Ageing population: Reasons for the Demographic Changes

Population ageing is the reduction in the size occupied by young people in the general population and an increase in the portion occupied by the old people. One of the things in Europe’s demography that has been considered as one of the most outstanding feature is its population ageing.

The age that marks the boundary between old age and the young generation is used to determine population ageing and at present, according to the United Nations report of 2003, the globe considers this age to be 26.4 years. In Europe, this age is 37.7 years, Northern America is 35.4, in Asia it is 26.1 and in Africa the age is 18.3 years. The age structure of a country is a result of differences experienced in fertility, mortality and migration.

According to Emily Grundy, no biological reason can be used to determine the passage to elder status and therefore ageing at individual level should be considered as a heterogeneous experience which does not involve disability. Population ageing is characterized by a fall in fertility which has also resulted to fluctuation in birth rates. Japan is one of the countries considered to have the oldest population with a Total Period Fertility Rate of 1.3 whereas England and Wales has 1.8. This has resulted from low fertility. This is very different from the US whose population is younger as a result of high fertility.

Mortality trends greatly affect population ageing. The rates of death to some extent determine age structures. Decline in death of very young individuals resulted to increase in life expectancy and this contributed negatively to population ageing. There was an increase in the child population. This trend in some ways got rid of the effects of lower fertility because the girl-child grew up to become a woman and bore children. In a country which already has old age structure and experiences low fertility and mortality, a drop in mortality at older ages is considered a key factor in pointing out the rate of further population ageing.

The gap between men and women had increased but later reduced. This was experienced in countries such as Italy, USA and most parts of Eastern Europe. This was facilitated by things such as world wars and male emigration. However, this has declined and is expected to reduce even further. This indicates that widowhood is stagnated and as a result, the number of older couples increases and they are able to rely on each other for comfort which meant more life for the elderly. An increase in the number of unmarried women has led to a decrease in the rates of births. There has been development in institutions which offer care for the aged. This has helped those who cannot afford daily means to live even more comfortably.

Other implications of the data in the table for the welfare state and for the government’s social policy & employers

Health policies have a great effect on the population. Treatment of high blood pressure may help in the curbing of some conditions that mostly affect the aged such as stroke. Non-smoking, less alcohol intake, consumption of some kinds food products such as fruits and vegetables and enough physical exercises are healthy habits that promote long life.

Population ageing mainly affects the costs of income support especially through pensions and long-term care in relation to health and disability. A reduction in the age-specific mortality has forced the job industry to increase the retirement age which means that the old people will not have to stay idle for long after retirement. Most countries now support longer working lives and reduce early retirement. Improvement in technology has resulted to expensive medical costs. An increase in the number of the elderly has also meant an increase in the long-term care costs.

Population ageing is to be positively viewed because its alternative which is population growth is usually accompanied by far greater negative effects. Concerning development, it is considered better to die at an old age after ones efforts in life have bore fruits than to die young before achieving anything. Population ageing has its negative implications. In the economy, the old people cannot effectively participate in the job group and most of them need special care and attention. This forces their close relatives to take care of them thus spending some time and energy which could have been used to do some work elsewhere.

This contrasts the situation whereby the young people are the majority of the population meaning that the country has more labor force than those who depend on the wealth accumulated. Professor Philip Booth observes that ageing will result to an increase in the number of people who have retired and the economy of a country would be affected through saving, capital accumulation and inflation. This is so because an increase in the number of people in the retired field means high demand of goods and services and those in the working field will face pressure in terms of production of the goods and services. A low and constant level of inflation will lead to a stable relationship between real and nominal interest rates which greatly favor savings.

Standard economic theory states that people in the working field participate in “life savings” during their working period. They save for what they will exhaust after retirement. So if the population of the country has more old people than young, it means that a large amount of the country’s resources are being exhausted than that which is being created. This also means that most people would be willing to sell their assets rather than purchase more and the value of assets would reduce and interest rates would increase.

Any differences faced in the net savings of a country would retard the growth of output by cutting down capital accumulation and this would result to an increase in the number of foreign investors and capital from other countries. Though ageing has an effect on capital accumulation, savings and interest rates, its impacts are not as compact as political factors which define the outcome of economic aggregates.

Remedies to help alleviate the situation outlined in the case study and how these suggestions may help the position

The government should therefore put into consideration the projection of the labor force and strategy objectives should be regular and relate to each other. The plans by the government to increase participation level of the labor force for people between 50 years and the retirement age has been accompanied by the need to increase employment opportunities for those who already are above the state pension age. In 2002 in the United Kingdom, the government proposed to individuals who had reached retirement age to postpone the taking of their state pension receipt and continue working for some more time and promised great rewards in return.

