An ageing society- opportunities or challenges?
by Dongyue Xu
Since the early days of the Industrial Revolution the world has undergone rapid changes. The development of advanced technologies has greatly reduced work time and enhanced productivity; as a result, people’s living standards have been improved dramatically, and there is an exponential increase in the world’s population. However, although there is a continuous growth in the world’s population, the United Nations state that the group of people in their middle ages gradually makes up the main part of the total population.
The first reason for the occurrence of ageing populations is globally increased life expectancy. In the past, the average age was around 30 years, whereas today there is an increasing number of citizens celebrating their 100th birthday. Better medical conditions also reduce the possibility of death caused by diseases or injuries. Furthermore, as advanced technologies are increasingly being used in food production, people in modern societies can gain sufficient nutrition and thus stay healthy. More importantly, the advent of artificial intelligence has already replaced some unnecessary manual work, and it guarantees that workers are not exposed any more to some adverse circumstances that are harmful to people’s health. As a result, people enjoy a longer life expectancy.
Moreover, a fall in birth rates also accounts for ageing populations. According to a United Nations report, the world’s fertility rate has been decreased in half since 1960s. Fertility rates significantly decline for several reasons. Formerly, infant mortality was high, so families tended to have more children. However, with the development of better medical therapies, mortality rates are largely controlled and decrease; simultaneously, the urge for gender equality brings women back to careers. The trend for smaller families and increasing costs of childcare and education also have an impact on the birth rates.
Previously, ageing populations were only seen as a problem for developed countries, and the median age of Europe is projected to grow from 37.7 years old in 2003 to 52.3 years old before 2050. The greying population also poses a challenge for many developing countries. The dependency ratio calculates the number of people not in the labour force and that of people who are in the workforce, and, according to Kenneth, this figure is expected to increase 44% in China; therefore, the UN estimates that an ageing population is increasingly turning into a global phenomenon.
Since a greying population is inevitable, let us have a look at the possible consequences. Firstly, an ageing population has a negative effect on the employment rate. While the number of people aged between 15 and 65 years is shrinking, the number of people above 65 years reaches an unprecedented level; the large portion of retirees reduces employment for adults, and the decline of in the working-age population might cause labour supply shortage, which may boost the level of wages and decrease productivity, thereby creating a vicious cycle of price/wage spiral.
Moreover, an increasingly ageing population will add to pressure on health services. In Japan, a country with a noticeable greying population, the considerable demand for more health care services is supported by Japanese government’s increased expenditure. Kiran points out that there is a significant growth in government expenditure on public healthcare, which rose from 25% of the total government consumption in 1980 to current 35%. An increased investment in healthcare will lead to spending cuts in other areas such as education and science, which might have a potential impact on future economic growth. If the Japanese government had not put so much money in public healthcare sector, the GDP per capita would be expected to be 20% higher, and the whole economy would be 10% larger than in its current state.
Besides, an ageing population also presents a challenge to the country’s welfare system. After retirement, retirees are supposed to receive their pensions, but the economic burden will fall on the working-age population. Consequently, tax rates may rise, and the labour force may be forced to delay their retirement age. The Government Office of Science (2016) showed that a potential extension of the retirement age aimed to increase the number of older workers in the labour market, which could alleviate the burden on the pension scheme to some extent. Nevertheless, although there are legislations against age discrimination to help the seniors remain in the labour market, older workers still worry about unfair treatment because of their age.
Whether ageing populations should be seen as opportunities or challenges depends on the preparedness of the nation. For example, it is often argued that older workers are unpopular in the manufacturing industry, as their physical and mental health is restricted; instead, this problem could be solved by higher levels of mechanisation and automation. In surroundings with low physical and mental stress, senior citizens could make the best of their strengths, although technological advancement might require less manual work. At this point, ageing populations encourage innovation in a more efficient working environment, and this benefits everyone.
Yet, a greying population may pose a huge challenge for the whole country. In terms of delaying retirement age, older citizens might feel upset and angry, as they do not have so much time to enjoy their life, whereas younger people may find out that the labour market is saturated and it becomes extremely competitive for them to find a job. Furthermore, policies like boosting birth rates require a long time to come into effect. Compared with reforms in the labour market, it is less appealing. Additionally, even if there were a huge increase in the birth rate, the whole society would still be facing challenges from other aspects. Finite resources need to be allocated to more people, how could the development of cities minimise the adverse effects on the environment, how do governments guarantee education resources are equally accessed to every child? There are numerous things to be taken into consideration.
In conclusion, an ageing population is a challenge to the whole society; at the same time, it offers an excellent opportunity to tackle current drawbacks.