Retirees: Burden or Resource?
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The number of elderly people is increasing in Hungary, with the 65+ age group accounting for 20.82% of the population. (This represents slightly more than two million people.) Arguments about the unsustainable pension system and the adverse economic and social effects of the declining number of active workers are often heard.
However, from another perspective, the elderly are not only a burden but also a resource, with both active and passive impacts that can be significant.
The older age group living among us has successfully preserved, documented, and continues to protect and nurture the linguistic, cultural traditions, historical knowledge, environmental values, professional skills, and social connections inherited from their predecessors.
For the later generations, who are still “active” today, our country has been made more valuable, beautiful, richer, and livable by today’s retirees – this can be factually proven based on the above.
During the “active” period of their lives, retirees have significantly contributed to the enrichment and growth of the country. Statistical data reveals that the average working period of the current retired generation (those born in 1958 or earlier, or those who took advantage of the “women 40” opportunity) was 38 years. So, in their case, according to the statistical average, the “active,” “capital-life” phase lasted from 1986 to 2023. If we consider the country’s GDP value in the year they entered the labor market as 100 units, 38 years later, by 2023, the value increased by this generation rose to 237 units.
Examining other aspects, it is evident that those currently retiring have enriched the country with significant value. Employees and employers – in accordance with the applicable regulations at all times – paid their pension-related public burdens to the budget, and overall, they most likely contributed more over 38 years than what age-eligible old-age pensioners receive from the budget as retirees – at least during the 16 years of retirement that can be calculated from the average life expectancy.
The reality is that a significant proportion of today’s retirees are still active, and their value-creating activities contribute significantly to the growth of the country’s distributable goods.
Retirees perform a significant amount of volunteer and unpaid – sometimes household – work. According to the latest statistical data, the majority of the elderly currently participate in unpaid, socially beneficial, value-creating activities. Published summaries indicate that the estimated value of volunteer work in Hungary exceeds 651 billion forints annually. (KSH: volunteer work) Naturally, the 65-74 age group also contributes significantly to the mentioned amount.
In addition to “invisible work,” a large portion of the 65+ age group is an active participant in the labor market sphere. They supplement their pensions with various formal and informal income earned within organizational frameworks.
One well-defined group includes those who engaged in activities or received income from sources that required them to pay public burdens. Nearly a quarter of a million people over 65 had an annual personal income tax filing obligation in 2022. (According to NAV records, 247.8 thousand people.) We can get even closer to the actual number of people working alongside their pensions by examining the KSH data on this matter. Some information can be gleaned from the published figure showing the percentage of “economically active individuals by age group.” According to surveys, 15.1% of the 65-69 age group and 7.6% of the 70-74 age group are present in the labor market.
Based on the data referenced here, half a million people over 65 supplement their pensions with employment.
However, there is no data on how many retirees are active in the 617 thousand individual and 528 thousand corporate enterprises, and at what cost they withdraw the equivalent of their value-creating work (e.g., as expense reimbursement, benefits in kind, dividends, etc.).
Currently, a total of around 800,000 retirees engage in volunteer work and/or income-generating activities. Some do it out of social necessity, others to maintain their social connections, and yet others out of the desire to pass on their work experience to the younger generation.