Ageing Populations – the Economic and Social Consequences

Topics: Retirement, Demography, Pension Pages: 7 (2670 words) Published: April 4, 2013
Ageing populations – the Economic and Social Consequences
Two hundred years ago Thomas Malthus published his Essay on the Principle of Population, in which he predicted a future of gloom and doom for humanity. Population growth, he said, would outstrip food supply, leading to widespread poverty and mass famine. About 30 years ago the Club of Rome, an international group of industrialists, scientists, economists and statesmen, echoed his views, predicting that food, energy and raw materials would all run out in the face of the ever-growing population. In Malthus’s time the total world population was under 1 billion. On 12 October 1999 it was adjudged by the United Nations to have reached 6 billion. A first response to the dire warnings of catastrophe is to observe that there is still more than enough food in the world to feed 6 billion people. Thirty years ago the global food output was the equivalent of 2,360 calories per person per day; today it is 2,740 calories – above the level considered necessary for healthy living. However, up to two billion people in the world are going hungry because of the inadequate distribution of this food. Governments of some LEDCs can’t afford to buy food from the world market. Even if they could, their transport infrastructures are usually incapable of distributing it to the rural areas where it is most needed. In rural areas problems such as unequal land ownership and soil erosion are limiting the amount of food that poor farmers can grow. Additionally the world’s population explosion is not over yet. Nine billion is the most likely prediction for total world population by 2050. More than 95% of the growth is expected to occur in LEDCs, and the bulk of the new births will take place in those countries that are the poorest, where governments are the least prepared and where problems of resource shortages are already most acute. Although the doom-mongers may not (yet) have been proved right, population growth has nevertheless placed severe pressure on natural resources and the quality of the environment. Population growth will remain the big issue in the developing world in the 21st century, just as it was for the whole world in Malthus’s time. However, in the developed world there is another population issue of increasing concern – the problem of ageing populations (Figure 1). Ageing populations

An ageing population is one in which the proportion of older people is increasing. When studying a country’s population structure (the distribution of its population by age group), geographers usually isolate three principal groups. The most important group is the working population (15–64-year-olds) which generates the country’s wealth and pays its taxes. People in this age group make up the independent element within any population. Below them is the group of young people (aged 14 and less) who are not expected to be in full-time work and are therefore dependent financially upon their parents. Above them is the passed the age of retirement. They depend upon pensions as their main source of income. In most countries, money for state pensions is provided by the working population, so the elderly also depend upon the 15–64 age group as well. As Figure 2 shows, there are considerable variations between countries in the official age(s) of retirement. It tends to be lower in LEDCs, where life expectancy is less. The old age dependency ratio is the measure of pensioners per 100 people of working age. It is calculated as follows:

Figure 3 is a plot of known and predicted old age dependency ratios for four MEDCs. It shows a ratio of around 25% in the UK in 2000. This means that, at present, there are about 25 pensioners for every 100 workers. However, the ratio is predicted to increase sharply after 2010, climbing to over 40% by 2040. Expressing this another way, the present ratio of 4 workers to support every pensioner is predicted to fall to 2.5 workers per pensioner by 2040 (Figure 4). While...
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