This webinar looks at synoptic issues surrounding ageing economies. How will ageing affect productivity, innovation, competitiveness, growth and the future of the welfare state?
The share of old people is set to rise dramatically and not just in the UK. The share of old people compared to workers has already increased sharply in Japan and Germany, China too is ageing rapidly leading some economists to ask, will China grow old before she grows rich? How will dependency rates change and could this – without reform of health and social care – potentially bankrupt some governments?
Or will attitudes change towards the concept of retirement? Skilled workers for example tend to work longer / later than people will fewer skills and qualifications. Many are changing their attitudes to retirement, business are adapting too.
The age dependency ratio is rising - It is predicted that each person of the new full state pension age in 2035 will be supported by 2.87 people of working age, as compared to 3.22 people in 2015
A rise in the elderly population, particularly if not matched by health improvements, will place ever-greater pressure on public finances, as a relatively smaller working-age population supports growing spending on health, social care and pensions. In 2015-16, councils in England spent £17bn on adult social care (covering everyone over age 18), according to NHS Digital. More than £7bn of that went on people aged 65 and over, and the proportion has been rising
Ageing increases the risk of certain types of costly illnesses (e.g. dementia)
But key evaluation point: Ageing does not automatically mean worse health and higher costs
Extent of healthy ageing will determine how much ageing increases health expenditure
Most of the drivers of health care spending are determined by long run economic, social and demographic pressures although the media tends to focus in short term issues such as demand for A&E services during the winter months.
Health care is relatively labour intensive. Harder to generate productivity improvements but wages have to keep up with the rest of the economy
Mental health: Thanks to ageing and lifestyle. King’s Fund says mental health costs (including dementia) will rise nearly 50% from 2007 to 2026
Is it true that older workers are typically less dynamic than younger participants in the labour market? Are we at risk of assuming too easily that older workers – perhaps with higher incomes and a different attitude to life – might be left productive? What of the value of accumulated experience? A shortage of workers overall – in part deriving from from an ageing population, low unemployment and, in the UK’s case, a fall in net migration – could end up prompting companies to invest which will increase the capital stock and - over time - provide a stimulus to productivity.
One of the big risks from an ageing population is increased levels of long-term unemployment. Opportunities to work at an older age vary considerably across OECD countries
82% of older people (aged 55 64) in Iceland were employed in 2013 but this falls to only 48% in Slovenia. Most countries plan to increase the official age for receiving a pension beyond 65 but, on average in the OECD, only 20% of people aged 65-69 were working in 2013
Some relevant news articles on changing demographics in developed and emerging countries:
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