It seems that the issue of
demography is getting more and more media coverage. And I don’t mean the issue
put forward by Dick Smith et al that the world’s population is on an inexorable spiral upwards to catastrophe. (At
least when the Rev Thomas Malthus was expounding this theory he had the novelty
factor in his favour.)
No, the demographic issue I’m
talking about is population ageing and decline.
As Michael Cook mentioned yesterday,
there is going to be a demographic summit held in Moscow this June. This is an apposite choice of venue for the
conference – at the capital of a country and at the eastern edge of a continent
(if we extend Europe to the Ural Mountains) in demographic decline with an
ageing population that is not reproducing itself internally.
However, as is discussed in this Reuters
this is not just a problem facing Europe. Asia is also facing a rapidly ageing
population that is not reproducing itself.
2030, the share of the population aged over 60 in Japan will have grown
to 37 percent from 30 percent last year. Germany and Italy will be just behind
on 36 percent.
Just as striking, the proportion of elderly South
Koreans is projected to double to 32 percent, according to the McKinsey Global
Institute, the economics research arm of consultants McKinsey & Co.
This will have a massive
impact on the number of workers relative to those of retirement age.
Right now, China has an old-age dependency
ratio of 0.11, meaning there is just over one elderly Chinese for every 10 of
working age. This will rise to 0.24 in 2030 and may exceed 0.43 by 2050,
according to the Organization for Economic Co-operation and Development, a
Paris-based forum for industrial democracies…China is not alone in facing a
pensions bulge. In a report published last week, the World Bank said
middle-income countries in East Asia can expect five times as many people as
now to become eligible for a pension over the next two to three decades. Health
care costs for a greying population will also jump.
There are other factors
that can mitigate this problem, the article mentions that people will work
longer (hopefully Asian populations will be more willing to countenance a rise
in their retirement age than the French were!) and that workers will become
better educated and therefore productivity will rise. Although if the Government is spending more
and more money on aged healthcare and pensions, the money may be tight for
education spending! What will definitely have an impact are policies that seek
to limit the number of children that people can have. Fewer younger people mean fewer workers and a
higher ratio of those in retirement compared to those working. The fact is that in many countries, the
demographic problem is not inexorable growth but inexorable ageing, followed by
inevitable population decline. These facts are much more likely to reduce our
current standard of living than the spectre of “population explosions”.