Meeting the challenge of aging populations
Print Edition
THE world’s top policy-makers are tackling economic issues relating to aging and shrinking birth rates.
G20 finance ministers and central bank chiefs meeting in Japan — where a rapidly aging population is a major domestic problem — have been warned to address the issue before it is too late.
“What we are saying is, if the issue of aging starts to show its impact before you become wealthy, you really won’t be able to take effective measures against it,” Japanese Finance Minister Taro Aso, said.
The G20 is a mixed bag of countries at various stages of development and population profiles, ranging from rapidly-aging Japan to Saudi Arabia, next year’s G20 chair, which has a very young society.
In their communique, the group said “demographic changes ... pose challenges and opportunities for all G20 members” and the issue requires a mix of “fiscal, monetary, financial and structural policies.”
Longer life expectancy and sliding birth rates, particularly among wealthy nations, have resulted in a rapid expansion of the elderly population in places such as Spain, Italy and South Korea, according to the Organization for Economic Co-operation and Development.
But the pattern is not limited to the rich world, with emerging powers such as Brazil and China also facing “rapid demographic change” relative to their early development stage, according to the OECD.
By 2050, the world is projected to have more than 2 billion residents aged 60 and above — more than double the number in 2017 — the OECD says.
But many economies have failed to update their pension and employment systems to adjust to the changing demographics, experts warn.
With its fast-shrinking workforce, Japan finds itself scrambling to find ways to cover the cost of its national pension.
It has left many elderly fearing cuts to their benefits, while young people worrying that a pension may not exist by the time they retire.
Meanwhile, a shrinking labor force means Japanese firms are unable to fill job openings.
While unemployment stands at 2.4 percent, the job-to-applicant ratio was 1.6 earlier this year. Individuals are increasingly working beyond the traditional retirement age, while economies must offer jobs that older workers can perform, experts said.
Technology may help train elderly workers as well as to assist them to access necessary services such as health care and to manage their finances.
So global leaders in the finance sector not health ministers must take the lead, said Aso. Yesterday’s talks aimed to prepare the ground for the leaders’ summit in Osaka at the end of the month, as aging becomes an increasingly pressing issue for the global elite.
“Most of the G20 nations already experience or will experience aging,” said Bank of Japan governor Haruhiko Kuroda.
“We need to discuss problems that arise with societal aging as well as how to deal with them.”
As a way to counter the economic impacts, OECD chief Angel Gurria called for elderly workers and women to play a greater role in the workplace, and urged young people to prepare better for their financial future.
A solution to the issue, Gurria said, requires “changes to the way society organizes itself.”
“You don’t want to not have enough money in order to cover the pension,” he said.
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