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MINISTRY OF ECONOMY AND FINANCE Department of General Accounts General Inspectorate for Social Expenditure Mid-long term forecasts for the pension and health care systems calculated according to models from the Department of General Accounts and updated to 2001 – summary and conclusions (*) INDEX 1. Updating the models .................................................................................................................................... 2 2. Year 2001 forecasting activity................................................................................................................... 2 3. Forecasting scenarios.................................................................................................................................. 3 4. Results............................................................................................................................................................ 4 5. Sensitivity analyses...................................................................................................................................... 5 6. Conclusions................................................................................................................................................... 9 Bibliography.................................................................................................................................................. 17 (*) This document reproduces the paragraph “Sintesi e conclusioni” from the report “Le tendenze di medio-lungo periodo del sistema pensionistico e sanitario: previsioni elaborate con i modelli di previsione del Dipartimento della Ragioneria Generale dello Stato aggiornati al 2001” edited by the Department of the General Accounts, published in Temi di finanza pubblica e protezione sociale, no.3, December 2001. 1.Updating the models The forecasts presented in this document were produced in the period June – September 2001 using the models of the Department of General Accounts (Ragioneria Generale dello Stato - RGS) on the basis of “national” macroeconomic and demographic scenarios. The models have been updated to include the final expenditure figures for 1999 – which form the point of departure for the forecasts – and the legal-institutional framework in force at the time the Economic and Financial Planning Document for 2002-2006 (Documento di Programmazione Economica e Finanziaria – DPEF 2002-2006) was elaborated. Beyond this, they also take into account the revision of the data for 2000 and the forecasts for 2001 and 2002 contained in the Relazione Previsionale e Programmatica for 2002. As regards health care expenditure, the forecasts take into account the financial effects of the agreement between central and regional governments of 8 August 2001. The updating has not, however, considered either the changes in regulations foreseen by the budget law of 2002 (Law 448/2001, art. 38) relating to the increase in pensions lower than “one million lire” (516.50 euros), or the financial effects caused by the reintroduction of prescription charge (so-called “ticket”) in pharmaceutical costs. 2.Year 2001 forecasting activity As far as the public pension system is concerned, the national forecasts updated to 2001 have already been presented in the relevant “Analysis” section of the DPEF 2002-2006. These same forecasts – incorporating the increased expenditure resulting from the funds set aside for the increase in pensions of less than a million lire – have been published in the document updating Italy’s stability programme (Ministero dell’economia e delle finanze, 2001). That document also included, for the first time, the long term forecasts regarding public health care expenditure. The forecasting activity referred to above has been carried out alongside that undertaken within the work group on the financial consequences of ageing at the Economic Policy Committee – Working Group on Ageing (hereafter referred to as EPC-WGA). The scope of this latter activity was to analyse the financial sustainability of social expenditure in the countries of the European Union. On an operative and organisational level, the strategy adopted by the work group was to give individual responsibility to each member state for the official production of forecasts relative to their own countries utilising the instruments that they already possessed, having verified the coherence of such instruments with the ends of the research itself. Nonetheless, the macroeconomic and demographic scenario hypotheses were defined by the EPC-WGA and given to each member state as a necessary postulate for the analysis. The previsional results of this work – regarding the 2 pension and health spheres – were published last November, edited by the Economic Policy Committee (Economic Policy Committee, 2001). In the Italian case, given the fact that the models used for those forecasts are exactly the same as those used for the “national” forecasts, the differences noted between the two are entirely due to the different criteria adopted for the definition of the scenario hypotheses. 