In a Milan retirement home yesterday 350 retirees, living in abject poverty, committed mass suicide. They left a suicide note pinned to the entrance of the state-funded home pleading for society to recognize the plight of the aged. It is a chilling reminder of the suffering and financial panic being experienced by millions of retirees around the world.
As world economic growth slowed for the sixth consecutive year, world leaders called for urgent intervention following the recent tragic mass protest in Japan. In Tokyo, 100 elderly retirees ended their lives in a public bloodbath that was beamed live to a world audience already battered by constant terrorism.
Now a UN special session is to address this global conundrum – how to stimulate economic growth, employment and prosperity given that the demographic profiles of leading producer nations have shifted dramatically towards older populations.
“The global economic future looks bleak”, agreed world leaders at the opening of the UN special session. “We need young consumers and young producers to drive both production and consumption. Without this, standards of living for everybody will continue to drop.”
Everywhere the ability to support growing numbers of elderly people is creating new economic hardships, with increasingly tragic consequences for all.
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ANALYSIS >> SYNTHESIS: How this scenario came to be
As the average lifespan of the world’s population increases at alarming rates, and global birth rates decline, the long term economic consequences are only starting to emerge – and the results are scary! Countries now grow old before they grow rich – can they afford to support the aged? Can the aged afford to support themselves? What are the consequences?
2004: Birthrates decline
Global fertility is now only 50% of early 1970’s levels. In the UK, the number of people younger than 16 is lower than the people over 60, for the first time. Global urbanisation and the increasing role of women in the economy has lead to people having fewer and fewer children. Few developed nations produce enough children to combat the population declines over the long term.
Social security and state funded pension plans generally depend on the constant replenishment of a nation’s human capital. Developing nations are experienceing an even greater problem – Mexico is ageing at 5 times faster than the USA. The Middle East has seen fertility rates plummet by almost 60% in some cases. Asia suffers from similar challenges.
The Group of 10 countries who carry out studies assessing the long term macro-economic and financial implications of ageing populations are worried – if strong interventions are not made, the effects may be crippling.
Already, only some 6% of all people on the planet can afford to stop earning a regular income and ‘retire’ at around the traditional retirement age of 60 years, whilst maintaining their former lifestyles and standards.
2007: Pensions implode
Europe struggles to sustain social security levels and the violent labour strikes of 2003, protesting governments demands for longer working life, are repeated across Europe. Many company funded pension schemes go bust and millions of unemployed and retired people are left without adequate financial support.
2010: Tax incentives drive change
As the fertility rates plummet across nations and countries begin to realize the long term fiscal and social consequences of ageing populations, governments seek remedies to alter the structural economic consequences – new and aggressive tax incentives are introduced to drive higher pro-creation. Re-skilling programmes, aimed at ensuring appropriately skilled older workforces, proliferate as companies struggle to keep up with consumption demand.
Additional reforms also include measures to stimulate national savings and investment, increasing the supply and skill of available labour, and the efficient allocation of savings.
Already, the effect of a reducing labour force reduces global GDP by some 0,5% to 1% p.a. This trend is expected to continue for the next 20 years. The long term effect on productivity gains as a consequence of technology can be the only saviour over the long term.
2015: Tax revenue drops
As the ‘boomers’ reach retirement age, their taxation contribution to state revenues, coming off the high during their maximum productivity years, drops substantially, causing even greater hardship for governmets already struggling to afford the cost of caring for their older populations. Consumption tax, as opposed to income tax, will become more widespread and more onerous as governments battle to replace the reducing income tax flows. Budget deficits increase.
2020: 50% of Europe ‘old’
Already, more than 50% of Europe’s population, some 130 million people, are older than 50 years. 35% of British citizens are older than 50 years. As a consequence of globalisation, mobility, competiveness and the financial struggle for most, family structures fragment and the elderly become more self dependant as family support structures disintegrate. The burden on the state increases.
2025: Export economies struggle
As the number of young consumers decline, so too do the fortunes of all economies built on a consumer based society. Japan for example grew at a time when European consumers were young and hungry for products – the picture has changed radically. Most ‘rich’ countries are encumbered by the cost and burden of older populations – the cost of health and financial support drains state coffers. The shape and scope of export markets has changed fundamentally.
2030: Mass suicides
As the plight of the aged around the world becomes more desperate, the regular incidence of mass suicides amongst older, socially and financially dependant communities becomes a scary reality. Society faces one of its biggest challenges for many a year – how do we cope with the legacy of a consumer based global economy, a society that, for many years, has evolved to the point of ‘all work and no play’ in the quest to survive financially and the reality that the future depends on the youth for stimulation, growth, innovation and progress…BUT, where is the youth?!