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Impact of Ageing Population

Old age is now a factor to be considered as major economic, budgetary and social challenges in coming decades. Almost every country in the world is studying the effect of this factor to their country in the coming years. In United Kingdom alone, CBI’s evidences proved that this factor would have significant impact in the social and economic changes in the country especially in the next 40 years. They pointed out that changes of government policies for the ageing population should be change and adjusted to suit the need of older people.

Business must be flexible to change the way they deliver their goods and services in order to be competitive. Facts about Demographic Changes • According to Weekend Australia, there will be 350 million people more in Asia alone that aged 65 above, from today’s 150 million people, that is 500 million people by 2060 • CBI’s report has mentioned that life expectancy has risen by 50% since 1900 (55% for men and 53% for women) and now it stands at 75 and 80 years respectively.

• The Government Actuary Department, for example estimates that the proportion of the total UK population over the age of 65 will rise from 15 per cent in 2000 to 20 percent in 2025 and to 24 percent in 2040. projection for Germany suggest that the proportion of over –60’s will rise from 36 percent to about 52 percent ; projection for Italy suggest a rise from 40 percent to about 58 percent (ESRC Society Today) Ageing and the Economy The ageing population will have a strong impact in the world economy in the future. Interest rates in the future will possibly increase.

It was predicted that the AAA Ratings that Australia have will drop to BBB in the next 25 years and by the year 2040 investing in bonds not recommended anymore due too high risk that an investor will take. The economy might experience downfall as the population ages. This is because of the fact that the ageing population will be saving thus resulting in the decrease of balance payments surpluses. Ageing and the Workforce In United Kingdom, it is predicted that the employees will feel the effect of the ageing population much sooner.

Because of the demographic changes, problems on the low participation of older workers in the labour force and an increase in the pressure on the pension scheme. The low labour participation is due to several reasons: 1. Sickness – people who do not have jobs maybe due to their disability or sickness. This hinders them in seeking work. Ofcourse, the employer requires healthy people to work in their company and they will not accept people with disability or are sick because it will likely have a bad performance in the company. 2.

Qualification problems – companies are seeking for the best qualified person to be part of their workforce. Thus making it difficult for those people to acquire work if their skills are not the qualified for the employers taste. According to CBI, 37 percent of the 50-64 years old who are economically active are not qualified to level 2 compared to 27 percent of 20-34 years old. There are also who have literacy or numeracy problem compared to a fifth 26-35 years old. 3. No luck in job seeking – there are older men who were looking for job who were not hired or rehired companies.

4. The welfare system creates disincentives to work – the welfare system has created a problem with the older age people because of the good benefit that they receive from the welfare system, they do not want to look for a job anymore even if they are still qualified. 5. Early retirement not being voluntary – Due to many companies decision in the 90’s of giving early retirement for their employees, those employees accepted those packages because they do not have any other good alternative choice.

After receiving this package they have difficulties in finding new job. Ageing and the Business World The businesses are not excused in the future problems that the ageing population might cause. These group will bring major opportunities to the industries thus business should make a good strategic plan to be able to win the trust and confidence of this market. For instance, there were three principal factors that are driving the increased risk in dealing with the ageing population when it comes to planning for the old age

• Growing shift in emphasis between state provision and the private pension provision. • Move of investment risk from company pension schemes to individuals • Increase life expectancy The above must be addresses by all the stakeholders involved like the owner of the companies, the government and the regulators or policymakers in order to avoid future problems they might cause. Ageing and the Government The solutions to the problems that the ageing population threats to all the sectors of the society can be remedied by the policies that the government will create.

With the good forecasting, research and thorough discussions of the concerned government agencies, the problems that the ageing population is posing will be decreased if not irradiate at all. The government can do the following move to as a solution to these problems 1. Review all their policies including the provisions in the country’s pension system including the State pension system. The government must review all the advantages and disadvantages of all the provisions in this system and make sure that this will not be a problem in the future of the ageing population

2. The government must work with the business sector to come up with the good solutions that the ageing population poses in the future. 3. Strengthen the other laws that is possibly related to the ageing population As a whole the ageing population has its advantages and disadvantages. The government and all the stakeholders involved must learn how to work this factor as an advantage and not as a liability in the future.

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