This move came about after the government realized that increasing the state pension age would disfavor citizens who are poor because they receive low income, those who mainly depend on the retirement benefits and those who have lower life expectancy than the population average. This was followed by an observation from Mr. Peter Tompkins who said “an increase in the state pension age to 67 might do little than increase the number of low-paid older persons who are dependent on non-pension means-tested benefits.” On the contrary, Professor Blake proposed that it would be proper to increase the state pension age due to the recovery of mortality age which should be done like two or three decades later to give room for the citizens to plan adjust for the change.

In the process of making laws by the government, the legislators have to consider issues such as human rights so that age diversity is put as a priority and the policies should not contain an ageist element. The government should therefore re-examine the state pension age after every five years to be in favor of the life expectancy beyond 65 years and the need to promote participation level at older ages and this expected to be an increase in the state pension age. The government can also help by including specific objectives concerning the older age employment in their Regional Economic Strategies and in the major concerns they put up for Regional Development Agencies.

In Britain in the late1990’s, it was observed that the blacks and the minority ethnic populations suffer severely from unemployment. However, this was not basically as a result of racism but it was brought about by the fact that most of the blacks were not in the job group age bracket (35-44 years=5%) but in the pension age bracket (45 years and above=16%). This forced the government to reform some of its objectives to favor the disadvantaged ethnic minorities in the labor force and much attention was given to the ones considered as “double disadvantaged” who were faced with both age and ethnicity issues.

Ageing has great effect on the supply side as it affects mental abilities, competence, enthusiasm and choice of the workers. It also affects demand through the needs and preferences of employers. Cumulative demand in the labor market results to long term profits receipt. People who earn fine pension treatment have greater chances self-financing their early retirement.

According to Professor Richard Disney, one of the causes of lower participation rates at higher age may be due to other older workers are not willing to agree to employment at lower wages compared to the younger workers.

Despite the causes of early retirement, there is proof that personal choice concerning when to pull out from work is vital for the individual’s welfare. The contentment of the employed and the early retired persons is determined by some issues such as if they chose their position. Those who don’t desire work, who have health issues or are expecting better income after retirement end up in most cases settling on early retirement. The government should be as precise as possible in giving an image of the situation in which exceptional actions may be validated in order to issue out the clearest possible channel to be followed by both employers and workers.

SME’s which might benefit from these lifestyle changes

It has been noted that most people who opt for early retirement from the government, in a bid to maintain their earning capacity or at least keep active by working in alternative sectors, either go for private employment or start their own small scale business enterprises with their retirement benefits. Others who would not start a business may end up being employed by such a firm. Small and medium enterprises are those organizations whose turnover falls below some specified limits therefore have fewer employees compared to other bigger organizations. These groups of companies are very many in Europe compared to large scale organizations.

They are supportive in facilitating high competition and driving high tech innovation in the market. A good example of such a business organization is the MicroTech which deals with advertising in the internet. It employs people who are not as active and in most cases the old who would wish to stay at home and work from there through the internet rather than do some tiresome work which requires more energy.

We also have the TEC Software Solutions which deals with the selling of software and all the transactions and deliveries are done over the internet. They have a variety of products depending on the customer’s preference i.e. the company can either give their customers standardized products or custom made ones. They also give trial offer whereby one is given a chance to test the products of the business group. This is considered as an easy task for the aged who do not have to use a lot of energy because of health risks.

There is another small scale organization called the TVstands which basically deal with advertisements in the media industry and offers advice concerning TV programs and how to manage the information and entertainment industry in the media. They inform the presenters on how to dress themselves properly before the viewers and also on speech matters. These organizations receive good wages in return but most of the work done is basically not manual. This is very good for the old generations as the work requires minimal input of physical energy.

References

Christine K. Cassel, Rosanne M. Leipzig, Harvey Jay Cohen – Medical – 2003.

Geriatric Medicine: An Evidence-based Approach‎.

D. Roseveare, W Leibfritz, D. Fore, E Wurzel. 1996. Ageing populations, pension Systems and government budgets: simulations for 20 OECD countries.

Grundy E.: (2003) “The Epidemiology of Ageing” textbook of Geriatric Medicine, eds.

R. Tallis & H. Fillit, Churchill Livingstone Thomas Robert Malthus, Geoffrey Gilbert. 1999. Business & Economics. An Essay on the Principle of Population‎.Pg 57.

Landis Mackellar. 2004. The Economic Impacts of Population Ageing in Japan.

Landis Mackellar. 2004. Economic and Social Research Institute, International Institute for Applied Systems Analysis – Business & Economics.