Essay baby-boom

LIMOUSIN

Clementine

COURSEWORK ESSAY

After the two World Wars, the return to normality and stability boosted procreation in many countries and especially in Europe. This phenomenon is called the “baby-boom”. By 2005, numerous generations from this episode had reached the retirement age. This number has not stopped increasing ever since. Thereby, from now until 2050 the number of people over 60 will almost double, going from approximately 12% to 22% according to the World Health Organization (WHO, 2014). The ageing population can also be explained by the medical and technological progress made these last decades. In my opinion, the ageing population will have an inevitable impact on the functioning of societies. Therefore, it is a necessity for the latter to revamp their system.

Many people believe that an older population could benefit the professional world because individuals growing up gain in experience and so in efficacy. However, although the population is globally ageing, the retirement age does not postpone. As a result, the portion of the population old enough to work decrease and so the economic activity slow down. One study estimates by the year 2022, in the United Kingdom, 12.5 million jobs will be opened up through people leaving the force work. Over this period, 2 million new jobs will be created, yet there will be only 7 million new workers which leave a significant gap.  Moreover, the seniors’ rate of unemployment remains very important in many countries. For instance, in 2014, only 36% of the population aged between 55 and 59 worked in Turkey. In Greece, relatively 45% of the 55-59 years old worked according to the Organization for Economic Co-operation and Development (OECD, 2015). Fewer workers would conduct to less effectiveness and less production and therefore, a global slowdown of the economic activity.

In parallel, several studies have shown that the needs and methods of consumption are widely different depending on the age. In this way, there is systematically a severe decrease in spending in many sectors passed the age of 65. Spending on clothing, leisure activities, transport, communication and beauty care are the ones that reduce the most. In addition to the decreasing numbers of workers, consumption in certain areas diminishes and so induces the decline of some companies. As an example, at the beginning of the 2000’s in Japan, known as the “oldest” country in the world, the automobile market decreased by roughly 4% each year owing to the ageing population according to Serrière (2012). Indeed, it appears that, after a certain age, the elderly does not invest in cars anymore. Consumption is one of the components of the economic growth; if it declines, it is the economic system as a whole which is weakened. The ageing population affects directly the economic activity of a country.

Another negative consequence of the ageing population is financial. The elderly continues to spend their money on needs however their consumption cannot be supported anymore by their salary as they no longer work. Consequently, governments, in order to ensure an increasing consumption and a certain standard of living, have to pay retirement pensions. Otherwise, the enhancement of standards of living induces the rise of the pensions’ cost. For instance, according to the INSEE in France, the retirement average amount per month went from 1, 062 euros in 2005 to 1,406 euros in 2013 (Drees, 2016). Some countries like France, Spain, Italy, Sweden or Austria function with a pay-as-you-go plan; it means that contributions paid in by workers are immediately used to finance the retirements pensions. Thereby, the proper functioning of these countries’ retirement system depends on the balance between contributors and pensioners. The ageing population provoked a disequilibrium as fewer people are working and more and more are retiring. Thus, contributions grow heavier and the whole economic system is forcefully impacted.

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