10 Problems Countries with Aging Populations are Facing


The world is getting older. Not just the Earth itself, but its human population. With innovations in medicine, the life expectancy rate in most countries has increased dramatically, which means that governments have to prepare for a population with a significantly higher percentage of senior citizens. And while that may appear to be a small problem, it will actually place a great amount of pressure on nations around the world. Here are just some of the problems we’re likely to see as the population gets older…

10. Uruguay is getting old fast…

If the world was a senior center, Uruguay would be one of the countries the nurses are the most concerned about. Uruguay has the oldest population in Latin America, and is experiencing a significant demographic change. With an older population and fewer new births, its citizenry will soon be made up of a significant number of the elderly. In fact, a study finds that by 2100, more than 30% of Uruguayans will be over the age of 65.

Because Uruguay has a significant safety net, policymakers are faced with a significant problem: how do they pay for the anticipated healthcare and social service-related spending that comes with an increase in seniors, leading to much higher — and more frequent — demand?  Do they cut benefits to their elderly citizens and face an exploding budget, or cut benefits to a demographic most likely to vote?

9. …and so is America

Now let’s talk about America, which like Uruguay is getting really, really old (but you guys still look great, really!). For the US, it’s important to look to past generations. For families in the Baby Boomer generation, the fertility rate was 3.7 births-per-woman, and over the last few decades that number had dropped significantly.  

According to the Centers for Disease Control and Prevention, the current fertility rate is 1.93, which is lower than 2.1 babies-per-mother replacement rate needed to keep a population steady. Studies show that when a country’s fertility rate falls consistently below the replacement rate, the balance between young and old shifts and older citizens come to represent a larger portion of the population.

8. Increase in government expenses

Now, let’s revisit Uruguay for a moment. Like most countries, Uruguay has a social safety net for men and women in retirement. According to a study of Uruguay’s economy, if there isn’t a change in policy, the percentage of GDP allocated to basic social services like health and social protection will increase from less than 25% in 2013 to nearly 43% in 2100. This dilemma is not just relevant for Uruguay, but many countries in Asia as well.

Studies have shown that many Asian economies will soon follow in Uruguay’s footsteps. Analysts predict that an aging population will have an adverse effect on productivity. They believe it will reduce the annual per capita GDP growth rate by 0.40 percentage points below its potential. Economists came up with this figure with the stipulation that an aging population will mean fewer people in the workforce, limiting productivity.

7. Increased likelihood of a depleted labor force

Although many have suggested that the labor market will be adversely affected by an aging population, some evidence suggests that these predictions may not be in line with reality. With the advances in modern medicine, not only are people living longer, but they’re living healthier. That means that some will choose (or be forced to, depending on their situation) to work well into their retirement years.

Some companies have welcomed that trend. For example, BMW made tweaks to its workplace for its older employees by providing custom shoes and easier to read computers. As a result, BMW saw its productivity jump 7%. BMW is not the only company to implement changes to help older employees, either. Unilever UK, Marriott, and Xerox have “introduced training programs that enable older employees to transition out of physically-taxing jobs and into ones that better suit their experience and skill sets.” It’s likely in the future that we will see more men and women working well into their 60s.

6. The need for more highly-skilled workers

Another remedy to an aging population is an emphasis on education. Creating a generation of highly-skilled workers can offset the loss in the labor pool. China is just one country that has decided to take this approach. According to Chinese state data, the number of births fell by about 630,000 year in 2017 while the percentage of the population aged over 60 rose from 16.7% in 2016 to 17.3% in 2017.

Aware of the threat of a decreasing labor force, China has invested heavily in the jobs of tomorrow. China graduates nearly 3 million science and engineering students annually, five times more than the United States. In addition, they’re investing heavily in robotics and artificial intelligence. Now hopefully, the emergence of those innovations will leave some jobs for the rest of us…

5. Immigration is a positive in combating some of these issues

Although America will still have to deal with its aging population, it would be far worse off if not for immigrants. For the sake of comparison, roughly one-third of Germans and Italians will be over the age of 65 in 35 years. Nearly 36% of Japanese citizens and about 35% of the people in Spain and South Korea will also be over that magical number.

Immigrants have been the driving force in keeping America relatively young over the years. By 2050 or 2060, immigrants and their descendants are projected to contribute 82% of the total population increase in the US (the emphasis there being “their descendants,” since a huge part of that figure is based around the idea that immigrants will have children in the US). If that projection holds, though, that means it’ll be the tax dollars of immigrants and their children that will be paying for an awful lot of the health care costs and Social Security for America’s aging population.

4. Raising benefit ages

Unfortunately for Americans, the threat of an aging population has led to the calls of raising the retirement age yet again. Some are even calling for a withholding of benefits until the age of 70. And sadly, studies have shown that, for poor Americans, it’s increasingly likely they’ll never see the fruits of all their labor.

For a number of reasons, including better access to healthcare and less arduous physical labor, a rich man born in the 1940s can expect to live more than a decade longer than a poor man born in the same year. Let’s hope that the retirement age doesn’t creep up to 70, and that more Americans can enjoy their later years in peace and comfort.

3. Japanese is the world’s senior citizen

There’s no country on the planet that should be more fearful of the implications of its aging population than Japan. After decades of improving life expectancy and falling birth rates, as more and more people moved into the cramped conditions of its cities, Japan’s population of 127 million is forecast to shrink by about one-third in the next five decades. Currently, citizens aged over 64 years are about a quarter of Japan’s population but within the next several decades it will reach 38%.

Prime Minister Abe has tried to introduce policies to fill the growing labor gap, even allowing some immigration into the country. Part of Japan’s difficulty in combating its labor shortage has been its cultural skepticism toward allowing foreign workers into the country. Other tactics have included plans to quadruple the size of the robotics industry in the country, encouraging automationWith annual birth rates dipping below 1 million for the first time on record in 2016, the Japanese will have to make some tough decisions on caring for its elderly population.

2. There will be an impact on the stock market

A big fear of many analysts and brokers is that the retirement of aging populations will lead to a stock sell-off. As most workers leave their pension funds and retirement plans in the market, once retirement comes it’s likely that many will liquidate.

Naturally, stock prices would then fall as they sell their shares and move them into cash, or spend those funds. However, some analysts believe that while some sectors may suffer, the market will be buoyed by a growth in other sectors, such as healthcare, senior housing, leisure, insurance, and biotech.

1. It’s not time to panic… yet

Compared to the host of problems we face — global warming, terrorism, nuclear war, etc — the threat of an aging population can far more easily be mitigated. Policymakers and businesses have years before the full economic impact is felt, and in that time, it’s up to all of us to come up with solutions to this problem.

Whether it’s being willing to sacrifice homogeneity like in Japan, or being willing to come up with innovations that allow older workers to contribute in the workplace like in the US, the most important thing is accepting that demographic changes are occuring throughout the world, and that innovative solutions must be embraced.

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1 Comment

  1. This issue is something to worry about if the supply of needs will not coup up with the population, either growing or shrinking. Human life cannot be controlled just for the sake of economy, budget, etc. of a country.