Tuesday, 22 October 2013 00:14
Population ageing occurs when the median age of a nation rises due to rising life expectancy, people living longer and/or combined with a fall of the birth rate. In the developed world, an increase in life expectancy has in the past caused the median age to increase and the population to age rapidly. More recently, even in less developed countries, this has occurred, except for 18 nations declared to be ‘demographic outliers’ by the United Nations, those that do not fit into the world standard norm.
The fact that the population is ageing is the reality in every other country in the world. In recorded human history, the world has never before experienced an aged population as of today. The UN’s prediction is that the rate of population ageing will, in the present century, exceed that of the previous century.
There are many policies and consequences to a nation state’s rate of ageing. A decline in the proportion of the population composed of children and a rise in the number of elderly in a country has tremendous effect. With better healthcare and the affordability of health care improving, longevity, living longer means that more people survive to an older age than before. As women realise that that they have the power to control their own fertility, the overall rate of fertility declines.
The economic effects of an ageing population are considerable. Older people have higher accumulated savings than young people. They have access to pensions and social security disbursements. However their spending pattern may defer from young people’s spending patterns, in that they may spend less on consumer goods and more on medical and related needs. This will necessarily have an effect on the service sector of the economy. Some categories of the Government’s expenditure will have to increase in an ageing society, for example healthcare, and where this is met from public taxes, the impact will be considerable.
On the other hand, as the birth rate decreases, expenditure on preschool, primary and secondary education will have to decline. Traditional patterns of budget allocation will have to be altered. Social security systems will also come under pressure. Where an old age pension scheme exists, the numbers of people, proportion to population, will increase. Where the pensions are not indexed to cost of living changes, the pressure to increase pensions, as the financial obligations of the pensioners increase, due to them living longer, will be tremendous.
Global Age Watch Index
Recently HelpAge Inter-national with the support of the UN Fund for Population and Development (UNFPA) compiled and presented a Global Age Watch Index, in an attempt to use available population and economic data to quantify and judge how an ageing population fares in an economy and how well prepared policy makers and implementers are for the transforming consequences of longevity combined with a fall in the birth rate. The study found that in the case of many European countries, the state is totally unprepared for a future where older people will constitute nearly a third of the population.
Silvia Stefanoni, the Chief Executive of HelpAge International, particularly highlighted Eastern Europe and Russia as being under prepared to meet the situation. Overall, worldwide, Stefanoni says, not only is life expectancy at older ages raising very rapidly, but fertility rates – the number of births per woman – is falling sharply, not only in industrialised countries but in other fast growing economies as well. This will result in a population profile which will leave a progressively small army of workers to bear the cost of maintaining the growing ranks of the elderly with their ever increasing demands on the health care and social security systems.
HelpAge International and the UNFPA intend to update and compile the index on a regular basis. The measures used cover four key areas, which have equal weight in forming each country’s ranking. They are income security, including old age poverty rates, health status including healthy life expectancy at age 60, employment and education including employment of older people and the ‘enabling environment,’ meaning in essence an attempt to measure the extent to which older people feel their lives remain meaningful to those around them.
The two institutions which collaborated on the index are of the view that internationally comparable hard data on conditions for the elderly are becoming increasingly a priority for all governments, who too often find it easier to put off policy making to meet challenges , the politicians, planners and bureaucrats, that seem far off in the future for their countries. However, as Stefanoni says, “The world is rapidly ageing: people over 60 years of age already exceed children under five, and by 2050 they will outnumber children under 15... The continual exclusion of ageing from national and global agendas is one of the biggest obstacles to meeting the needs of the world’s ageing population.”
Human Development Index
The methodology for the Global Age Watch Index is similar to that used for the internationally recognised Human Development Index (HDI). Professor Sir Richard Jolly, who was involved in designing the HDI, with its founder the late Dr. Mahboob ul Huq, has said, “This groundbreaking Global Age Watch Index broadens the way we understand the needs and opportunities of older people through its pioneering application of human development methodology . It challenges countries in every part of the world to raise their sights as to what is possible.”
In the Index just published, Sweden was ranked as the best country in which to be a senior citizen. Nordic countries with their extensive and long history of social welfare schemes did well, with Norway ranked a close second. In the last place was Afghanistan, which ranked just below Pakistan. However it is interesting that the Index shows that the conditions for the elderly cohort of the population are not necessarily linked to a country’s economic performance.