3.Forecasting scenarios Within the national forecasts, the “RGS-baseline scenario” (scenario tendenziale), which would occur in the absence of policies, acknowledges the main variant of new demographic forecasts produced by Istat, assuming 2000 as the base year (see table A). In comparison with the previous forecast (Istat, 97), this latter foresees an increase of more than 3 years in life expectancy at birth for both sexes, reaching, in 2050, 81.4 years for males and 88.1 for females. Beyond this, it assumes a doubling in the annual flow of immigration (from around 60 thousand to around 120 thousand per year) and a slight reduction in the fertility rate distributed throughout the entire period under consideration (in 2050, 1.42 rather than 1.46). The macroeconomic assumptions underlying the RGS-baseline scenario, shown in table B, substantially follow the figures assumed for the previous pension system forecasts (Ministero del tesoro – RGS, 2000). Specifically, the productivity growth rate is fixed at an average annual level equal to around 1.8%, maintaining the usual pattern of steady increase in the first part of the forecasting period, in which it goes from 1.1% in the period 2001-2010 to 2% starting from 2026. The total employment rate (both male and female) in the age group 20-64 grows by around 12 percentage points passing from 57% in 2000 to 69% in 2050. This growth, whilst affecting both sexes, is particularly marked for females (about 18 percentage points). The increase in the employment rate is due to both an increase in participation rates and a decrease in the unemployment rate. The latter drops from 10.6% in 2000 to 4.5% in 2050. Given the substantial invariance in the macroeconomic outline with regard to previous forecasting exercises, the increased migratory flow presupposed in the main demographic scenario determines a slightly higher endogenous dynamic for the GDP, which settles at 1.5% as the annual average for the entire forecasting period. However, for the years 2002-2006 the growth rate of real GDP has been taken as equal to about 2%, substantially in line with the average trend over the last twenty years. This choice, which reflects a formulation by now considered fixed (Ministero del tesoro – RGS, 1999, 2000), is explained by the need to isolate the medium-long term trends of those 3 factors which condition the structural balance of the health care and pension systems from short term cyclical fluctuations. However, in order to highlight the relevance of such a component, the RGS-baseline scenario has been flanked by a so-called “programmatic” scenario, which takes into account, for the years 2002-2006, the policies laid down regarding the growth of employment and productivity which are encapsulated in the DPEF 2002-2006. As will be demonstrated in the text, this alternative shows only transitory improvements in the pension sphere. As regards health care expenditure, the methodological choice agreed within the EPC-WGA on the evolution of standardised pro capita consumption (Consumo Pro capite Standardizzato - CPS), i.e the evolution of health care consumption independent from changes in the population (level and structure by age and sex), excludes any financial effect even in the short term. 4.Results The curve seen in figure A demonstrates the evolution of the relation between pension expenditure and GDP in the RGS-baseline scenario. It shows rapid growth in the first three decades of the forecasting period, where an increase of some 2 percentage points of GDP may be seen, passing from 13.8% in 2000 to 15.8% in 2031, after which it drops rapidly, settling at 13.5% in 2050. The initial change, excepting the first five years, is due almost entirely to an increase in the number of pensions alongside a substantially unchanged relationship between average pension and productivity. This factor decreases during the central part of the period under the effect of the gradual introduction of the contribution-based system (mixed regime), which stimulates a slowing down in the growth of pension expenditure. In the final phase, the ratio between expenditure and GDP diminishes rapidly through the joint effect of two factors. One is the gradual passage from the mixed system of pension calculation to the contribution-based one, and the second the dwindling growth, and then decrease, in the ratio between the number of pensions and the number of employed people. This last phenomenon follows from the progressive elimination through death of the baby boom generations. It is worthwhile pointing out that the updating of the parameters underlying the demographic forecasts produced by Istat, whilst relevant (see table A), do not produce significant change in the ratio between pension expenditure and GDP, as the effects of reduced mortality are effectively balanced out by those of increased migratory flow. Important changes do come about, however, in 4 certain components which participate in determining