When the world woke up to the fact that its population was getting older and living longer, pensions were one of the main concerns. But the issues go far deeper than that, as experts increasingly point out.
Planet Earth is in the middle of an unprecedented transformation, according to the United Nations. We are moving from a world with high mortality and high fertility to one with low mortality and low fertility. Formidable changes are forecast. Continued migration from rural areas to cities will place huge pressures on natural resources such as oil and water. The environment will come under renewed threat as fast-developing economies in emerging markets go through their 21st Century version of the Industrial Revolution.
Look forward to more seniors…
In many countries, a shrinking and financially hard-pressed younger generation will save less, with possibly significant effects on the global economy. The UN estimates that the global population will rise from the current 6.7 billion to 9.2 billion by 2050 and nearly half those will be over 60. This anticipated increase alone is equivalent to the entire world's population only 57 years ago.
In its "2006 Revision" of official population estimates, the UN foresees the following changes by 2050:
- Globally, the number of people over 60 will almost triple, from 673 million today to two billion by 2050.
- The number of children under 15 will decline slightly.
- Population of less developed regions will rise from 5.4 billion to 7.9 billion.
- Population of more developed regions will stay largely unchanged at 1.2 billion.
- Over-60 age group in more developed regions will increase from 245 million to 406 million
More over-60s than children for the first time in history
The projected outcome is that by 2045, for the first time in history there will be more people in the world aged 60 and over than children under 15. In Europe, where ageing is accelerating more rapidly and birth-rates in many countries are falling, that watershed has already been passed, in 1995.
…and fewer juniors
Even among what the UN refers to as the "oldest old" - those over the age of 80 - numbers are expected to increase rapidly. In most countries, this section of the population is growing faster than any other. At the moment 88 million strong, the octogenarian army is forecast to number more than 400 million by 2050, with 60% of them in Asia.
If even half the forecasts prove correct, the strains on social services, state pensions provision and availability of trained labour will be immense. Suggested "remedies" include raising the retirement age or encouraging greater private provision for retirement, but most of those who have studied the subject agree that these actions on their own will not solve the problem.
Some commentators suggest that a revival in birth-rates or the increased flow of workers from developing countries will help to provide an answer. But Didier Blanchet, who has researched demographic studies and now heads the department of general economic studies in the French national statistical institute, discounts this. "There is a great deal of irresponsibility and lack of realism in pretending that such effects could be counterbalanced by a new surge in fertility levels or by increasing reliance on migration from developing countries. Migration can play a positive role, but is certainly unable to fully avoid the consequences of increased longevity." 1
A challenge right across the globe
As the scale of what has been called the demographic time bomb becomes apparent, a range of issues has been identified. Every area of the globe has to face up to the challenge. To take some of the major economic players:
- China, the new powerhouse, currently has 144 million people over the age of 60, and this figure is expected to rise to 438 million by 2050.
- In the United States, the population between the ages of 55 and 64 is expected to grow ten times faster in the next five years than that of the under-55s.
- India's population will rise from 1.1 billion today to 1.6 billion by 2050, of whom 324 million will be over 60.
- In Europe, only the older population is expected to increase, from the current 150 million to 225 million in 2050. Simultaneously, the number of people under the age of 60 is forecast to decrease from 470 million to 330 million.
- Asia, Latin America and the Caribbean are all catching Europe up. The over-60 age group in all three regions is expected to overtake the number of children by 2040. At about the same date, the population aged 15 to 59 is expected to begin a slow decline in Asia, and to stop growing in the other two regions.
Even these estimates, says the UN, depend on ensuring that fertility in developing countries continues to decline. It adds: "To achieve such reductions, it is essential that access to family planning expands in the poorest countries. If fertility were to remain constant at the levels estimated for 2000-2005, the population of the less developed regions would increase to 10.6 billion instead of the 7.9 billion projected by assuming that fertility declines." 2
Source:
1) The Geneva Papers, Volume 32, No. 1, January 2007, Changing life cycles and their impact on Insurance, Page 3
2) World Population Prospects: The 2006 Revision, www.un.org
