The ageing population of many countries in Western Europe and East Asia is a theme that we have discussed on many occasions on this blog. A larger proportion of elderly people in a society threatens to place a large economic burden on pensions and welfare structures that were designed on the assumption that each successive generation would be larger than the last (much like a Ponzi scheme…) However, Sarah Willis has written an interesting article at Open Democracy where she argues that the picture of an ageing society and economy (in this case, the United Kingdom) is not all doom and gloom.
In short, she argues that those 65 years and older should not be seen purely as an economic burden. Instead we should learn to value our seniors more and see them as a source of experience that is extremely useful for the economy as a whole. In fact, the view that everyone over 65 is an economic burden on the welfare state is untrue:
“…the number of over 65s in the workforce increased by 229,000 between the end of 2011 and mid-2014, pushing this figure over the one million point. If everyone worked one year longer it would raise GDP by 1%, and every extra year worked could boost an individual’s pension pot by £4,500.”
Aside from directly participating in the workforce, the elderly provide a huge benefit indirectly, by providing childcare for their children’s children. As Willis states:
“Equally, semi-retirement offers an opportunity to take on less demanding, or at least less time-intensive work, allowing them to continue to support their children by looking after grandchildren.
This point is significant. Aside from making a direct contribution to the workforce, older people can also be seen as a resource for childcare. As childcare costs have rocketed in the UK—up 27% in five years—grandparents are increasingly stepping in to help the child’s parents go to work; meaning more people can stay in full time work, and that it pays to do so. Not always the case when free childcare isn’t as option.”
Further, the purchasing power of the elderly population is considerable: 31% of those aged over 65 are worth upwards of £500,000, compared to 17% of 25 to 44 year olds. This wealth is spent on things and this spending stimulates the economy:
“Between 2001 and 2010, discretionary spending on foreign travel, eating out, driving and theatre tickets rose among the over 65s but dropped among the under 30s, due to a combination of student debt, stagnant wages, high unemployment and increased housing costs.”
Of course, while we should recognise these economic benefits of an ageing population, the costs of increased pension outlays and increased health spending will still be massive. Whether increased consumer spending and childcare help will offset these costs remains to be seen.