the ratio (the number of the employed, pensions, average pension). The evolution of the ratio between health care expenditure and GDP shows a much more regular growth. Leaving aside the initial stability, which results from the application of the 8 August agreement mentioned above, the ratio increases at an almost constant rate at least until 2040. The rhythm of growth shows some signs of dropping only in the final decade, this for well-known demographic reasons (exit by way of death of the baby boom generations). In the forecasting period as a whole, the ratio increases by 1.7 percentage points (around 30%) passing from 5.5% in 2000 to 7.2% in 2050. Taken together, the evolution of public expenditure for pensions and health care shows a trend with regard to GDP which is strongly conditioned by the dynamics of the former component, by far the larger in size. Starting from the figure of 19.3% in 2000, the curve reaches a maximum of 22.5% in 2033 and thereafter gradually decreases to settle at 20.7% in 2050, more than one percentage point up on the initial level. 5. Sensitivity analyses As is well-known, the results of any forecast depend in a significant way on the hypotheses which determine the macroeconomic and demographic framework. For this reason it was thought necessary to carry out broad based sensitivity analyses aimed at measuring the effect on the expenditure/GDP ratio of alternative hypotheses regarding the single parameters used, as has been done for the forecasting exercises undertaken for the EPC-WGA (Economic Policy Committee, 2001). Regarding the hypotheses for the demographic framework, four simulation exercises have been carried out. The first of these regards the adoption of the high and low Istat variants in place of the main variant, whilst maintaining unaltered the hypotheses concerning the macroeconomic framework. In this case, the alternative scenarios foresee a modification of all the demographic parameters on the basis of different attention levels regarding welfare. Thus, whilst the high hypothesis allows for an increased fertility, an increased net flow of immigrants and a lower mortality rate, the low hypothesis presupposes figures moving in the opposite direction. At the end of the forecasting period, the effect produced on pension and health care expenditure, taken together, appears more or less symmetrical with a difference in either direction a little below one percentage point (table C). In 2030 this variation is much less, and is also much less symmetrical, given the strong component of inertia which characterises the demographic forecasts 5 at that date and the differing temporal outlines with which the effects of the demographic parameters may be seen. Beyond this, it is interesting to note that pension expenditure is much more sensitive with regard to these two demographic scenarios than is health care expenditure. In fact the changes seen at the end of the period are of over 0.7 percentage points for the former and around 0.1 percentage points for the latter, with a ratio much greater than that of the relative dimensions of the two components. The other sensitivity exercises related to demographic parameters considered, in succession, changes in the following: the fertility rate, life expectancy at birth, and the net flow of immigrants. In carrying out these exercises it was thought best to consider as alternative hypotheses for each demographic parameter the high and low values assumed in the Istat scenarios. Such a choice meant that the alternatives taken into consideration were not always perfectly symmetrical. However, it allowed each single exercise to be interpreted as the contribution the single demographic parameter makes to the overall result, which originates from the application of the Istat high and low variants, net – obviously – of any interaction. The effects brought about by changing single demographic parameters appear to be reasonably symmetrical, particularly if corrected to take into account the slight asymmetry in the variation of the hypotheses. At the end of the forecasting period, the alternative hypotheses relating to the fertility rate produce an oscillation of some 0.7 percentage points in the ratio of pension expenditure to GDP, and 0.3 percentage points in the ratio of health care expenditure to GDP. Regarding the hypotheses on mortality, the changes brought about are diametrically opposed to those in the case of fertility and settle respectively at 0.3 percentage points for each component of expenditure. Finally, changing just the net flow of immigration produces, overall, an oscillation of about 0.4 percentage points of GDP in 2050, of which around three-quarters derive from the pension component. The sensitivity analyses relating to the macroeconomic hypotheses concerned, successively, a change in the rate of productivity growth, in the participation rates, and in the unemployment rates. With regard to this subject, it is necessary to underline that none of the alternatives considered produce any effect on the ratio between health care expenditure and GDP (see table D). In fact, as the evolution of health care consumption independent from demographic changes (CPS) is correlated to GDP, this automatically means that any improvement or deterioration brought about on GDP by modifying the macroeconomic hypotheses is completely neutralised by an equivalent percentage variation in health care expenditure. 