Around the world, nowadays, persistent unemployment, skill mismatches and retirement frameworks have become central to fiscal policy, and to the often-fierce political debates that surround it. The advanced countries are facing an immediate "aging" problem. Most of the emerging economies are also in the midst of a demographic transition that will result in an age structure similar to that of the advanced economies - that is, an inverted pyramid - in just two or three decades. Indeed, China will get there much sooner.

Multiple problems impact employment. Weak demand in the aftermath of the global financial crisis, which began in 2008, remains a key factor in Europe, the United States and Japan. But, longer-term structural issues are weighing down labour markets as well.

Most importantly, globalisation results in a continuous shift of comparative advantage. This creates serious adjustment problems as employment created in new activities does not necessarily compensate for the loss of jobs in existing ones. In any case, most new jobs require different skills, implying that workers losing their jobs in dying industries have little hope of finding another one.

Moreover, technological progress is becoming ever more "labour-saving". Computers and robots are replacing human workers in settings ranging from supermarkets to automobile assembly lines. Given the volatile macro-economic outlook, many firms are reluctant to hire new workers, leading to high youth unemployment throughout the world.

At the same time, aging - and the associated cost of health care for the elderly - constitutes the main fiscal challenge in maturing societies. By the middle of this century, life expectancy at age 60 will have risen by about ten years relative to the post-World War II period. This is when current retirement ages were fixed.

Marginal changes to existing arrangements are unlikely to be sufficient in responding to technological forces, reducing social tensions and averting young people's fears. Additionally, it is likely they will fall short in addressing growing fiscal burdens. A radical reassessment of work, skill formation, retirement and leisure is needed, with several principles forming the core of any comprehensive reform.

For starters, skill formation and development must become a life-long process, starting with formal schooling, but continuing through to on-the-job training and intervals of full-time education at different points in life. Special youth insertion programs should become a normal part of public support for employment and career formation. This should come with exemption from social-security contributions for the first one or two years of employment.

A complementary principle could be that retirement should be a gradual process. People could work an average of 1,800hrs to 2,000hrs a year until they reach their 50s. They could then taper off to 1,300hrs to 1,500hrs in their early 60's, ultimately moving towards the 500hrs to 1,000hrs range as they approach 70. A hospital nurse, an airplane crew member or a secondary-school teacher, for example, could work five days a week until her late fifties, four days a week until age 62, three days until age 65 and two days until age 70.

Employers and workers should negotiate such flexibility, but they should do so with incentives and financial support from the government. An example of this would be variable social-security and income taxes. Paid holidays can be three to four weeks until the age of 45, gradually increasing to seven to eight weeks in one's late 60s. Maternity and paternity leave should be increased where it is currently low, such as in the United States.

Public policies should also encourage greater scope for individual choice. For example, every ten years, a worker should be able to engage in a year of formal learning, with one-third of the cost paid by the employer, one-third by public funds and one-third from personal savings (these proportions could vary depending on the income bracket).

The overall objective should be a society in which, health permitting, citizens work and pay taxes until close to the age of 70. Less intensively with advancing age and in a flexible manner that reflects individual circumstances. In fact, gradual and flexible retirement would in many cases benefit not only employers and governments, but also workers themselves. This is as continued occupational engagement is often a source of personal satisfaction and emotionally enriching social interaction.

Using the Gallup World Poll, a recent study has found that the happiest cohorts are those who work part-time voluntarily. In exchange for longer working lives, citizens would have more time for both leisure and skill formation throughout their lives, with positive effects on productivity and life satisfaction.

The new social contract for the first half of the 21st century must be one that combines fiscal realism, significant room for individual preferences and strong social solidarity and protection. This is in the face of shocks stemming from personal circumstances or a volatile economy. Many countries are taking steps in this direction.

They are too timid. We need a comprehensive and revolutionary reframing of education, work, retirement and leisure time.

Kemal Devris Kemal Dervis Is Vice President of the Brookings Institution, United States. He Also Served As an Administrator of the United Nations Development Fund (UNDP).