in Western Perspective
100,000
rs U.S.A. Japan Western Europe Russia la ol sd mi ha -K ry ea lG na io at
rn 10,000 te in 90 19 PP (P DP aG it ap rc Pe 1,000 15 20 25 30 35 40 45 Median Age
Note: Data forRussia onlycover post‐Communist years 1995‐2005.
Sources: AngusMaddison, “Per Capita GDPPPP (in 1990 Geary‐Khamisdollars),” HistoricalStatistics for the WorldEconomy: 1‐2006 AD, table 3, http://www.ggdc.net/maddison/ (accessed June6,2009). Population Division of the Department of Economic andSocial Affairs of theUnitedNations Secretariat, WorldPopulation Prospects:The 2008 Revision, http://esa.un.org/unpp.
37 Figure21: PercentAged 65+ vs.Per Capita GDP PPP, 1950‐2005: The Russian Federation in Western Perspective 100,000 rs
la U.S.A. Japan WesternEurope Russia ol sd mi ha -K ry ea lG na io at
rn 10,000 te in 90 19 (PPP DP aG it ap rc Pe 1,000 0510 15 20 25 Percent Aged 65+
Note: Data forRussia onlycover post‐Communist years 1995‐2005.
Sources: AngusMaddison, “Per Capita GDPPPP (in 1990 international Geary‐Khamisdollars),” Historical Statistics for the WorldEconomy:1‐2006 AD,table3,http://www.ggdc.net/maddison/ (accessed June 6, 2009).;Population Divisionofthe Department of Economic and Social Affairs of the United Nations Secretariat,World Population Prospects: The2008Revision, http://esa.un.org/unpp.
38 Figure22: GDP Per Capita, PPP, 2006 (Angus Maddison) vs.Percent of Population aged 65+, 2025 in OECD Countries andRussia
35,000
y=617.18x +6765.6
) 30,000 R2 =0.1328 l$ Switzerland ona 25,000 ti PP na ,P ter ta in 20,000 Germany pi is ca am
er 15,000 Kh Pp y- GD ear 10,000
0G Russia
(199 5,000
0 0510 15 20 25 30 35 Population aged 65 andover (percent),mediumvariant
Sources:UnitedNations, DepartmentofEconomic andSocial Affairs, Population Division, World Population Prospects:The 2008 Revision, New York, 2009;Angus Maddison,StatisticsonWorld Population,GDP and Per CapitaGDP,1‐2006 AD,availableat http://www.ggdc.net/maddison/Historical_Statistics/horizontal‐file_03‐2009.xls.
In 2005, Russia’s median agewas alittle over37years.When WesternEurope’smedian age reached that same level, however, percapita GDP there was on average nearly two and ahalf times as high as Russia’s today. The same wastrue for Japan. America’s median age is still alittle lowerthan Russia’s, butthe US per capita income level, by Maddison’s reckoning,isabout four times higherthan Russia’s.
So too, with theproportion of population 65 and older: when Western Europe first attained Russia’s current levels,its average percapita GDPwas over 75 percent higher
39 than Russia’s today. Japanwas twice as rich in termsofGDP per capita. America still has alowerpercentage of 65+ population than contemporary Russia, butwhenRussia’s share was the same as America’s today, herper capita income level was barely afifthof that of the US.
Moreover,ifwecomparecurrent (2006) per capita income levels with prospective (2025) proportions of total population 65 years of age and older, we can see that Russia’scoming income‐to‐aging outlookappears generally—one is tempted to say exceptionally‐‐unfavorable by comparisonwith thecountries in today’s OECD.
Pervasive population aging by asick and fragile citizenry on what qualifies historically as an unusually low trajectory for general income levels begs thequestion of how Russia’s steadily growingproportion of senior citizenswill be supported in thedecades ahead.
An initialglimpseatthe outlook is afforded by USBC projections of “old agedependency ratios,”the ratioofthe 65+ population to people of conventionally defined workingages
(15‐64).Bytheseprojections, Russia’s old‐age dependencyratio is slated to rise in the years ahead from about 20 percent in 2005 to something like 32 percent in 2030.Put another way, there are about 5people of notional working agefor every notional retirement ageRussiannow, but the ratiowould be down to about3:1 in alittle over two decades.