6 An alteration of 0.5% in the productivity growth rate, both positive and negative, produces a reduction or an increase in the ratio between pension expenditure and GDP of, respectively, 1.2 and 1.4 percentage points at the end of the forecasting period. Much of that effect is already noticeable by 2030. The effect of a change of 5 percentage points, applied in both directions, to participation rates is much smaller, however. In this case, the hypothesis of reduced participation in the labour market brings about an increase in the ratio between pension expenditure and GDP equal to 0.6 percentage points in 2050, whilst the opposite hypothesis sees a reduction of around 0.4. A comparison with the results for 2030 reveals a significant asymmetry, owing to the temporal profile within the framework of which variations to the workforce are applied. It is worthwhile remembering that the earlier such a correction is applied the greater the final effect on the pensions system will be, due to the modification in the number of pensions and vice versa. To come, finally, to the unemployment rates, the only hypothesis regards an increase in the rates, there not being sufficient leeway for a change in the opposing sense. The simulated alternative assumed no variation in the specific unemployment rates for age and sex. At the close of the forecasting period, this resulted in an increase in the average unemployment rate of almost 4 percentage points. At the same date, the ratio between pension expenditure and GDP showed an increase of a little less than 0.4 percentage points, of which some half was already present by 2030. Having completed the framework as regards the demographic and macroeconomic hypotheses, it was felt opportune to include within the sensitivity analyses certain parameters deriving from the legal-institutional background (Table E). In this case the need was not to test alternative assumptions as such, but to evaluate the financial consequences of change to the existing legal framework. This aspect emerges clearly in the simulations relating to the pensions system which are concerned with, successively, real indexation, the revision of the transformation coefficients, and the requirements to retire under the contribution-based regime. The case for health care expenditure is different. Here the alternatives considered were not so much alterations to legal parameters but rather an interpretation of the effects due, even partially and in an indirect way, to the institutional set up of the public system. In such a context, the two hypotheses considered related to, respectively, a linkage of CPS to productivity rather than to pro capita GDP and an improvement in health, ages being equal, consistent with the increased life expectancy underlying the demographic projections. The introduction of a real component into the percentage of indexation of pensions produces decidedly significant effects on the financial equilibrium of the pensions system. The hypothesis of 7 an indexation to nominal GDP, applied beginning in 2007, produces an increase in the ratio of pension expenditure to GDP equal to 3.4 percentage points at the end of the forecasting period. It is interesting to note that more than 90% of such an effect already occurs prior to 2030. The effect brought about by the hypothesis of a lack of revision to the transformation coefficients is also significant. In fact, the current legislation states that these coefficients shall be revised every ten years on the basis of the evolution in mortality rates. At the close of the forecasting period the ratio of pension expenditure to GDP would be 1.8 percentage points higher (0.8 in 2030). Changes to the eligibility requirements under the contribution-based regime have been carried out following two opposite paths. In the first case, it has been supposed that the regulatory parameters are modified in such a way as to allow entry to an old age pension to all workers on reaching the minimum required age. At the other end of the scale, a hypothesis has been made whereby a correction to regulatory parameters excludes access to a pension at any age below 65. The aim of the exercise is also to evaluate the maximum oscillation of the ratio between pension expenditure and GDP which derives from the propensity to take pensions on the part of workers who are entirely subject to the contribution-based regime. It is noteworthy that at the close of the forecasting period the variation in the ratio is reasonably limited in both directions, passing from an increase of around 0.2 percentage points in the case of anticipated entry into pension, to a reduction of 0.1 percentage points