The implication is that the strongest growth will be in the low-income countries (no surprise there) whilst the developed world will struggle along with productivity growth and not much else. Take a look at China on the chart – it suffers from an even greater demographic challenge over the next 30 years than the developed world. It has finally removed the one-child-per-family policy but indications are that Chinese couples have simply lost their appetite for large families. This is no different from the trend we see throughout the world.
Ageing populations are expensive. They consume rather than contribute. They make demands that society finds it difficult to fund and manage. It is a challenge that we know about well in advance but little is being done to prepare – politicians will always leave these and similar long-term challenges to the next in line whilst many in society choose to simply ignore the financial challenges of their retirement years.
The IMF comments that the low-income countries face pressure to accommodate the rapid increase in the working-age population. In a sense it is a high-class problem but being realistic the IMF states that: “Creating enough jobs to absorb the new entrants will be vital for welfare and social and political stability. In this regard, economic diversification into labour-intensive activities outside agriculture, and away from excessive dependence on commodities for resource-intensive exporters, is critical…improving education standards will be essential to ensure that the growing pool of workers has the necessary skills.”
So whichever lens you look through there are difficulties ahead – funding the ageing population in a low-growth developed world and finding sufficient jobs for those in the low-income world. It wasn’t meant to be easy.