40 Figure23: Projected Old Age Dependency Ratios, 2005‐2030: Russian Federation vs. Selected More Developed Regions [Persons 65+/Persons 15‐64 years of age]
60% WesternEurope More DevelopedCountries 55% Japan Russia United States Germany Switzerland 50%
45%
40%
35%
30%
25%
20%
15% 2005 20102015202020252030
Source:U.S.Census Bureau, International Data Base,available at http://www.census.gov/ipc/www/idb/, accessed on June 25,2009.
On its face,Russia’s coming old‐age dependencyburdenlooks to be milder than those facing most other developedsocietiesRussia’s projectedratio for 2030 is about the same as America’s(32 percent), but it is lower than theaverage for the more developed regions (37 percent),considerably lowerthan the projectedaverage for Western Europe (41 percent) and far lower than theprospective ratio for Japan(51 percent), where there maybefewer than 2persons in thenotional working age group foreach notional retiree.
41 Thesenumbers mightseem to suggest that Russia willbemore favorably positioned to weather thecoming graying wave that is settosweep alldeveloped societies. But any suchinferencewould be badlymistaken. Figure23does notoffer an “apples to apples” comparison. In Russia, population aging is associated with afar worseoverallhealth profilethan for correspondingmore developedsocietiesfromOECD countries—andthis makes the challenge of copingwith aging much greater.xxi Russia’s senior citizens are significantly morefrailand unhealthy thantheir counterparts in theaffluent West; moreover, their healthtrendshave beenheading in the wrongdirection for almost two generations.Inthe affluent West,“healthy aging”istransforming the demographic profile of older men andwomen. Thesesalutary changes, in tandem with ongoing changes in the natureofwork in Western societies (inter alia, the decline of manual labor and theexpansion of employment in aless physically taxingservice sector) is opening newpossibilities for continuing labor forceparticipation for arobust and active, albeit graying, population.xxii In Russia, on the other hand, “unhealthyaging” is not only limiting the possibilities for older Russians to engage in economically productive activity: it is also restricting the scope for younger adults to supportRussia’s steadilygrowing older generations.
Poorhealth may helptoexplaincontemporaryRussia’s distinctive laborforce participation patterns. From age 55 onwards, workforce participation in Russia drops off very sharply—more sharply,indeed, than in most Westernsocieties. Accordingto Russia’s 2002 census, only about half of Russians in their late fiftieswere still in the country’s workforce. Less than 30 percent of thoseintheir early60s were economically active, amongthose 65 and older, thelabor force participation rate was under 5 percent. According to those same statistics,essentially no Russians overthe ageof73 were economically active.xxiii For the “moredeveloped regions”asawhole,labor force participation rates todayatolderages are consistentlyhigher than in Russia. In 2002, by ILOestimates, thecorresponding rates for the more developed countries as awhole were 62 percent for persons in their late 50s, 35 percent for persons in their early60s, and about 10 percent for persons 65 and older.
42 Eventhis comparison, however, is confounded by incomeeffects—by the preferencefor leisureofmore affluent populations. In recent decades, there hasbeen aretreatfrom the workforce at older agesacross Western Europe, but thisshift is explainedinsome measure by rising affluence and abroadpreference for enjoying leisureduring ahealthy old age. Russia’s exceedinglylow workforce participation patterns at older age, by contrast, maybeconditioned much more by sheer exigency: the plaininability of frail seniorstomeet the demands that the Russian workplace imposes.
That latter distinction emerges more sharply whenwecompare labor force participation rates for older men and womeninRussia today to the rates that prevailed in Western Europe when Western European societies reportedper capitaincomelevelssimilarto Russia’s nowadays.xxiv Consider Franceand Italy—two paragons of earlyretirementin Western Europetoday.Bythe reckoning of the economic historian Angus Maddison, France’s per capita GDProughly matched the Russia 2002 level in 1954 and Italyin1960. In 1961, accordingtothe Italian Census, labor force participation rates in Italyfor the 65+ groupwere overtwo and ahalf times higherthan Russia’s four decadeslater.As for France, its 1962 Census recorded labor force participation rates overthreetimesthe Russia 2002 levelfor persons 65 and older and nearly twice as high per persons in their early60s. Note furtherthat combinedmale andfemalelife expectancyatage 55 was higher in both Italy and France in theearly1960s than it was in Russia in 2002.xxv Why didolderWestern Europeans do more work in theearlypostwar era than Russians today? Perhaps partofthe answer is:because they could.