in the case of delayed entry. This result is due to the fact that the “number” effect, brought about by the reduction of the pensions paid, is gradually counterbalanced by the “amount” effect which follows on from the greater contributive seniority and the application of higher transformation coefficients. A demonstration of this is the fact that in 2030, when the “amount” effect is negligible, the variation in the ratio of pension expenditure to GDP shows an increase of 0.8 percentage points or a decrease of 0.6 points. Linking CPS to productivity determines an increase in health care expenditure in relation to GDP of around 0.6 percentage points at the end of the forecasting period, and of around 0.4 percentage points in 2030. The deterioration of the ratio depends on the fact that the alternative economic policy considered, unlike that in the RGS-baseline scenario, excludes the possibility that an evolution of health care consumption independent of demographic structures can compensate for changes in GDP brought about by the dynamics of employment. The hypothesis of improved health has been specified differently as regards acute and long term care. In the first case the difference in health care consumption between those subjects destined to die within a year and their surviving contemporaries has been taken into consideration. 8 In the hypothesis for the second component, the age profile for health care consumption has been shifted to take into account the increased life expectancies underlying the demographic forecasts. The effect of such an assumption is to see the ratio between health care expenditure and GDP improve progressively, reaching a level of some 0.4 percentage points lower than that of the RGSbaseline scenario in the final part of the forecasting period. 6.Conclusions To conclude, the results of the analyses carried out in this report may be summarised as follows; a) the marked drop in the birth rate in the last thirty years has not yet produced negative effects regarding the financial sustainability of the social security systems, and particularly of the pension system. Recent demographic forecasts based on the Istat scenarios show that such effects will come about swiftly and in significant measure, beginning in 2015 when the baby boom generations begins to reach pensionable age and to pass from the working age population to the quiescent population. This trend will be more marked given the increased life expectancy postulated in all demographic forecasts regarding economically developed states. b) Notwithstanding the fact that Italy is destined to experience an ageing process amongst the most extreme of all the industrialised countries, the level of public expenditure for pensions and health care in relation to GDP will be significantly lower, over the next 50 years, than the average for countries of the European Union (Economic Policy Committee, 2001). This depends fundamentally on two things. One is the process of pension reform carried out in the ‘90s, and the second the fact that long term care, which represents the macro function of public health care expenditure most effected by the ageing of the population, is of modest dimensions in Italy. c) Regarding the pension system, the measures which have helped to limit the growth rate of the ratio of pension expenditure to GDP are as follows; (i) the elimination of the real component in updating the amount of pensions and the passage to a system of indexation only to prices, (ii) the introduction of the contribution-based method of calculation where benefits are related, according to actuarial equivalences, both to contributions and to the life expectancy of the pensioner and of his possible survivors, and (iii) the ten-year revision of the transformation coefficients to take into account the evolution of the probabilities of death. 9 d) The decomposition of the ratio of pension expenditure to GDP shows the expansive effect of the demographic component (ratio between pensions and employed) and the compensatory effect brought about by the legal-institutional component (ratio between average pension and productivity). The expansive effect of the demographic component is due both to an increase in the absolute levels of the aged population following from a drop in mortality rates and from the ageing of the baby boom generations, and also to a marked reduction of the working age population. The containment of the ratio between average pension and productivity comes about through the abolition of the real component of indexation in the first part of the forecasting period and the gradual introduction of the contribution-based method of calculation in the second part. e) The analyses by sector show the predominant role of private sector dependent workers, mostly insured with the Private Employed Insurance Fund (Fondo Pensione Lavoratori Dipendenti – FPLD). The specific pension expenditure within this section shows a movement slightly lower than that of the total expenditure in the first part of the forecasting period, and