The Ageing Population Opportunity

This topic is just starting to rock our political and economic world. Business will not escape the consequences. I believe we can use the situation to our advantage if we are aware and make the right choices.

This document has been prepared as a briefing paper for the Wise Society meeting in Auckland on 26th January 2011.This post includes only the first part of the paper summarising the statistics and outlining the situation. The following two posts include discussion and practical solutions.The whole paper is at the bottom of this page as a downloadable PDF. Please think about this and talk to others about it. We need to widen the conversation.

Background 

In short – from the mid 1940’s more people were born, fewer died and more are living to be older. For the first time in history, there will be more older than younger people and the balance of those over 65 will be significantly increased. The oldest old population group – those over 85, will grow in size the most. So, unless we have world war, natural disasters, plague or divine intervention, we have a new paradigm ahead of us. We can choose to see this as a problem or as an opportunity.

Facts and statistics

• There is a ‘bulge’ of retirees over the next 20-30 years

• The dependency ratio today is 0.53. In 2051 it will be 0.71

• By 2050 1 in 4 people will be over 65. Today it is 1 in 8.

• The problem is Global in developed countries. Europe and Japan seem to be most affected.

• The oldest old – over 85 - is the group increasing in number the fastest

• Physical and mental incapacity over 65 is a major concern

• Dementia currently occurs at a rate of 1 in 1000 up to age 65 then climbs to 1 in 5 over 80. This does not include those with brain damage (strokes, tumours, damage from falls)

• There will be fewer working-aged employees to fill jobs

• Many over 60’s want to work but can’t get appropriate work

• All family members will be affected

• Age discrimination and abolition of mandatory retirement will  affect employers

• According the EEO Trust* fact sheet, only about 50% of employers are taking this situation seriously

General

The ‘ageing population’ refers to the increase in older people in the mix of society over the next 30 years. Often this is confused with the wave of Baby Boomers that are just reaching retirement. Baby Boomers is a term referring to the generation of post war babies born between 1945 and 1964 who are said to share some similar characteristics. However, research shows that they are far from a homogeneous group.* The NZ department of Statistics claims that the ageing population issue also includes those born up to the 70’s.*

Increase in numbers

The ‘bulge’ of this period occurred mainly because of an increase in births and longevity:

• Post war renewal – more babies were born
• Fewer deaths at birth due to new medical discoveries
• Fewer deaths in adulthood due to the above
• More people living to be older because of medical discoveries

Decrease in births from the 1970’s

The wide use of the contraceptive pill in the l970’s led to women controlling childbirth and the next few generations. In wealthy countries, women pursued careers and lifestyle choosing to have fewer children. This imbalance of the generations will lead to a significant shift in the dependency ratio in most first world countries over the next 20 years. The first Baby Boomers retire this year – it has already started! A new increased birth rate seems to have begun in the past decade – but it won’t impact in the next few decades.

What is the dependency ratio?

This figure is calculated on the basis of those earning to those being supported. Generally speaking, the number of children under working age plus the number of retired constitutes the supported group. Everyone in between is assumed to be working to support them.

For example, if 80% are earning and 20% are being supported, then society can support the 20% easily. On the other hand, if there are 20% supporting the 80% there will be serious difficulties. This assumes that all the people in the middle years are working – that retired people are non-earning and that we don’t have child labour! Any one of these factors can shift the dependency reality if not the age related ratio.

Sources of information:*

The following are good sources of information and statistics:

EEO Trust - Great knowledge and advisory base. See especially:

Workplace Age and Gender July 2009

Ageing workforce fact sheet

Power point presentation ‘Effectively managing an ageing workforce’

NZ Department of statistics

‘Demographic aspects of NZ’s ageing population’ 2006

NZ Department of Labour

‘Workforce 2020’

Neilson Report for the Hope Foundation – research on ageing

‘New insights into the experienced generation’ July 2009

NZ Institute for Research on Ageing

‘Maximising the potential of older workers’ 2007

Videos:

Gregory Petsko: ‘The coming neurological epidemic’

Articles on www.janisgrummitt.com:

‘All wise people are old but not all old people are wise’ (blog)

‘Opportunities of the Ageing population’ (blog)

‘What is a wise society and why do we need it?’ (page)

Also see various articles and discussions on the Wise Society LinkedIn group.

The full paper including comments and possible solutions is posted as a downloadable PDF at the bottom of this page.