Future Aging Shock?

Global aging in the 21st century – Suddenly its the topic, trend or talking point dominating Davos 2010, the latest EU summit and even the dinner table.
Truth is, while heated bureaucracy discussions have surfaced in the last decade, global aging has been increasing as a percentage of our population since the turn of the century. It’s been silently creeping up, impacting policy changes, health reforms and workforce restructuring.

Whether you choose to face it or ignore it, aging is changing the entire economic agenda of the 21st century.

But while aging population statistics maybe startling, the changes in trends and attitudes over the past five decades are borderline scandalous: In 1950, approximately one in every three people aged 65 or over was in the labor force. In 2010 the ratio of over 65 year old workers decreased to less than one in five (“World population aging 1950– 2050″).What does this mean? Did we push too early for pension? By doing so did we begin to slowly erode the workforce while increasing pressure on government pension funds?

In some European countries – Belgium, Hungary, Austria and Greece, 65-plus workers don’t even reach two percent. I wonder if the violent anti-government protestors, who objected to raising Greece’s retirement age from 61 to 63, were aware of their father’s and grandfather’s contribution to the GDP 50 years ago?

By 2060 it’s predicted, one in three people in Europe will be 65 and over (according to Eurostat). If this trend continues – more than half of the population (given that children don’t work) will not be part of the workforce by 2060.

Europe is not the only region facing dire population swings: By 2040 it’s estimated over 400 million, yes 400 million 65 year olds and up will be living in China. The impact on the Chinese workforce alone will be phenomenal. The figures are hard to digest. China has that effect on you – The sheer numbers have a way of speaking for themselves.
But nothing can match Japan – In Japan by 2030, nearly 24 percent of all older Japanese are expected to be at least 85 years old.

On the other side of the scale, birth rates are steadfastly declining. Its estimated declining birth rates will begin to impact the labor force in the coming years. The stark reality of growing aging populations on one hand and birth decline rates on the other is already heavily linked to Europe’s economic downturn.

But while we can attribute technology and medical advances to an aging population, no one really knows why birthrates have dropped so low in so many regions: Speculation could begin with economic woes and delayed child bearing and go on to teen pregnancy prevention and a decline in fertility rates.

Whatever the reasons, for the first time in history, and probably for the rest of human history, people aged 65 and over are starting to outnumber children under the age of five  (UN dept. of economic and social affairs). Paradoxically as the number of pensioners grows, taxes are predicted to rise, while the workforce, economic growth and Gross Domestic Productivity will shrink.

So, what are some of the likely trends and opportunities emerging from aging?

  • Some countries may grow old before they grow rich (U.N dept. of economic and social affairs)
  • There will be an explosion of the number of centenarians worldwide
  • We’ll see a great grandparent boom as four generation families will become common
  • Inheritance money will dwindle as parents outlive their savings. The drop in this income will  lead to declining venture investments ( “2048″ by Prof. David Passig)
  • The need for migrant health workers to take care of the aged will lead to the globalization of elderly support
  • On-going education, ergonomics and part-time employment opportunities for older workers will grow in importance
  • Real estate will see a surge in demand for built-in basements  as adult children (twenty somethings) live longer at home