slightly higher in the second. This results from the fact that the para-salaried workers (parasubordinati) have been assumed to move to the FPLD, after a certain period of time. The sector for public employees, on the other hand, shows a movement higher than the total in the first period and lower in the second part. This depends both on the high yields of the earnings-related system which will remain completely or in large measure effective for at least another twenty years, and on the sharp contraction of pension amounts brought about by the introduction of the contribution-based system. Within the self-employed, the pension funds for artisans and merchants shows a movement of expenditure well above that of the total pension system in the first part of the forecasting period. This is due to the results of the law 233/90 which extended to such funds a calculation method very similar to that used for the FPLD, notwithstanding the fact that the contribution rate is much lower. This advantage will be operative throughout the period of survival of the earnings-related system. With the introduction of the contribution-based system, however, the lower notional contribution rate foreseen for the self-employed in comparison with the employed (20% against 33%) will bring about a reversal of this trend. Finally a word should be said about the fund of the Direct Agriculturists, Land Colonists and Sharecroppers (Coltivatori Diretti, Coloni e Mezzadri – CDCM ), the impact of which 10 is destined to drop drastically consequent on the reduction in size of the farm workers sector. f) The analysis of distribution effects shows an improvement regarding the position of the pensioner vis-à-vis the active population in the first part of the period. In the second part, however, there is an evident about turn of this trend to the point that beginning in 2026 pensions will increase in real terms by 0.8% whilst the average growth of pro capita GDP will be equal to 1.8%. In any case, it is worthwhile to underline that, owing to internal mechanisms within the contribution-based system itself, the significant shrinkage of the growth of the average pension in relation to pro capita GDP prevalently concerns those insurance positions which will have enjoyed higher internal rate of return and amount of pension under the earnings-related system. This less concentrated distributive set up will in effect tend to act in favour of the social sustainability of the system. Beyond this, the analysis of the intergenerational distributive effects reveals that the absence of real indexation does not produce distorted effects on the average in the early and central parts of the forecasting period. On the contrary, the favourable calculation methods allowed to the older generation of pensioners tends to compensate, as compared with the less favourable calculation methods foreseen for new pensioners. g) The analyses of health care expenditure for each macro function show a growth in the long term care component which is much more marked (61%) than that for acute care (26%). This automatically brings about a change to the relative weight of each component at the end of the forecasting period. Such a process, common to many economically advanced countries (Economic Policy Committee, 2001), has different characteristics in the countries of southern Europe, where the long term component is of limited importance (around 10% of total health care expenditure in Italy) in comparison to the rest of Europe, where such expenditure already accounts for a significant percentage of GDP. h) The growth of health care expenditure in relation to GDP can only be countered effectively by economic policies aimed at reducing CPS in a measure sufficient to compensate for the expansion of consumption due to demographic ageing. Such a reduction would be of significant size if considered in relation to pro capita GDP (24%). This means that the resources available to meet the health needs of each citizen, as a ratio of the overall resources produced, will be noticeably lower than 11 those currently available. For this reason significant increases in the efficiency and efficacy of the public health care system will be necessary to avoid a progressive deterioration of the levels of “health well-being” which have been reached. i) The decomposition of the evolution of the ratio between health care expenditure and GDP for different explanatory factors shows the marked impact of the demographic component both as numerator (increases in health care expenditure) and as denominator (slowdown in the growth of GDP) in the ratio. Growth in the employment rate, which partially compensates for the decrease in size of the working age population, and the hypothesis of the economic policy adopted, both work in the opposite direction. Linking CPS to pro capita GDP, in fact, neutralises the effects on the ratio brought about by the change to the numbers of employed in comparison to the total population. j) To conclude, the sensitivity analyses show that changes in the demographic