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1787/888932389398 In addition, some governments are focusing on areas that form a relatively small portion of total public spending. 7% of GDP on average. 2% of GDP. 6% of GDP. 3% of GDP). GOVERNMENT AT A GLANCE 2011 © OECD 2011 41 II. FISCAL CONSOLIDATION: THE NEED FOR EVIDENCE-BASED DECISION MAKING Pension reforms aim to address rising costs As OECD projections based on demographic change indicate that pension costs will continue to rise in most countries, reforms in this area are important for longer-term sustainability.

Turkey has planned wage reductions as part of its fiscal consolidation plan. Source: OECD National Account Statistics; OECD Fiscal Consolidation Survey 2010 as presented in OECD (2011), Restoring Public Finances, Paris. 15. Government workforces are ageing Percentage of central government workers 50 years or older (2009) 60 ITA 50 ISL 40 ESP AUT 30 BEL SWE USA SVK NOR NLD IRL DEU GRC PRT ISR FRA 20 FIN POL HUN DNK CAN CHE GBR MEX AUS EST JPN CHL SVN NZL KOR 10 10% 20% 50% 80-100% Other No set ratio identified in survey Replacement ratios (2010) Note: The Czech Republic and Turkey have also set replacement ratios (less than 50% of departing workers will be replaced in both of these countries) but are not included in the figure due to missing data on the age profile of their workforces.

Fourteen countries are looking to reform their pension systems as part of their fiscal consolidation plans. In several of these countries, such as Italy, Poland and Portugal, pension expenditures represent a large and increasing share of GDP. However, other countries with above-average and increasing expenditures have yet to address reforms in this area. Most reforms focus on reducing the costs of pensions for future retirees and will not affect those currently receiving benefits. In part to reflect that citizens are living longer, eight countries have announced increases in the retirement age ranging from two to five years, which can positively affect economic growth due to higher labour force participation of older people and the potential increased demand (and consumption) as older people need to save less since they will be retired for fewer years.

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