In Russiatoday,retirementage is conventionally set at 60 for men and 55 for women. Correspondingly, official Russian statistics regard the working ages as 16‐59 for men, 16‐ 54 for women.Tobesure:some pension‐agedmen and womeninRussia today are still actively engaged in remunerativelabor—but the proportion is very low indeed. Figure 24 below makesthe point. According to estimatesbythe Russian Federation Pension Fund,infact, fully three quarters of Russia’s pensionable populationdid not work at all in theyear 2006xxvi—this despite the meagerbenefitsguaranteed by official Russian
43 social security programs.xxvii As of 2006, Russia’s averagepublic pension payments actually fell below thecountry’s official “minimumsubsistence” level—meaning that the typical pensioners who reliedonthesebenefits alonefor support without outside income from work or othersources would have to live below Russia’sown stringent “poverty line”.
Figure 24: Shareofrespondents and their partners, who receivepensions and whohave ceased to work, %ofrespective age groups
Source:National HumanDevelopment Report, Russian Federation, 2008, UNDP Russia, Moscow,2009, Page 118, Figure6.9. Availableat http://78.136.31.142/en/reports/nationalreports/europethecis/russia/name,18666,en.html.
Under real existing Russian conditions,then, Russia’s current andrelatively low official retirement ages may be more realistic thresholds for calculating Russia’s true “old age dependency ratios”than the conventional international formulas used in Figure 23. When we employ this Russian conception for calculating old‐age dependency level, however, we find that the implied demographicburden is already much higherthan may be commonly appreciated.
44 According to officialestimatesbyGoskomstat/Rosstat (the Russian Federal Statistical Service), Russiahad just 3persons “atworking age” for everyperson“overworking age” at the startof2008. But of course notall of Russia’s working agepopulation was actively engagedeconomically. In 2008 (thatis, before the impact of the current world economic crisis on localdemandfor labor), Russia had aworkforce of about70million, andapension‐agepopulation of nearly30million—meaning the ratioofearners to pensionable population was just 2.5 to 1. Overthe years ahead, that ratio is set only to decline further.
Pension and Old Age Support:ALooming Dilemma for the Russian Federation
By Goskomstat’s own “mediumvariant” projections, Russia’s ratioof“workingage” to “over working age” population is on track to fall below 2:1bythe year 2030—just 20 years from now.[SEE FIGURE 25] And, of course, in 2030—as now—notall of Russia’s population of workingage willactually be employed. Projectionsbythe Russian Ministry of Education and the InstituteofDemography at Moscow State University suggest that, on the current trajectory,Russia’spension‐agepopulation will nearly equal the country’s workers by the mid‐2020s—andthat there could be more pensionersthan workers in Russiaasearly as the year2029.xxviii
45 Figure25: Ratio of Working Age to Above Working Age Population (medium variant), Russia, 2010‐2031
3.5
3.0 to on ti on
ti 2.5 la la opu pu Po eP 2.0 ge Ag ng gA 1.5 ki in or rk Wo eW 1.0 o: ov ti Ab Ra 0.5
0.0 2010 2012 2014 2016 2018202020222024 2026 2028 2030
Source:“1.8. Total populationbyselected agegroups,” Federal StateStatistics Service(Goskomstat), Russian Federation,Availableathttp://www.gks.ru/free_doc/new_site/population/demo/progn3.htm.
In the decadesahead, theRussianFederation willface at the same time the full panoply of challenges and claims attendant to social protection programs for amodernwelfare state: family benefits (child support, maternity benefits and thelike), unemployment insurance programs,occupational healthand safety programs,and health care benefits, among others.Inrecentyears,the Russian government has begun to address some of these issues. It has implementedapro‐natalist programofchild allowancesxxix,for example,and has movedinthe direction of reforming its health care system(although outsiders have argued thesehealth reform measures are as yet halting, inefficient and incomplete with evident gapsinsecuring broadaccess at reasonable quality).xxx
46 The following discussion willnot address these broaderquestions of social protection, effective healthcareprovision andpreventive measures, focusing instead only on the demographic implications of the country’s prospectiveold age‐support challenges. It is important to remember, however, that the full range of social protection obligationswill place additional andlikelygrowing fiscal pressureonthe Russian budget and the economy that must support it,above and beyond pressures on the for old‐age support systemdescribed below.
