The longevity accounts

We may not realize this now, but the ageing of the population will become one of the most important social alterations in the era of humanity. Improvements in the quality of life in general and medical advances have helped older people to live longer.

Although ageing is a global problem, the process is at a more advanced stage in some countries in Europe and Asia. Regardless of the region, the ageing of the population affects several aspects of daily life: health, pensions, retirement, housing, transportation and much more.

According to WHO, it is estimated that the number of people aged 65 or older will increase from 524 million in 2010 to 1,500 million in 2050. Is the economy ready to handle this situation? Let's see some challenges that must be faced as soon as possible.

Decrease in the population of working age

A rapidly ageing population means that there are fewer people of working age. This leads to a shortage of supply of skilled workers, which makes it difficult for companies to fulfill demand roles.

An economy that can not occupy the occupations in demand faces adverse consequences, which include a decrease in productivity, higher labor costs, delays in the expansion of business and lower international competitiveness. In some cases, a shortage of supply can raise wages, thus causing wage inflation and creating a vicious spiral of prices / wages spiral.

Increase in health costs

As the demand for medical care increases with age, countries with rapidly ageing populations must allocate more money and resources to their health care systems. With spending on health care as part of the gross domestic product (GDP) already high in the most advanced economies, it is difficult to increase spending while ensuring that care improves and other social needs do not deteriorate in the case of health care financed with public funds or administered by the government.

In addition, the health care sector in many advanced economies faces similar problems, such as the shortage of skilled labor, the increased demand for home care and the need to invest in new technologies. All of these cost scales make it more difficult for existing systems to manage the increase in the prevalence of chronic diseases, let alone meet the needs of larger and growing populations.

Increase in the dependency ratio

Countries with large populations of older people rely on smaller groups of workers to collect taxes to pay higher health costs, pension benefits and other publicly funded programs. This is becoming more common in advanced economies where retirees live on fixed incomes with much lower tax levels than workers. The combination of lower fiscal revenues and greater spending commitments on health, pensions and other benefits is a major concern for advanced industrialized nations.

Changes in the economy

An economy with a significant proportion of older and retired adults has different demand drivers than an economy with a higher birth rate and a larger working-age population. For example, rapidly ageing populations tend to have higher demands for health care services and residences.

Although this is not necessarily negative, economies may face challenges in the transition to markets that are increasingly driven by goods and services linked to older people. As advanced economies get older, it remains to be seen whether immigration will fill the gaps in the sectors left by the aging population or whether larger economies will have to adapt to demographic changes.