parameters of the size contemplated in the high and low Istat variants would produce significant effects on the amount of GDP destined to finance pension and health care expenditure. In no case, however, they are capable of counterbalancing the deterioration expected as a result of the demographic factors. Conversely, change to the variables in the macroeconomic framework do not have any effect on the ratio of health care expenditure to GDP, given the hypothesis adopted regarding the movement of CPS. Significant effects on the ratio between pension expenditure and GDP do come about, however, according to the size of the change postulated. The sensitivity of the system to change in the legal-institutional parameters highlights the importance of certain rules that characterise the current regulatory set up of the pension system, such as indexation only to prices, and the ten-yearly revision of the transformation coefficients. Besides this, the analyses have shown that alternative assumptions regarding the propensity to take up a pension in the contribution-based system can have significant though only transitory effects. Finally, regarding health care expenditure, it has been shown that the effect deriving from the hypothesis of better health, ages being equal, could reach interesting dimensions at the close of the forecasting period. 12 Figure A: expenditure as a percentage of GDP Figure A1: pension expenditure 18% 17% 15.8% 16% 15% 14% 13% 13.5% 13.8% 20 50 20 45 20 40 20 35 20 30 20 25 20 20 20 15 20 10 20 05 20 00 19 95 12% Figure A2: health care expenditure 8.0% 7.5% 7.2% 7.0% 6.5% 6.0% 5.5% 5.5% 5.0% 20 50 20 45 20 40 20 35 203 0 202 5 202 0 201 5 20 10 20 05 20 00 19 95 4.5% Figure A3: health care and pension expenditure 24% 22.5% 23% 22% 21% 20.7% 20% 19% 19.3% 18% 13 20 50 20 45 20 40 203 5 20 30 20 25 202 0 20 15 20 10 200 5 20 00 19 95 17% Table A: demographic hypotheses– Istat main variant, base 2000 Fertility rate 2000 2010 2020 2030 2040 2050 1.26 1.4 1.41 1.41 1.42 1.42 Life expectancy males females Net flow of immigrants (‘000s) Eldery dependency ratio (1) 76.2 82.6 79.6 86.2 81.4 88.1 111 113 117 119 121 124 28.9 34.1 40.3 50 64.9 68.8 (1) population of 65+ to population aged 20-64 (in %) Table B: macroeconomic hypotheses - RGS-baseline scenario (in %) 2000 2010 2020 2030 2040 2050 Employment rate [ 20-64 ] - males - females - total 71.6 42.2 56.8 76.2 47.7 62.0 76.0 48.3 62.3 75.2 49.3 62.5 76.8 55.4 66.3 77.5 60.0 68.9 Unemployment rate - males - females - total 8.1 14.5 10.6 6.4 11.3 8.4 6.3 10.8 8.0 5.4 9.3 7.0 4.2 7.3 5.5 3.5 5.9 4.5 0.5 1.0 0.7 -0.3 -0.2 -0.3 -0.6 -0.4 -0.5 -1.0 -0.1 -0.6 -0.7 -0.1 -0.5 1.1 1.6 1.9 2.0 2.0 1.8 1.4 1.4 1.3 1.5 Employment (average annual change in the decade) - - males females total Productivity (average annual change in the decade) Real GDP (average annual change in the decade) 14 Table C: sensitivity analyses of the demographic hypotheses – changes in the expenditure/GDP ratio compared with the RGS-baseline scenario (in %) pensions health care total Hypothesis 2030 2050 2030 2050 2030 2050 -0.27 0.12 -0.73 0.75 -0.02 0.01 -0.10 0.11 -0.30 0.13 -0.84 0.86 -0.21 0.17 -0.64 0.81 -0.10 0.12 -0.26 0.33 -0.31 0.29 -0.91 1.14 (m = -2,6) ; (f = -2,7) 0.39 -0.41 0.25 -0.37 0.14 -0.15 0.26 -0.29 0.53 -0.56 0.52 -0.66 (+40/45 thousand) (-32/27 thousand) -0.48 0.33 -0.36 0.30 -0.06 0.05 -0.10 0.08 -0.54 0.38 -0.46 0.38 Scenario high variant low variant Fertility rate high variant low variant Life expectancy high variant low variant Net flow of immigration high variant low variant in 2050 (+0,23) (-0,27) in 2050 (m = +2,6) ; (f = +2,4) 15 Table D: sensitivity analyses of the macroeconomic hypotheses – changes in the expenditure/GDP ratio compared with the RGS-baseline scenario (in %) pensions health care total Hypothesis 2030 2050 -1.19 1.32 -1.22 1.40 - +5% -0.53 -0.42 -5% 0.29 change in 2050 +3,9% 0.20 Productivity high low 2030 2050 2030 2050 - -1.19 1.32 -1.22 1.40 - - -0.53 -0.42 0.63 - - 0.29 0.63 0.38 - - 0.20 0.38 changes (+0,5%) (-0,5%) Participation rates high low changes in 2050 Unemployment rate Table E: sensitivity analyses relating to the legal-institutional framework – changes in the expenditure/GDP ratio compared with the RGS-baseline scenario (in %) pensions health care total Hypothesis 2030 2050 Indexation to nominal GDP 3.14 Constant transformation coefficients retirement age under the contribution-based scheme all at 57 (1) minimum age 65 CPS= average productivity per employed Improved health conditions 2030 2050 2030 2050 3.40 3.14 3.40 0.77 1.82 0.77 1.82 0.81 -0.59 0.24 -0.12 0.81 -0.59 0.24 -0.12 0.36 0.59 0.36 0.59 -0.35 -0.41 -0.35 -0.41 (1) Except for people whose pension amount does not reach the limit of 1.2 times the old age allowance 16 Bibliography Agenzia Regionale di Sanità Toscana (2001), Il valore economico dell'ospedalizzazione in funzione del tempo dalla nascita e dalla morte, a cura di Bartolacci S., Berni R., Forni S., Tediosi F. & Cesare Cislaghi. 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