Although Pakistan and Sri Lanka’s GDP numbers are somewhat similar, Sri Lanka, in the Global Age Watch Index, ranks at 39 out of 91, compared to Pakistan’s one before the last place! Stefanoni says that in Sri Lanka’s case, similar to that of Bolivia’s, modest disbursements to the elderly (in Sri Lanka payments by the Charity Commissioner to aged citizens, pin padi) have proved particularly effective in improving the status of the aged, in multi-generational households.
Sri Lanka’s population average median age is 31.1 years. 30.1 years for males and 32.2 years for females. The annual growth rate of the population from 2001 to 2012 was 0.7%. The number of people over 60 years, out of a total population of 20 million was 2.4 million or 12.3%. The life expectancy averaged 75.9 years. The Global Age Watch Index reported that older Sri Lankans rank their social connections, physical safety and civic freedom highly. This, and Sri Lanka’s overall position in the Index, says the compilers, is consistent with Sri Lanka’s HDI ranking.
The Index comments: “We have seen how Sri Lanka’s over 60s have benefited from progressive social welfare programs earlier in their lives, which may be also an important contribution to later life satisfaction.”
Sri Lanka’s overall Global Ageing Watch Index value of 57.3 means older people’s wellbeing is positioned at 57.3 out of 100. This gives Sri Lanka a shortfall of just 32.6 percentage points below the best performing country in the Global Age Watch Index, Sweden.
Mark Gorman, the Director of the HelpAge International advocacy group, comments: “This survey shows that history counts. The top ranked countries are what you would expect, but Scandinavian countries were not wealthy when they introduced universal pension schemes. The older population in Sri Lanka today is benefiting from good basic education and health care. These countries made certain policy choices. Everybody faces scarce resources, but they should not forget that when they make investment decisions, they should also address issues of old age.”
Generous welfare benefits
Poor countries which have a history of progressive social policies, such as Sri Lanka, Bolivia and Mauritius, scored higher in the Global Age Watch Index than might be expected from the size of their economies. In Sri Lanka’s case, we know that this is connected to the generous welfare benefits which have been a hallmark of Sri Lanka’s history.
In the 1930s the first State Council elected by Universal Franchise legislated for free education and free healthcare. Later a free rice ration and an extensive food stamp scheme provided the poor and not-so-poor with food security and basic nutrition.
Under the Land Settlement Schemes, families who were taken from the south west quarter of the island to the north central and eastern regions were settled on newly-irrigated land and provided with a whole range of handouts and subsidies, such as free irrigation water, cattle, homesteads, seed material, agricultural extension advice, etc.
These services, provided out of local taxpayers’, IFI and donors’ funds, commercial loans, concessional loans and grants, had a huge impact on the standard of living and quality of life of the peasantry and the urban poor. However, the changing population profile with more aged people and less children has caused a strain on the provision of services to the population.
If healthcare is taken as an example, the present healthcare delivery system, budget and infrastructure, both human resource and physical, was designed to cater for a growing young population, whose main health concerns were mother and childcare, nutrition and communicable diseases. However, with the population ageing, geriatric medical care has become a priority and illness patterns have moved from infectious diseases such as malaria, filaria, influenza and chicken pox to lifetime diseases such as diabetes, high blood pressure, cancer and kidney disease, etc., which require lifetime treatment.
Neither the present health budget nor the health human resources plan of the healthcare delivery system nor the physical infrastructure presently in operation can cope with these new challenges. The National Health Plan has to be completely revised, in all aspects, human resources, physical infrastructure and equipment , and updated to meet the new challenges of providing first class health care to geriatrics and an ageing population.
The same applies to education. The focus on preschool, primary and secondary education has to shift away to tertiary and ongoing skill development to provide the workforce with the technical skills required by a dynamic rapidly changing economy. The much-abused word ‘skill mismatch’ which has been a potent word in our vocational training vocabulary, from the time it was first articulated by the legendary development economist Professor Dudley Seers from the Institute of Development Studies of the University of Sussex, in a report for the GOSL /ILO and UNDP in 1971, has to be dealt with once and for all, and the tertiary education sector brought under the discipline of market forces.
