Age is one of the first things you notice about people…and budgets. By 2023, spending on pensions will take a fifth of the Federation’s Expenditure Budget: 1.7 billion pesos. This represents a 14% increase compared to 2022, when it was 1.4 billion pesos.
How to put this number in perspective? Some of the President’s commitments and programs are expressed in the budget exercise, as well as the aging of the Mexican population. The 2023 budget reflects 360,000 million pesos that are labeled as a pension for the elderly and support for the elderly with disabilities. There are also the costs of returning retirement privileges to CFE workers. They once again had the right to retire with 100% salary if they complete 25 years of service and reach 55 years of age. This privilege costs around 2,000 million pesos a year and will grow. It seems little in a budget of 8.3 billion pesos, but…
The aging of the population is one of the most important social transformations of the 21st century, says the UN. In Mexico this means that every year we have a new record in public spending on pensions. In 2012, 429,000 million pesos of the federal budget were allocated to this item and in 2021, this spending exceeded one billion pesos for the first time. With inflation and population dynamics, it is very likely that by 2025 pension spending will exceed 2 trillion pesos and reach 25% of the government budget. This is logical, because in Mexico older adults are no longer a small minority. They have more and more political presence, as is clear in the presidential cabinet. Seniors in Mexico are growing in influence, because they are expanding in absolute numbers and as a proportion of the total population. Who said Gray Power?
Population aging occurs in Mexico at a great speed. In the year 2000, those over 60 years old totaled 6.9 million people and were 7% of the Mexican population. According to projections by the National Population Council, by 2030 there will be more than 20 million people, almost 15% of the population.
The demographic transition in Mexico will soon force us to stop seeing ourselves as a young country. In Sweden, the transition from a predominantly young society to one where the balance is tilted towards adults and older adults took 80 years. In Germany, it took 60 years. In Spain, it was 45 years. In Mexico and Latin America, the process will take between 20 and 25 years, according to studies by the Inter-American Development Bank. Not long ago, in Mexico there was talk of the challenge of taking advantage of the demographic bonus. The conversation has changed the subject: how will we be prepared for a future where there will be older people and they will demand their rights with more force and arguments?
On the radar we have spending on pensions, but it is not the only area in which the budget must be adjusted to face a new reality. The urban infrastructure will have to be transformed to respond to the needs of a population that will need more hospitals, but also more recreational spaces for older adults. In a world where it seems that it will be normal to live until the age of 90, the retirement age will have to be reviewed. Carlos Slim said it last week and left a proposal in the air: 75 years old, he also spoke of working three days a week. Sooner rather than later, we will have to seriously discuss similar proposals.
Offices and transport will have to respond to the challenges implied by a society with older people, who will have a greater need to remain active. In a few years, perhaps the media and social networks will be talking about tips for companies to attract creative older adults, in similar terms to how the challenges of recruiting millennials were discussed recently.
Two years ago, in space I quoted Maggie Khun, an American activist for the rights of the elderly. With her, I want to close this Safe: There are many myths about aging, said Khun, “that it is a disease, a disaster; that we old people are useless; that we don’t have sex; that we have no power and that we are all equal”. Let’s enjoy the myths, but let’s face the stubborn reality.
lmgonzalez@eleconomista.com.mx
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