The world is experiencing unparalleled population aging. This poses problems for productivity and growth, unless we do something about it
There have never been this many people over 60 before, and it's forecast to get much, much worse. Virtually every area of globe, with the exception of largely African and Middle Eastern nations, is fairly rapidly aging - with the worst afflicted nations being Japan followed by Western nations.
Without any further healthspan gains, large swathes of the population are likely to suffer from chronic disease and require some level of either care or significant medical investment. With an altered age dependency ratio and a dwindling working age population, we have some tough choices ahead of us. One way of improving the situation is by improving how much each worker contributes and produces, but this may be a challenge according to IMF economists; particularly as much of the workforce has been expanded to include older people as the retirement age moves slowly up.
Productivity generally increases up until someone's 40s, and then declines. The economists predicted that the reduction in this age group coupled with a rise in older working groups could have reduced Japan’s annual total factor productivity growth by as much as 0.7–0.9 percentage points between 1990 and 2005. The picture is much the same in European nations too - the growing number of workers aged 55 and older on average estimated to have lowered total factor productivity growth by around 0.1 percentage points every year over the past two decades.
From 2014 to 2045 however, the situation seems likely to get worse. In countries like Greece, Ireland, Italy, Slovakia, and Spain, annual total factor productivity growth could be reduced by 0.6 percentage points. So what does this mean? It means that it's getting harder for the smaller working population remaining to make up the difference and keep up with growing medical costs.
A way out?
The 3 economists that produced this data suggest that widening medical access, improving training, making it easier for older workers to change jobs and increasing spending on R&D to improve innovation could resolve some of these issues. The reality is that without tackling the root cause of age-related disease and aging itself, there is no positive way out of this scenario. Without making desperately needed gains in our treatment, and perhaps more importantly prevention, of this torrent of health concerns that come coupled with age, we have a very difficult road ahead. This challenge is echoed even more poignantly in countries like China, which despite a growing economy are likely to struggle even more due to their massive population.
By putting pressure on governments around the world and making this push for longevity more well known, we can hope to see investment and resources flow into both basic science and translation of novel technologies to target the aging process.
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