As the planet's population gets older, there are fears that a gray tsunami may make the possibility of golden aging more remote. But a World Bank report released Tuesday says global aging isn't an unstoppable force and can be compensated for by policy initiatives.
By 2100, the world population is expected to increase from 7.3 billion to 10.9 billion and the share of older people is increasing, raising concerns about healthcare, sustainability of pension systems, inter-generational conflicts and a negative impact on economic growth and productivity.
While the report, Golden Aging, Prospects for Healthy, Active and Prosperous Aging in Europe and Central Asia, says there are challenges as populations get older, there are still opportunities for governments, individuals and the private sector to collectively forge a prosperous and healthy “Golden Age.”
“You need a lot of change to take advantage of the opportunities,” said Maurizio Bussolo, a World Bank economist and co-author of the report. But he added, “We can actually change demography itself.”
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While the report looks at aging in Europe and Central Asia — the oldest region in the world — it says the demographic trends there are a harbinger of things to come in the rest of the world.
In 1950, the average age of a resident in Europe and Central Asia was 29 years. Now, it has increased to 37 years and the share of people older than 64 years in the population has doubled from 6 percent to 12 percent in the past 65 years. By 2050, the share of older people could reach 21 percent.
The main cause of aging societies in Europe and Central Asia is people are having fewer children rather than living longer. The fertility rate today is about 1.4 children per women, which is below the replacement level and means populations will decline if current trends continue. In the United States, a low fertility rate (1.9) is coupled with longer lifespans but higher immigration rates so the population is still growing.
In the 1970s and 1980s, the demographic worry around the world was the population bomb. “In some countries, development may not be possible at all unless slower population growth can be achieved soon,” the bank said in its 1984 World Development Report. But fertility rates came down, averting a projected doubling of the world’s population every 35 years.
Much as the doomsday scenario of uncontrolled population growth didn’t come to pass, dire consequences from an unstoppable age quake might not either.
Among the fears as the percentage of working age people becomes smaller is these producers will be tasked with supporting a growing share of older people, putting pensions and healthcare systems under more pressure.
But the report suggests that if governments encourage more people to work through supportive policies and to participate in the labor force longer, dependency ratios could remain rather stable.
Bussolo said there’s no reason why the aging population can’t work longer and many older people already are. If women participated in the labor force as much as men do, the report says there also would be a decline in dependency ratios.
So-called productivity losses also can be compensated for by in-migration. But in countries where productive workers are leaving, “migration can exacerbate the aging of a society,” Bussolo said.
“The number of years of schooling changes the projection, too,” said Bussolo. “We’re still below the level where the peak of productivity is reached.”
Better educational opportunities and more capital could ultimately boost the productivity of the smaller number of younger workers, said Hans Timmer, the World Bank’s chief economist for Europe and Central Asia.
The right incentives and policies by governments can help increase the chances of more healthy, active and productive aging, according to the report.
Among the actions the report suggested: shifting health systems toward more preventive care, primary care and more diagnostics; reforming education systems to encourage skills needed for a more productive work force and longer working lives; reforming workplace institutions so women can better reconcile family and career goals and older people can work more flexible hours; designing pension and long-term care plans to address the new demographic realities, and encouraging lifelong learning, mobility and migration — both internationally and domestically — to improve labor market flexibility.
A successful policy package for aging societies shouldn’t just be aimed at older populations but rather cover the whole life cycle, the report said, supporting education, work, families and retirement.
“The greatest risk we face is not aging itself, but the unwillingness or inability to adapt,” said Laura Tuck, the World Bank’s vice president for the Europe and Central Asia region.