In 2002 the RussianFederation adoptedapension reform strategymodeled broadly on the World Bank’s “threepillars” schema (i.e.,apay‐as‐you‐go (PAYG) defined‐benefit nationwide publicpension system, amandatory privately funded defined‐contribution system, andanotional supplementaryprivatelyfunded defined‐contributionsystem).xxxi Although the WorldBank was involvedinadvising the government on thisreform, and provided financial support forthis overhaul, aWorld Bank project evaluation assessment has concludedthat the pension reform has not beensuccessful, at least to date.xxxii Given theuncertainties(and lack of transparency) surroundingRussia’scurrent financial system and markets for bonds and equities, Russian workers haveremained understandably cautiouswith their private retirement systeminvestments—opting largelyfor holdings in cash or otherinstruments bearing distinctly negative real returns in an inflationary environment. Thus the “first”pillar—thebasic PAYG Russian public pension system—remains dominant,and is likelytoserve as the primarysourceof pension‐basedold‐age support forRussia’sretirees in the years immediatelyahead.
For pensionersrelying solely on public pension incomefor old‐age support,living standards aredetermined by the “replacementrate”: the ratio of monthlypension benefits to workingincome(both net of taxes). The International Labor Office recommendsthat this replacement rate should be no lower than 40%‐‐and in OECD countries, “the lowest replacement rates are around 40%, but most are well above that level”.xxxiii In Russiaasof2007, however,the replacementrate forthe public pension systemwas an estimated 26%. In practice, this meant that averagepublic pension
47 benefits that year were barely abovethe country’s penuriouspovertyline (“minimum subsistence level”); in some earlieryears,asalreadynoted, average benefits had actually been lowerthan that “minimum subsistencelevel”. Accordingtoone widely‐ accepted analysisbyaRussian economist,Evsey Gurvich,Russia’spublicpension systemwas so seriously underfunded thatitcould not maintain even that low replacementrate into the future: absent changes in the then‐existing arrangements,the system’sreplacement rate was projectedtofall to amere 16% by 2027. [SEEFIGURE 26] Allthings have not remained equal since 2007: the Russian government hasdecreed annual increasesinpublic pension benefits in 2008 and 2009, and 2010 ;in2009, furthermore Prime Minister Putindeclared that “Poverty among pensionerswill be fully eliminated” (implicitly acknowledging that thiswas awork stillinprogress)..xxxiv Welcomeasthey were, however, it is essentialtorecognize thatthesedeclarationsand adjustments in pensionbenefits were ad hoc—entirelyprovision in nature. No regular mechanism is in place withinthe Russian public pension systemtoassure that replacementrates will not resume theirdownwarddeclineinthe future.Givenits actuarialimbalance, moreover, the budgetary implications of maintainingaeven a steady replacement ratio—even ameager one—in Russiaover theyears immediately ahead appear to be imposing. Calculations by EvseyGurvich, for example,suggestthat it would take fully3%ofRussianGDP in 2027 just to keep the pension system’s replacementrate at its2007 level; by these estimates, raisingthat rate slightly, to 30%; would requiresupplementarybudgetarycommitments exceeding 4% of GDP. [SEE FIGURE 27] (Achieving theILO’sdesideratum of aminimum40% replacementrate would of course mean afar greaterallocation of public funds; Gurvichdid not even consider this possibility.)
48 Figure26: Projected Replacement Rate of Russia’s Public Pension System, 2007‐2050 (projectionsasof2007)
Source:David Hauner,“MacroeconomicEffects of Pension Reform in Russia,” IMFWorkingPaper, International MonetaryFund,August 2008.
Figure27: AdditionalFunding Need under Two Scenarios,PercentofGDP
Source:David Hauner,“MacroeconomicEffects of Pension Reform in Russia,” IMFWorkingPaper, International MonetaryFund,August 2008.
