While political, economic and technological shifts can be difficult to predict, demographic data don’t lie. Over the next 10 years, the median age in more than 60 countries will be over 35, and in 25 of these countries half the population will be over 45. An aging global population is almost inevitable—but how it affects business will depend on what leaders do today. In this article, political demographer Jennifer D. Sciubba explores the implications of this shift for business and policymakers, including its impact on the workforce, customer base, retirement expectations, and more. In conclusion, she argues that in order to adapt to our aging population, global leaders must acknowledge the realities evident today, understand what is certain and what can be influenced, and actively invest in shaping the future.
According to the latest United Nations report, two-thirds of the world’s population lives in countries with below-replacement fertility, while life expectancy continues to grow. This means that many populations are aging rapidly and will start shrinking soon (if not already). At the turn of the century, 32 countries had an average age over 35. By the end of this decade, that number will more than double. In 25 of these countries, half the population will be over the age of 45.
In many ways, we may view the future as uncertain. But unlike so many technological, political and economic shifts, demographic trends are remarkably predictable. The aging of our population is all but inevitable – it will have a major impact on global labor pools, markets and the future of work, with several important implications for business leaders:
1. An aging workforce
Countries such as China, Canada, and Italy are now adding fewer people to the labor force each year due to declining fertility rates. As a result, more and more companies find themselves asking older employees to stay on longer. This will require increased investment in training and development to help these older workers master new skills, as well as additional accessibility and safety measures, such as wearable exoskeletons to help older workers lift safely on farms and factories. lifting objects.
Additionally, many companies are turning to automation to replace or augment certain roles as new, younger talent becomes harder to find. A number of companies have already begun developing “digital workforce” tools that provide seniors with fully virtual sales assistants, customer service representatives, and even companions. Between growing AI capabilities and changing demographic trends, these new technologies have the potential to become an increasingly important part of the modern workforce.
2. Aging customer base
Over the past decade, the global population over the age of 70 has grown by 627 million, from 5% to 12% of the total population. In ten years, 16% of the 8 billion people on Earth will be over 70 years old. This means a huge opportunity for products and services that serve this older demographic.
The most obvious growth area is healthcare, where demand for geriatric medicines, primary and specialty care, and related products such as wearable glucose meters or electrocardiograms will continue to expand. While life expectancy has increased in many places, healthy Life expectancy is lagging, meaning that finding ways to support the health and wellbeing of this growing population is not just a business opportunity – it is also critical for policymakers and government leaders. For example, older adults in the United States are more likely to live in rural areas, where health care is often less accessible. In Arkansas, Maine, Mississippi, Vermont, and West Virginia, more than half of seniors live in rural areas, demonstrating the large and growing need for senior-focused healthcare services in these markets.
An aging customer base is likely to have an impact on a wide range of industries besides healthcare and businesses with a particular focus on seniors. For example, in real estate, an aging homeowner may wish to downsize, or adult children may wish to purchase a home that has room for their aging parents. As demographics change, realtors may increasingly benefit from developing and passing on expertise to help buyers and sellers navigate these transitions, whether through professional development certification or through other professional endeavors.
3. Change retirement standards
Of course, age is just a number. When it comes to retirement norms, expectations of how long employees want to stay in the workplace don’t necessarily align with longevity. For example, Japan is the country with the longest lifespan in the world by age alone, with 31% of the population aged 65 or over. In contrast, only 22% of the French population is aged 65 or over. So one might expect more people to retire in Japan – but in fact a combination of differences in work culture, the social contract between the government and its citizens, and a host of rules and policies mean that the average retirement age in France is younger than in Japan 10 years old: 61 years old vs. 71 years old. As a result, about 29% of France’s workforce is actually retired, compared with 24% in Japan.
Despite these gaps, legal changes to the retirement age have been slow. In recent years, both the Netherlands and Ireland have scrapped plans to raise pension retirement ages to accommodate rising life expectancy. This is understandable, as legislation to deny pensions is hardly popular – but in the coming decades, it will be crucial for employers, governments and citizens to have some sort of mechanism in place to help older workers who choose to delay retirement of.
For example, many older workers who are not yet ready to retire have begun to express interest in semi-retirement. In a recent survey of working baby boomers, an overwhelming majority said they wanted to pursue some form of semi-retirement, with 79% expressing interest in flexible work arrangements and 66% expressing interest in transitioning For consulting positions, 59% worked fewer hours. But only one in five said their employer offered any of these semi-retirement options, suggesting plenty of opportunities for employers to differentiate themselves from the competition for talent by offering non-traditional career paths. When seeking to understand a particular labor market, leaders must consider not only people’s ages, but also the flexibility of employment choices and the different rules and cultural norms that may affect the true retirement age in different countries.
4. Changing global markets
Finally, it is important to recognize that our common assumptions about the demographic makeup of different countries may be outdated. At the turn of the century, countries such as Japan, Italy and Germany had some of the oldest populations in the world – but today, Thailand and Cuba are equally aging, with Iran, Kuwait, Vietnam and Chile not far behind. Ten years from now, we can expect young people in these countries to start entering markets as workers and customers, increasing the average age of these populations.
These are important considerations when identifying new investment markets. Different countries will respond to these changes differently, and business leaders would be wise to pay attention not only to demographic trends in a particular market, but also how their leaders are likely to respond to these trends. Will the government be fiscally responsible as more and more places need care? Or do you expect companies or individuals to shoulder the burden? A country’s approach to managing its aging population can affect its potential as a talent pool or client base in both substantial and nuanced ways.
the future is clear
Today’s business leaders and policymakers face myriad sources of uncertainty—but when it comes to demographics, the future is clear. The reality of our global population aging is now evident, because once a population’s fertility rate falls below replacement level (an average of two children per woman), it remains constant. Unless there is massive immigration from places like Ethiopia or Nigeria that still have young and growing populations, this will likely mean a smaller future population for most countries on the planet.
This clarity enables foresight and planning that is not possible in many other areas where transitions can be more difficult to predict. Fears about an aging population and certain, pessimistic rhetoric are increasingly common – but how this trend affects our businesses and governments will depend on how we prepare today. To adapt to our aging population, business leaders and policymakers alike must acknowledge these realities, understand what is certain and what can be influenced, and actively invest in shaping the future.