Tracking the future. Daniel Silke
The sheer size of its younger population will mean it hits skills shortages later than the United States or the United Kingdom, but its reported preponderance of males over females may cause a gender imbalance sooner.
Human life expectancy was 37 years in 1800. New 21st-century technologies have the potential to overcome problems that humanity has struggled with for eons. Biotechnology and nanotechnology have the potential to overcome disease and vastly extend human health and longevity.
Radical life extension could be the medium- to long-term demographic trend of our time. The use of nanobots embedded in human bloodstreams, together with advances in artificial intelligence, is making futurists the world over talk about humans potentially becoming immortal by 2050[7] as cancers and other diseases are wiped out. It is more feasible, though, that the average life will be 125 years by 2050 rather than the 70 or 80 we might currently enjoy.
Managing benefits in an ageing world
These trends will have profound business and social implications. Already Western economies are feeling this demographic challenge. In the aftermath of the global recession of 2007–2010, their stagnant ageing populations are now confronted by public sector budget cuts. The recession could not have come at a worse time for older workers. Increasing health and pension claims come, demographically speaking, when the number of older people is growing and at a time when austerity measures on both sides of the Atlantic are kicking in.
With the world entering its current peak era of ageing humans, social benefits are in retreat. Add to this rather gloomy picture the shrinking pool of workers in the West and Japan and a critical global juncture is being reached – and perhaps overlooked – now and towards 2050.
With budgets cut, services across all government departments are likely to be severely curtailed or even eliminated. The key debating point in future will be a domestic issue rather than foreign policy. The Left/Right divide that often characterises our public discourse as human beings will mutate into a spending debate about societal priorities.
One of the key domestic issues in the developed world will be to establish whether it is a priority for a country to care for its elderly or look to stimulate the younger generations to become more productive and innovative. While global politics will still focus on ‘sexy’ strategic issues, such as who wields power in a multi-polar world or whether democracy will prevail in a future China, the politics of pensions and health care will become more mainstream. The next 20 years will bring greater fiscal and public debt pressures as aged and related healthcare services remain under fiscal stress.
Expect new political parties to emerge to represent older voters and their interests. Retired peoples’ political movements aren’t new, but they will become more vocal, activist in methodology and popular, just as the Green movement accomplished for much of the last decade. The politics of ageing will envelop the globe. It will have an impact on economic growth, investments and savings, consumption habits, the workplace and, of course, on pensions. Beyond the economic, social change in the ways families are composed, living arrangements, housing and again the troublesome issue of health care will dominate this new demographic-induced debate.
A maturity–youth divide will join the north–south or digital divides as a measure of potential conflict. Societies will need to make stark choices or work at compromises. The worst of all possible worlds will occur when both safety nets for the elderly and increased tuition fees for the young are introduced simultaneously, as in the United Kingdom in 2010. Societies will need simultaneously to advance the prospects for younger people and keep the elderly onboard – pretty tough unless economic growth can resume. A clash of generations may now be seen as an addition to Samuel’s Huntington’s seminal predictions of a clash of civilisations[8].
Undermining either generational group right now can be the stuff of political instability in the short term and dire social problems later on. If families are to be encouraged to have children in the depopulated Western world, high university tuition fees are a disincentive. Similarly, if the elderly find their benefits cut, their ability to contribute meaningfully to society in future will be undermined. Both these dangers loom in today’s ageing and increasingly youth-less Western societies.
Of course, an ageing world is already changing our lifestyle as human beings. Retirement ages are now being extended to 67 in major European countries like Britain, Germany and Holland. France has been one of the more recalcitrant countries (witness trade union protests) to understand that working longer – to accumulate more, to rely less on the state and because it is possible to be productive much later in life – will become a societal norm in future.
New ways to manage retirement benefits from the state will be a key trend in the ageing West. In the Netherlands, there are already innovative debates about whether the state should move from a fixed age of retirement to a fixed period of paid retirement, so that the retirement age would be index-linked to average life expectanc[9]y. Indeed, healthy ageing is likely to redraft the way we think about retirement in the future.
The United States will be shielded to some degree owing to higher fertility rates and more immigration than their European counterparts. The United States has the lowest median age – 36.6 years – of the g7 nations (Canada, France, Germany, United Kingdom, France, Italy and the United States) according to United Nations’ estimates for 2010. Youthfulness is one variable for future growth because younger people tend to have more children.
Despite this, the US working-age population will grow only by 15 percent over the next four decades when compared with the 62 percent between 1950 and 2010. There will be a net inflow of 30 million immigrants into the United States over the next three decades, providing the one bright spark of potential economic growth in the Western world. The more tolerant and integrative methods used in immigration by the United States will prove their worth, even though there will be an ongoing and raging debate about this[10].
But there is a long way to go. Ageing is still often seen by the Western world (and corporates) as regressive. Older people are regarded as an unproductive burden. The demographic future will reappraise and revalue more mature citizens but thinking needs to alter now.
The challenges of fewer young people
A shortage of children is a key trend for the latter part of this century. At the global level, the number of older persons is expected to exceed the number of children for the first time in 2045. By implication, add a shortage of workers – predominantly in the West – to this trend. Moving businesses to India, China and other countries where a younger pool of workers awaits will be the key feature of outsourcing’s second-wind in the years to come (see Chapter 6).
While outsourcing was never politically popular in that it cost jobs and killed off entire industries in the West, it will now become a necessity. And it will be less unpopular than the alternative of liberalising migration to bring younger, more productive workers from the developed world to the West. Still, developed countries will need to incentivise companies to stay the course in their mother markets rather than relocate in an effort take up some of the domestic unemployed slack.
Societies likely to lose the child dividend (the advantage that some developing countries have of a younger population able to work in large numbers) should also be incentivising larger families or at least making it more comfortable by providing child care, extended leave time and financial allowances to families with younger children. Singapore – whose total fertility rate dropped far below the replacement rate – and Japan are doing so. Unfortunately, this is unlikely to find political support in the West, particularly in times of spending cuts. But it will come in the future as necessity hits home.
Probably the most feasible short-term solution is to use robotics and it-related advances to boost productivity. Job-redesign processes to equip elderly people with basic skills sets and some it knowledge will become big business in future. This will be essential to integrate older workers who