49 By 2009, accordingtoofficial Russian sources, thecountrywas already devotingfully 10% of GDP to old‐agepensions.xxxv Could such additional commitments be sustainable? Russia, of course, is blessedwith an abundanceofnatural resources—most notably today itsoil and gas reserves. Theseresources present the government an opportunity to financesocial policies and other initiativesthat would be unavailable to acountryin Russia’s position, butlacking such natural wealth.Yet thepublic means afforded by Russian oil and gas are by not unlimited. One InternationalMonetaryFund (IMF) analysishas attempted to estimate just how long the monies in Russia’sOil Stabilization Fundwould lastifthey were devoted exclusively to supporting theunfundedbalances of the existing PAYG public pension system. [SEE FIGURE 28] Under theassumptionsofa 30% replacementrate and $80/barrel oil, the Fund wouldbecompletely spent by 2021—eleven years fromnow. With oil at $100/barrel anda30% replacement rate, the date of full depletion for the Fund wouldbepostponed—but by just 4years.Even under moreoptimistic assumptions (i.e., lowerreplacement rates)and $80/barrel oil, the Fund would be bankrupt before 2030—that is to say, in less than twodecades, andat precisely thetime when Russia’s pension aged population couldexceedpopulation of actively engagedworkersunder the assumptionsofaforementioned Moscow State University study.
50 Figure28: OilStabilization andNational Welfare Funds in Percent of GDP
Source:David Hauner,“MacroeconomicEffects of Pension Reform in Russia,” IMFWorkingPaper, International MonetaryFund,August 2008.
To sum up: it is no secret that population aging represents amajorprospective social and economicchallenge for all affluent Western societies in the decades ahead. What is less generallyrecognizedisthat population aging poses more acute challenges to Russia than to today’s Western societies –achallenge driven by poor health indicators, an unfavorable ratiobetween working ageand retired population cohorts, and pension systembynomeanssufficient to meet present andfutureneeds of an upper middle income economy such as Russia. In fact, far more than in today’s affluent Western societies,population aging and theconsequent “aging burden” in Russia may proveto be both asocial problemand constraint on economicdevelopment in thedecades ahead.
The challenges for social policymakersinRussia overthe yearsaheadstand to be especially pressing.(To reiterate: in focusing on old age support,wehave been examining but one of many social support issues that will be confronting the country.) Devising sustainable social programs in such areas as old‐agesupport and health care promises to be avastly more daunting challengefor Russia than for the aging, but affluent and relativelyhealthy, societies of the OECD. What shouldbeapparent from
51 thisstudyisthat meetingRussia’sfutureneeds willtake more than another plaintive call for “integrated, coherent,comprehensive”policiesinthe social sector.Noless crucialisthe imperative of generatingthe wealth that an aging Russia willneed to meet its social policyclaims.Enhancing labor productivity through new skills and better health is the critical tasktotackle. To adegree perhaps not yet fullyappreciated, the fate of Russia’s social security situation on theyears ahead will depend on the success with which three efforts‐‐ 1) policiesfor radically reducing adultmortality andthe working age in particular 2) policiesfor revitalizing Russian highereducation andknowledge production and3)afundamental reform on institutions andeconomicpolicies—are pursuedtoday.