The system of education and skill development at the tertiary level must be geared in order that relevant skills demanded by the economy are provided. The workforce must be provided with extensive retraining facilities, as the technology changes so much, as of today, that constant retraining is required, even of older workers. A visit to a McDonald’s outlet in Singapore shows that geriatrics can also flip Big Macs! On the labour law aspect, much more flexibility is required enabling workers to take short-term assignments, be able to work until much older, as lifetime employment, as we know it, will soon go the way of the dinosaur.
Health and wellbeing evidence
One great drawback is that until the Global Age Watch Index was published, nations, while knowing that data showed that the rate at which their populations ages is likely to increase over the next few decades, few countries had a way of finding out whether their older citizens are living the extra years of their lives in comfort, or good or poor health and a supporting environment of quality.
A compression of morbidity would imply reduced disability in old age, whereas an expansion would see an increase in poor health with increased longevity. This is crucial information for governments to have at their fingertips, if the limits of lifespan continue to increase indefinitely, as some researchers believe it will.
The World Health Organization (WHO) through its household health studies is working to provide the much-needed health and wellbeing evidence including the World Health Survey and the Study on Global Ageing and Adult Heath (SAGE). The Global Ageing Survey explores attitudes, expectations and behaviours, towards later life and retirement, covering 44,000 people aged 40 to 80 in 24 countries across the globe. This has shown, among other things that most people are now fully aware of the ageing of the world’s population and the implications which this will have for their lives and the can also benefits of their children and grand children.
Migration has been seen by some as a method of countering population ageing, permitting younger migrants into countries which have ageing people with a low birth rate. Economist Paul Collier in a recent book, ‘Exodus: How Migration is Changing Our World,’ analyses how much more migration the world can take, if it would be beneficial and to whom.
Collier looks at this from three sides – that of the migrants themselves, the countries that they leave and the countries to which they migrate. Collier is of the view that migrants are escaping countries with dysfunctional social models and institutions. Good governance, the Rule of Law and strong independent institutions, which protect fundamental human rights, are factors which permit migrants to perform much better in the country to which they migrate, compared to the country the migrant leaves.
However Collier is of the view that unchecked migration will be counterproductive. If the cultural cohesion of the receiving countries is affected, there could be problems. Migrants will attempt to introduce the same cultural norms which destabilised their home countries, imposing dress restriction on Islamic women in Europe for example. Taxpayers in receiving countries will resent the fact that large numbers of migrants, different to themselves, draw upon social welfare benefits. The sending countries benefit from remittances of funds and the introduction of new ideas and concepts.
Collier projects that migration will continue to increase, with the possibility of receiving nations having a large unassimilated diaspora. There is a natural tension between migration and the welfare state. Collier suggests that limits should be placed on migration, even though it could help countries with ageing populations to attract younger people into the work force. Collier’s policy prescriptions are aimed at preventing immigration from undermining its positive aspects.
Singapore for example had an aggressive policy on this. However, there has been somewhat of a backlash, as Singaporeans have shown some resistance to the policy of the Government to encourage migration. Over 4,000 Singaporeans attended a rare public rally in heavy rain, to protest against a recent Government policy paper which predicted that the population will grow by 30% to 6.9 million by 2030 with migrants taking up nearly half. The Government felt this was the only way to meet the twin threats of a greying population and rapid out migration by young Singaporeans.
Sri Lanka’s migrant work force
Sri Lanka has a huge migrant work force, in West Asia and East Asia primarily, but also in other parts of the world. Foreign remittances keep the economy afloat. On the other hand, Sri Lanka also has Chinese construction workers and Indian foundry workers employed within Sri Lanka. It was not so long ago that Indian workers were imported to open up the coffee plantations. We are simultaneously a labour importing and exporting country.
Canada has the highest per capita immigration in the world, partly to counter population ageing. However, again there have been differing views. The C.D. Howe Institute, a conservative Canadian think tank, has expressed the view that immigration cannot be used as a viable means for countermining population ageing. Other scholars have also concurred. Demographers Peter McDonald and Rebecca Kipper have gone so far as to comment that “as fertility sinks further below replacement level, increasingly higher levels of annual net migration will be required to maintain a target of even zero population growth”.
Most of the developed world (with the notable exception of the USA) now has sub replacement level fertility levels and population growth now expends largely on immigration together with population momentum which arises from previous larger generations now enjoying longer life expectancy.
(The writer is a lawyer, who has over 30 years experience as a CEO in both government and private sectors. He retired from the office of Secretary, Ministry of Finance and currently is the Managing Director of the Sri Lanka Business Development Centre.)