Many countries are facing a demographic time bomb. Simple stated as the population ages a larger percentage of people are over working age and a smaller percentage of working age. As a result, it has been suggested that society will be less able to support the older adult population. Consequently we will lose public services such as libraries which become unaffordable and people will need to retire much later in life. Japan is frequently used as an example of a country which is expected to face this situation much earlier than other countries. The combination of a shrinking and aging population with a smaller proportion of the population expected in the workforce means that Japan is studied in relation to these significant changes in society (see Appendix).
However the narrative is too simplistic and one significant factor that is often overlooked in these discussions is the increasing efficiency of the workforce. Many populations have been aging for a very long time and societies have been successful in meeting such trends. Changes in technology, healthcare and education mean that workers can become increasingly efficient. Bringing this into the discussion we can now ask whether a more efficient workforce can counter the economic effects of an aging and shrinking (based on fertility rate trends) population.
Answering these questions is particularly important in meeting the future social and healthcare needs of a society. Such answers may provide a new perspective for the debate. In the meantime many solutions have been suggested. The charity Carers UK has suggested that there will be new opportunities for people who have retired to continue at work. The IMF has suggested that countries will have to put aside half of their GDP to prepare for this imminent demographic timebomb. Raising the eligibility age for pensions has been yet another suggestion.
Whatever the solutions, this debate will become an increasingly important one in the 21st Century.
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