i Thisessay is asubstantially revised andextendedversion of achapter from Nicholas Eberstadt, Russia’s PeacetimeDemographic Crisis:Dimensions,Causes,Implications (Seattle, WA: National Bureau of Asian Research, forthcoming).Anabridgedversionofthe presentstudywill be appearing in TheInternational Social Security Review. Theauthors wouldliketosaluteMr. ApoorvaShahfor his superb researchassistanceinthe present work. Any remainingerrorsare of course theauthors’ own. ii NicholasEberstadtPh.D. holdsthe Henry WendtChair in Political Economyatthe American Enterprise Institute(AEI) in Washington,DCand is SeniorAdviser to theNationalBureau of Asian Research (NBR) in Seattle, WA. Hans GrothMD, MBA is Senior Director for Healthcare Policy &MarketAccessatPfizer Europe, Oncology BU andMemberofthe BoardofDirectorsofPfizerSwitzerland. He is also invited LectureronGlobal DemographicChange &EconomicDevelopment at theUniversity of St.Gallen, Switzerland.Bothauthors are members of theGlobal AgendaCouncil (GAC) of theWorld Economic Forum(WEF) iii Estimates are for 2005 percapita GDP in constant2005international dollars. WorldBank, World Development Indicators Online (WDI online),available electronically at http://ddp- ext.worldbank.org/ext/DDPQQ/showReport.do?method=showReport;accessed January 15, 2010. iv For 2007,the cutoff formembership in the“high incomeeconomies” grouping was aPPP-adjusted per capita GNIof$16,830 (for Lithuania). TheRussian Federation’s estimated level forthatyear was $14430—about 15%below thenotional “high income economy” threshold. WorldBank, World Development Indicators 2009.(CD-ROM). v Oneparticularly dramatic post-Communist transformationinhealth andmortality conditions foraformer Soviet Bloc state was thecase of the former GermanDemocratic Republic (now Eastern Germanywithin thereunified Federal Republic of Germany). Life expectancyinEastern Germany has soaredsince reunification: in the sixteenyears from 1990-2006,overall lifeexpectancy in Eastern Germany is estimated to have risenbyover8years—over three andahalfdaysfor every passing calendarweek. Despite four decades of Communist-era disadvantage,lifeexpectancyatbirth for thepopulation in Eastern Germany has convergedwith that of WesternGermany,standing today justafewmonths of theWestern German level. Overall life expectancy at birth in Eastern Germany is nowinfacthigherthanlife expectancyinthe United States: at the timeofreunification, it was nearly three years lower than in America. Formoredetails on this case, seeNicholas Eberstadt and Hans Groth, DieDemografiefalle: Gesundheit alsAusweg fürDeutschlandund Europa, (Stuttgart: ThiemeVerlag,2008). viCf. Nicholas Eberstadt, Russia’sPeacetime Demographic Crisis: Dimensions,Causes, Implications (Seattle, WA: NationalBureau of Asian Research, forthcoming).
52 vii Ibid. viii Cf. “Scientific glasnost”, Nature,464 ,141-142 (11March 2010) |doi :10.1038/464141b;Published online 10 March2010; see also“Data Everywhere” TheEconomist,February25, 2010, available electronically at http://www.economist.com/specialreports/displaystory.cfm?story_id=15557507. ix Transparency International,“Corruption Perceptions Index2009”, available electronically at http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table x James D. Gwartney et al., Economic Freedom of theWorld:2009 Report,(Vancouver: Fraser Institute, 2009), Chapter1,available electronically at http://www.freetheworld.com/2009/reports/world/EFW2009_ch1.pdf xi Heritage Foundation, “2010 IndexofEconomic Freedom—Ranking TheCountries”,available electronically at http://www.heritage.org/index/ranking.aspx. xii Studentsofdemography todayare generally underthe impression that theUnitedNationshas definedan “aging society” as one where 7percent or more of the citizens are65+,with an “agedsociety” benchmarked at 14 percent or more overthe age of 65.The documentationfor theseformal thresholds,as it turnsout,issomewhat problematic. (Personal correspondence with Dr.HaniaZlotnik,head of theUN PopulationDivision, andDr. Joseph Chamie, former headofUNPD, July 2009)But the7percent and14 percentnotional thresholds for“agingsocieties” and“agedsocieties” are widely used by students of demography nowadaysnonetheless. xiii For some details and evidenceconcerning thecorrespondence of improvedhealth status with declining mortality levelsfor oldercitizensinsomeofthe OECD countries,, see Nicholas Eberstadtand Hans Groth, Europe’s