Results – Thesis Part 6
Results
To establish a basis for comparison, Table 4 summarizes the results of various countries, showing how Barbados, a developing country, compares to more robust economies.
As previously mentioned, the Old-Age Dependency Ratio (ODR) is widely used to measure how aged a population is. In 2000, during a period of concern about the future sustainability of the NIS, Barbados had an ODR of 0.17 – the second lowest among the group and similar to North American countries. This suggests that the elderly population represents 17% of the Barbadian population of working age, which is a relatively high proportion for a developing country. However, given that Barbados already has the profile of an advanced country in demographic transition, this result was not surprising. Barbados had the lowest PR on the list of countries analyzed, indicating that even though there are people retiring early, they are few in number.
Country | PER | BR | ODR | PR | ER | PWR |
---|---|---|---|---|---|---|
United Kingdom | 0.08 | 0.20 | 0.24 | 1.19 | 0.73 | 0.44 |
United States | 0.08 | 0.31 | 0.19 | 1.10 | 0.76 | 0.27 |
Canada | 0.10 | 0.33 | 0.18 | 1.21 | 0.72 | 0.31 |
Japan | 0.14 | 0.36 | 0.25 | 1.16 | 0.74 | 0.39 |
Germany | 0.24 | 0.51 | 0.24 | 1.33 | 0.68 | 0.48 |
France | 0.29 | 0.58 | 0.24 | 1.25 | 0.61 | 0.50 |
Italy | 0.35 | 0.49 | 0.27 | 1.47 | 0.55 | 0.71 |
Brazil | 0.31 | 0.70 | 0.09 | 1.67 | 0.34 | 0.44 |
Barbados | 0.08 | 0.34 | 0.17 | 1.07 | 0.82 | 0.23 |
Regarding the Employment Ratio (ER), 82% of the Barbadian working-age population was employed, which is significantly higher than in other countries. The Pensioner/Worker Ratio (PWR) for Barbados in 2000 was very low compared to other countries, with only 230 retirees for every 1000 workers. Additionally, the Pension Expenditure Ratio (PER) was in line with that of North American countries and the United Kingdom. Finally, the Benefit Ratio (BR) represents the percentage of the average weekly earnings that beneficiaries will receive in retirement. Based on these results, Barbados has a profile similar to North American countries, which is not surprising since the NIS has worked with the Quebec Government over the years to provide benefits to insured persons working in both jurisdictions.
Evolution of Measures
Year | PER | BR | ODR | ODRNIS | PR | ER | PWR |
---|---|---|---|---|---|---|---|
2000 | 0.0768 | 0.3379 | 0.1732 | 0.2119 | 1.0722 | 0.8178 | 0.2272 |
2010 | 0.0926 | 0.4588 | 0.1843 | 0.2186 | 0.9230 | 0.8433 | 0.2018 |
2020 | 0.0928 | 0.4009 | 0.2521 | 0.2856 | 0.8105 | 0.8827 | 0.2315 |
2030 | 0.0836 | 0.3249 | 0.3558 | 0.3709 | 0.6939 | 0.9594 | 0.2574 |
2040 | 0.0725 | 0.2571 | 0.4208 | 0.4073 | 0.6923 | 1.0330 | 0.2820 |
2050 | 0.0591 | 0.1936 | 0.4459 | 0.4063 | 0.7518 | 1.0974 | 0.3055 |
Firstly, the Old-age Dependency Ratio (ODR) shows that the Barbadian population, which is already considered aged compared to other countries in the region, continues to display high values. By 2050, the ODR is projected to expand to 45%, meaning the population aged 15 to 64 years will only represent 55% of the total population, down from 83% in 2000. The ODR of the Social Security System (ODRNIS), calculated based on the ODR obtained by the UN and the employment ratio (HERBERT, 2003), is expected to reach 41% by 2050, indicating a 92% increase over the period analyzed. According to Table 5, the old-age dependency ratio will increase throughout the period analyzed. This outcome, driven by population ageing, is not surprising as birth and mortality rates are predicted to decline further in the coming years, making the population older.
When analyzing the ODR data for both the general population and the pension system, it is evident that the increasing ODR implies a declining support ratio during the same period. In 2000, when the ODR was approximately 17%, there were 5.77 working-age people for each individual aged 65 or older. By 2050, with the ODR nearly tripling, the support ratio will decrease to about 3 working-age people per elderly individual. The second column shows the ODR for the Social Security System, which mirrors the general ODR as it was calculated from it and the employment ratio. In 2000, with an ODR of 0.2119, the support ratio was around 4.72 contributors per retiree. Similarly, in 2050, with an ODR approaching 0.4063, the support ratio is expected to be 2.46 or 3 contributors per retiree. In the initial year, Barbados had an ODR of 0.17, closer to North American countries, and according to Bongaarts, low ODR levels indicate high fertility and migration rates in previous decades. Analyzing pre-2000 rates confirms that fertility and migration rates were indeed high. Finally, the analysis of the old-age dependency ratio in Figure 1 shows that the ODR for the pension system tends to be higher than the population ODR, resulting in a lower support ratio. However, it is noted that population data were used in this analysis to adhere to Bongaarts’ methodology, and the ODR and support ratio for the NIS pension system were merely for demonstration.
From Chart 2, showing the number of contributors and beneficiaries receiving old-age pensions (both contributory and non-contributory) in 2014 (the last year of real data obtained), it is evident that the peak of beneficiaries is around 65 years old, while the normal retirement age at that time was 66½ years (from January 1, 2014, to December 31, 2017). Many of these individuals were likely not affected by the reform and could retire under the old rules at 65 years old. Chart 3, below, shows the evolution of the number of contributors and beneficiaries over a different period, generally indicating that both numbers remained relatively constant with little fluctuation over the years. It is important to recall that the beneficiary bar* refers to individuals receiving old-age benefits.
Regarding the Pensioner Ratio (PR), variations in these ratios are due to different eligibility criteria for retirement across countries. For example, at the time, the normal retirement age in Barbados was 65, whereas in Italy, it was only 58 – a 7-year difference. Generally, a higher minimum retirement age suggests fewer people under 65 are retired, resulting in a low pensioner ratio (BONGAARTS, 2004). From Table 4, Barbados had the lowest PR in the group, indicating a smaller proportion of retirees under 65 compared to other countries. The evolution of this measure shows a decline during the analysis period, suggesting that the number of individuals receiving retirement benefits below 65 will decrease. Additionally, it is essential to remember that not all working-age individuals (15 to 64 years) are employed; some may be unemployed or choose not to participate in the labour force. Therefore, Bongaarts does not consider this measure to be accurate. In Chart 4, a notable peculiarity is the high value in 2000 that sharply declines by 2050; unfortunately, the reason for this occurrence was not discovered.
Regarding the Employment Ratio (ER), it is observed that the measure increases by 34% over the analysis period. Notably, in 2033, the measure exceeds one (1), indicating that the number of employed individuals is greater than the working-age population, suggesting that some elderly individuals remain active in the labour market. In most countries, social security legislation encourages citizens to exit the labour market due to the attractiveness of benefits (GRUBER; WISE, 1998).