• Strategy
  • The Economist

Survey: The Near Future

Peter Drucker explains how it will differ from today, and what needs to be done to prepare for it.

The New Demographics

How to live with an aging population

By 2030, people over 65 in Germany, the world’s third-largest economy, will account for almost half the adult population, compared with one-fifth now. And unless the country’s birth rate recovers from its present low of 1.3 per woman, over the same period its population of under-35s will shrink about twice as fast as the older population will grow. The net result will be that the total population, now 82m, will decline to 70m-73m. The number of people of working age will fall by a full quarter, from 40m today to 30m.

The German demographics are far from exceptional. In Japan, the world’s second-largest economy, the population will peak in 2005, at around 125m. By 2050, according to the more pessimistic government forecasts, the population will have shrunk to around 95m. Long before that, around 2030, the share of the over-65s in the adult population will have grown to about half. And the birth rate in Japan, as in Germany, is down to 1.3 per woman.

The figures are pretty much the same for most other developed countries — Italy, France, Spain, Portugal, the Netherlands, Sweden — and for a good many emerging ones, especially China. In some regions, such as central Italy, southern France or southern Spain, birth rates are even lower than in Germany or Japan.

Life expectancy — and with it the number of older people — has been going up steadily for 300 years. But the decline in the number of young people is something new. The only developed country that has so far avoided this fate is America. But even there the birth rate is well below replacement level, and the proportion of older people in the adult population will rise steeply in the next 30 years.

All this means that winning the support of older people will become a political imperative in every developed country. Pensions have already become a regular election issue. There is also a growing debate about the desirability of immigration to maintain the population and workforce. Together these two issues are transforming the political landscape in every developed country.

By 2030 at the latest, the age at which full retirement benefits start will have risen to the mid-70s in all developed countries, and benefits for healthy pensioners will be substantially lower than they are today. Indeed, fixed retirement ages for people in reasonable physical and mental condition may have been abolished to prevent the pensions burden on the working population from becoming unbearable. Already young and middle-aged people at work suspect that there will not be enough pension money to go round when they themselves reach traditional retirement age. But politicians everywhere continue to pretend that they can save the current pensions system.

Needed but Unwanted

Immigration is certain to be an even hotter issue. The respected DIW research institute in Berlin estimates that by 2020 Germany will have to import 1m immigrants of working age each year simply to maintain its workforce. Other rich European countries are in the same boat. And in Japan there is talk of admitting 500,000 Koreans each year — and sending them home five years later. For all big countries but America, immigration on such a scale is unprecedented.


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