Coming DemographicChallenge: Unlocking the Value of Health,(Washington,DC: AEIPress, 2007). xiv “LifeTablesfor WHOMemberStates”, WHO Statistical Information System,available electronically at http://apps.who.int/whosis/database/life_tables/life_tables.cfm,accessed July 23, 2009. xvAngusMaddison, “Statistics on WorldPopulation, GDPand Per Capita GDP, 1-2006AD”,available electronically at http://www.ggdc.net/maddison/Historical_Statistics/bertical-file_03-2009.xls ,accessed July 20 2009. xviCf. TheHuman Mortality Database, available electronicallyatwww.mortality.org,accessedJuly10, 2009. xvii Martin Bobak, Margareta Kristenson, HynekPikhart, Michael Marmot,“Life span and disability: a crosssectional comparison of Russian andSwedish community baseddata”, British Medical Journal,vol. 329, p. 767-771 (September17, 2004). xviii Shkolnikov V.M., Andreev E.M., DemakakosP., Oksuzian A.,Christensen K.,Shkolnikova M.A. andJ.W.Vaupel, “PatternsofgripstrengthinMoscowascompared to Denmark and England”, 21st REVES Conference “Reducing gaps in health expectancy” 26-29 May 2009, Copenhagen, available electronically at www.ined.fr/.../telechargement_fichier_en_772_shkolnikov_andreev_demakakos_oksuzyan_christensen_p pt.pdf ,accessed July 20, 2009. xixT. PaulSchultz, “Health Disabilitiesand Labor Productivity in Russia in 2004”, in Cem Mete, ed., Economic Implications of ChronicIllness and Disability in Eastern Europe andthe Former Soviet Union, (Washington DC: WorldBank, 2008),pp. 85-109. xx Health United States 2008 (Hyattsville, MD: US NationalCenters forHealth Statistics, 2009) Table 83, available electronically at http://www.cdc.gov/nchs/hus/hus08.pdf ,accessed July 7, 2009. xxi In all graying societies, thegoalshouldbetoage in good health—andmanyWesterncountries are recognizingthisapproachasthe viable strategy. This is thereason, for example,why Switzerlandis discussing implementationofapreventivehealth strategytopromote aging in good health.Among the otherpotentialbenefits of such an approach,afocus on healthyaging mayhelp thecounty’scitizens consume less in theway of healthcareservice and stay longer in thelabor force xxii Thesepossibilities are describedand examinedinNicholasEberstadtand HansGroth, Europe’s Coming Demographic Challenge: Unlockingthe ValueofHealth,(Washington,DC: AEIPress, 2007). xxiiiILOLABORSTA database,available electronically at http://laborsta.ilo.org. xxiv Cf. Angus Maddison estimates, loc. Cit. xxv HumanMortality Database, loc. Cit. xxvi Cf.UNDPRussia, National HumanDevelopment Report:Russia2008—RussiaFacing Demographic Challenges,(Moscow:UNDP Russia, 2009),Figure6.8,p.117.
53 xxvii According to calculations by UNDP Russia, the“substitutionrate” for theRussian pensionsystem— pension income as aproportionofimmediatepre-retirementincome—was just 25 percentin2007. This is afar lowerrate than in anyWestern country today. National Human Development Report:Russia 2008; loc. Cit., Figure 7.2; p. 135. xxviii Ibid.; Figure 7.4, p. 138. xxix Cf. Nicholas Eberstadt, Russia Peacetime Demographic Crisis, loc. Cit. xxx See, forexample,William Tompson, “Healthcare reform in Russia: problemsand prospects” Economics Department Working Paper No 538. ECO/WKP (2006)66, Organisation forEconomic Co-operation andDevelopment(2007), available electronically at http://eprints.bbk.ac.uk/504/1/ECO-WKP(2006)66.pdf. xxxi Cf.World Bank, Averting theOld AgeCrisis: Policies To Protect theOld andPromote Growth,(New York:OxfordUniversity Press, 1994). Fordetails on the World Bank’sadvice to Russiaonpension reform, see “Pension Reform in Russia: Designand Implementation”, (Washington,DC: WorldBank, Human Development Sector Unit, Europe andCentral AsiaRegion, November 2002). xxxii SeeElsaFornero andPierMarco Ferraresi,“Pension Reform and theDevelopment of Pension Systems:AnEvaluation of WorldBank Assistance—BackgroundPaper,Russia CountryStudy” (Washington,DC: Independent Evaluation Group, 2007) xxxiii DavidHauner, “Macroeconomic Effects of Pension Reform in Russia,” IMFWorking Paper, WP08/201,International Monetary Fund,August 2008, p.5. xxxiv“State pensions to grow 20%annually in 2009-2011”, RIA-Novosti,May 14,2008;“Putinpromises to eliminatepovertyamong pensioners”, Itar-Tass, November25, 2009;“Over 11 mlnRusiantoget higher valorized penions—Golikova”, Itar-Tass, March16, 2010. xxxv “Russia’spensions next year to grow by 46 pct—Putin”, Itar-Tass, September 23,2009.
