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Finance Leadership & Development
Being Intergenerationally More Fair: Our Resolution for 2018
by Dr. Susanna Di Feliciantonio, Head of EU Public Affairs, ICAEW | December 20, 2017 |
The intergenerational contract is under strain in Europe and beyond. A report recently published by ICAEW Europe, Intergenerational Fairness: A Survey of Citizens in 10 European Countries, shows that fewer than one in four Europeans feel that their respective generation is being treated fairly by their government when making policy decisions. Most Europeans also feel that governments are ignoring the financial implications of policy decisions on future generations. This sense of distrust is pervasive and shared broadly across countries as well as between genders and age groups.
Why does it matter? Intergenerational pressures are increasingly the focus of governments. These challenges are only likely to grow given demographic trends, structural economic changes, rapid technological developments, and strained public finances in many countries. The nature of the challenge will undoubtedly be quite different across the world. Some countries need to deal with a youth bulge, others are grappling with rapidly aging populations. Yet all, arguably, need to find a path toward more intergenerationally fair policymaking.
Our report seeks to add to the growing political focus by providing a unique picture of the views of 10,000 Europeans on different aspects of the debate. Carried out in mid-2017, the 10 countries surveyed (Bulgaria, the Czech Republic, France, Germany, Greece, Italy, Poland, Sweden, Switzerland, and the UK) reflect broad diversity of size, geography, and economy.
It also builds on our existing work on public finances in Europe, encouraging discussion among key policymakers and stakeholders on how governments can promote greater confidence in the way they manage public finances—for today and tomorrow. So we are dismayed to find that so many Europeans believe that governments are ignoring fiscal policy effects on the young, irrespective of differences in countries’ economic and fiscal outlook. Clearly there is ample room for improving communication of the potential financial impact of policy decisions. This finding also reinforces our long-standing belief that better understanding and management of public finances is critical to governments’ ability to be more intergenerationally fair.
Europeans fear that young people will pay for mistakes made today and also inherit the consequences of policy failures made yesterday. But they still see governments in the driver’s seat when it comes to meeting key societal needs. This outlook remains broadly similar across the countries we surveyed, even if the role of the state might be quite different. This broad agreement on the primary role of government may be expected. But is it sustainable? Will the balance between the role of the state and the role of the individual need to evolve?
Our survey also suggests that Europeans hold remarkably similar views when it comes to prioritizing policies with a strong direct or indirect intergenerational dimension. Addressing poverty and unemployment and securing pensions and social care are placed squarely at the top of the agenda. Measures to ensure environmental sustainability or to reduce government debt are at the bottom of the in-tray. Though we might argue about how and why some policies are ranked over others, the similar outlook across countries suggests that there may be a common ground for governments to start making difficult choices.
Ensuring intergenerational fairness will require difficult trade-offs. A balance must be struck between competing needs and priorities. Short and long-term priorities need to be reconciled. This should be familiar territory for the accounting profession. After all, we all share a primary interest in ensuring that decision makers—be they politicians, policymakers, business leaders, or finance directors—are equipped with the knowledge and insight needed to make good decisions. We can help bring clarity, rigor, and integrity to a pressing—and complex—public interest issue. In our report, we put forward a framework based on five core considerations to foster more transparent, informed, and accountable decision making. We welcome all ideas and suggestions on how to further refine and apply such a framework.
As we look to 2018, we are resolved to press for a profoundly different approach to making key policy decisions, enabling our societies to better respond to demographic, technological, and economic change. We hope the global accountancy profession will join us as we try do our bit to help improve the prospects of all generations, current and future.
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