Summary ( A slow burning fuse)
1. Population ageing is on every agenda, from G8 economic conferences to NATO summits. The World Economic Forum plans to consider the future of pensions and health care at its prestigious Davos conference early next year. The media, including this newspaper, are giving the subject extensive coverage. 2. Governments in rich countries now accept that their pension and health-care promises will soon become unaffordable, and many of them have embarked on reforms.
Reasons for aging population
1. The first of the big causes is that
people everywhere are living far longer than they used to. a. In 1900 average life expectancy at birth for the world as a
whole was only around 30 years, and in rich countries under 50. The
figures now are 67 and 78 respectively, and still rising. b. The UN thinks that life expectancy at birth worldwide will go up from 68 years at present to 76 by 2050 and in rich countries from 77 to 83. (These are averages for both sexes; women generally live five or six years longer than men, for reasons yet to be fathomed).
2. people everywhere are having far fewer children, so the younger age groups are much too small to counterbalance the growing number of older people. c. In the early 1970s women across the world were still, on average, having 4.3 children each. The current global average is 2.6, and in rich countries only 1.6. The UN predicts that by 2050 the global figure will have dropped to just two, so by mid-century the world’s population will begin to level out. d. The reason why there are fewer babies is that women everywhere are marrying and having children much later in life. Between 1970 and 2000 the mean age at which women had their first child in a range of OECD countries rose by more than a year every decade, and many more women now have their families in their 30s. e. People have got used to smaller families, the number of children they say they want shrinks too. Demographers talk about a “low-fertility trap”. f. Postponing marriage and childbirth is part of a bigger change in the lives of many women in rich countries. Over the past few decades many more of them have been getting more highly educated and taking paid jobs. That changed their ideas about what they wanted out of life. For a while birth rates were lower in countries where lots of women worked outside the home g. In a modern society children are an economic liability, not an asset. They have to be fed, clothed, housed, looked after, educated and entertained. As a rule of thumb, economists reckon that a family with one child needs 30% more income than a childless couple to maintain the same living standard. The obvious way to keep the household financially afloat is for the mother to go out to work.
Negative Effects of Aging population
1. Developing country
a. Since most poor countries have little or nothing in the way of a state-funded welfare net, those numbers will be hard to manage. b. Although China has seen stupendous economic growth in recent years, it is still some way off being rich, so it will have trouble absorbing the cost of this rapid ageing.
2. Fewer hands make heavy work
c. Macroeconomic theory suggests that the economies of ageing populations are likely to grow more slowly than those of younger ones. d. In Japan, for instance, which currently has about three workers to every pensioner—already one of the lowest ratios anywhere—the number will halve by 2050. True, there will be fewer young people to maintain, but children cost less than old people and the overall burden will be much heavier than it is now. The OECD has estimated that over the next three decades the age-related decline in the labour force could cut growth in its member countries by a third compared with the previous three decades.
3. Ageing will affect financial markets
e. According to Franco...
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