Singapore, Nov. 25 (Reuters): The world stands on the brink of a crisis with old people likely to outnumber the young sooner than anyone thinks, fewer babies born and pension costs soaring as economies slow, a population expert said today.
“There is still time to avert crisis,” said Richard Jackson an adjunct fellow at the Center for Strategic and International Studies, or CSIS, a public-policy think tank in Washington.
“But time is running short — and the problem is worse than is generally supposed,” he wrote in a report for Citigroup Asset Management.
Jackson cited global ageing, falling fertility, untenable pension costs with fewer taxpayers to support them and financial market chaos as developed countries grow old, followed soon by the developing world — and all topped off by giant China.
The problem of populations top-heavy with the elderly is one that has appeared with almost lightning rapidity. Its threat to the developed and the developing world was neatly summed up by a Chinese writer, said Jackson. “Whereas the now-developed countries first got rich and then got old, China will get old first,” he quoted Lin Ying as writing.
Human life expectancy has made greater gains in the past 50 years than in the last 5,000, and governments must confront what may seem a boon but may prove a bane, said Jackson.
He painted a picture of a world within just 20 years in which European economies had not grown for a decade and Japan, the world’s largest debtor, has to ask the IMF for a bailout — and is turned down by, yes, China. “Global ageing threatens to bankrupt the developed countries, destabilise the global economy, and even overturn the geopolitical order,” he said.
“Within the next five to 10 years, the demographics will shift — and the window of opportunity will close,” he wrote. “Leaders need to act before it’s too late.” He foresaw two futures for East Asia.
One in which developed countries fail to confront their ageing challenge, resulting in a crisis that could engulf the world. Growth would slow in Asia, capital shortages increase, export markets shrink and protectionism would rise. But with timely reforms, East Asia and its developed nation partners could reap huge benefits from economic integration.
Countries should increase employment among working-age adults, encourage later retirement and reward families that raise children, Jackson said. And more economies will have a spillover effect by allowing more young people to support the old across borders.
In developed countries, the percentage of the population aged over 65 was 15 per cent at the turn of the century and due to rise to 27 per cent by 2050 — and to 35 per cent in Japan, which is already way ahead in terms of its greying population.
In the developing world, the percentage aged over 65 stood at six per cent in 2000 and is set to hit 14 per cent by 2050.
But it’s not just ageing. One of the hottest topics debated at today’s seminar was fertility. The numbers show fertility in the developed world has fallen furthest, from 2.4 per cent in 1965-70 to just 1.6 per cent in 1995-2000.