54 Previous Discussion Papers:
David E. Bloom and David Canning, Asghar Zaidi and Alexandre Sidorenko, “Global demography: fact, force and future”, “Features and Challenges of Population Ageing using the European No. 2006/ 1 Perspective“, No. 2008/5 David E. Bloom, David Canning, Michael Moore and Younghwan Song, “The effect of subjective survival probabilities on retirement and David E. Bloom, David Canning, Günther Fink and Jocelyn E. Finlay, wealth in the United States”, “The High Cost of Low Fertility in Europe“, No. 2007/ 1 No. 2008/6
Glenda Quintini, John P. Martin and Sébastien Martin, Robert L. Clark, Naohiro Ogawa, Makoto Kondo and Rikiya Matsukura, “The changing nature of the school-to-work transition process in “Population Decline, Labor Force Stability, and the Future of OECD countries”, the Japanese Economy“, No. 2007/2 No. 2009/1
David Bell, Alison Bowes and Axel Heitmueller, Jovan Zamac, Daniel Hallberg and Thomas Lindh, “Did the Introduction of Free Personal Care in Scotland Result “Low Fertility and Long Run Growth in an Economy with a Large in a Reduction of Informal Care?”, Public Sector“, No. 2007/3 No. 2009/2
Alexandre Sidorenko, Hans Groth, “International Action on Ageing: Where Do We Stand?“, “Switzerland and its Demography“, No. 2007/4 No. 2009/3
Lord Adair Turner of Ecchinswell, Hans Groth, Reiner Klingholz and Martin Wehling, “Population ageing or population growth: What should we worry “Future Demographic Challenges in Europe: The Urgency to Improve about?“, the Management of Dementia“, No. 2007/5 No. 2009/4
Isabella Aboderin and Monica Ferreira, David N.F. Bell and Robert A. Hart, “Linking Ageing to Development Agendas in sub-Saharan Africa: “Retire Later or Work Harder?“, Challenges and Approaches“, No. 20010/1 No. 2008/1 Ousmane Faye, United Nations Population Fund (ed.), “Basic Pensions and Poverty Reduction in sub-Saharan Africa“, “The Madrid International Plan of Action on Ageing: No. 2010/2 Where Are We Five Years Later?“, No. 2008/2 David E. Bloom and Alfonso Sousa-Poza, “The Economic Consequences of Low Fertility in Europe“, Svend E. Hougaard Jensen and Ole Hagen Jørgensen, No. 2010/3 “Low Fertility, Labour Supply, and Retirement in Europe“, No. 2008/3 David E. Bloom, David Canning and Günther Fink, “The Graying of Global Population and Its Ronald Lee and Andrew Mason, Macroeconomic Consequences“, “Fertility, Human Capital, and Economic Growth over No. 2010/4 the Demographic Transition“, No. 2008/4 Monika Bütler and Stefan Staubli, “Payouts in Switzerland: Explaining Developments in Annuitization”, No. 2010/5
Previous Letters:
Ariela Lowenstein, Marie F. Smith, “The Israeli experience of advancing policy and practice in the area of “The Role of Lifelong Learning in Successful Ageing”, elder abuse and neglect”, No. 2008/2 No. 2007/1 Aurore Flipo, Hélène Derieux and Janna Miletzki, Jeffrey L. Sturchio & Melinda E. Hanisch, “Three Student Essays on Demographic Change and Migration”, “Ageing and the challenge of chronic disease: do present policies have No. 2009/1 a future?” No. 2007/2 Nicholas Eberstadt & Hans Groth, “Too sick to prosper: Russia‘s ongoing health crisis obstructs economic Summary of a Special Session with: Bengt Jonsson (chair), Michaela growth and development”, Diamant, Herta Marie Rack and Tony O’Sullivan, No. 2009/2 “Innovative approaches to managing the diabetes epidemic”, No. 2007/3 Ilona Kickbusch, “Closing Speech of the 5th World Ageing & Generations Congress”, Baroness Sally Greengross, No. 2009/3 “Human Rights Across the Generations in Ageing Societies”, No. 2008/1 WDA Forum
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