2012 05-29 global challenges-ageing and shrinking lf_final rm

Page 1 May 29, 2012 Rainer Münz

E R S T E G R O U P B A N K A G

Rainer Münz

Erste Group

IFA 11th Global Conference on Ageing

Prague, May 29, 2012

Global Challenges:

Ageing and potentially shrinking

labour forces



Global demographic trends



20th Century



21st Century



Reality no. 1:

Growing world population





From 6 billion to 7 billion people:

Contribution per continent to

earth’s 7th billion

Asia Africa Latin America North America Europe Oceania



3 Total Population change by Major

Area,1950-2100

Source: UN, 2010



… Europe’s, Russia’s and Japan’s

populations have already started to shrink

Projected population growth, 2010-2050, in %

Source: Berlin Institute 2010

to -20 %

-20% - -5%

-5% - 0%

0% - 25%

25% - 75%

75% - 100%

100% - 150%

150% - 200%

above 200%

n. a.



Some Regions of Europe have the

most rapidly shrinking populations

Projected population change 2010-2030, in %

Source: Berlin Institute 2010



Reality no. 2:

Global ageing



Demographic ageing is a global phenomenon

Total Population change age groups 0-19 vs 50+, 1950-2100

Source: UN, 2010

Age 0-19 Age 50+



Europe is continuously getting older

1.00 0.75 0.50 0.25 0.00 0.25 0.50 0.75 1.00

0

10

20

30

40

50

60

70

80

90

100

Alt

er

in % Men (2010) Women (2010)

Men (2050) Women (2050)

Source: Eurostat, Europop 2008

1950

2010

2050

Ag

e



… and driven by two trends





Source: UNPD 2011

During the last six decades, global life

expectancy has increased by 20 years

Life expectancy by world regions, 1950-2015

30

40

50

60

70

80

1950-1955 1970-1975 1990-1995 2010-2015

Africa

Asia

Europe

Latin America

North America

Oceania

World





In the same period, the overall number of

children per woman has halved

Total fertility by world regions, 1950-2015

0

1

2

3

4

5

6

7

1950-1955 1970-1975 1990-1995 2010-2015

Africa

Asia

Europe

Latin America

North America

Oceania

World

Source: UNPD 2011



Today 50% of humanity live in societies with

less than 2 children per family

World population by Total Fertility, 1950-2100

Source: UN, 2010

Po

pu

lati

on

in

mil

lio

n



… however, demographic

ageing is not affecting all

regions the same way



Europe and Japan have the oldest

populations

Share of age group 65+ in total population

Source: UNPop Div 2011

n. a.

to 3%

3% - 6%

6% - 9%

9% - 12%

12% - 15%

above 15%



Slowly growing

population

Low life expectancy,

high fertility

Fast growing population

Increasing life expectancy,

gradually sinking fertility

Stagnating population

High life expectancy,

low fertility Shrinking population

Ageing society

Chad

Ethiopia

India

South

Africa

Egypt

Indonesia

Brazil

France

Russia

Germany

Italy

Niger

Nigeria

China

USA

Japan

The demographic development of the richer world is

in a very advanced stage: Countries with a

stagnating or shrinking native population account

for four-fifth of world economy



What challenges is the

rich world facing due to

demographic trends?



Challenge no. 1:

Aging and eventually

shrinking labour forces

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Demographic trends affect labour

supply highly differently

Development of labour force until 2020 (in %)

Source: based on ILO data 2011

below -5%

-5% - 0%

0% - 10%

10%- 20%

above 20%



In some developed countries working-age

populations have already started to shrink

Working-age population, in million

Source: The Economist 2012



What can we do?



Work 10 years longer

than today



29,6 30,2

34,0 34,2 34,4 35,036,6 37,3 37,6

39,6 39,7 40,5 41,1 42,3 42,4 43,5 43,646,3 46,5

48,2 48,6 49,2 50,0

53,7 53,856,2 56,8 57,1 57,6 57,7

60,3

65,268,0 68,6

70,5

79,8

TR MT PL MK HU SI IT BE HR LU FR SK RO GR AT BG ES EU CZ LV LT PT IE NL EE FI CY UK DK DE US JP CH NO SE IS

an

Therefore, labour force participation rate of

the age group 55-64 needs to be increased

Labour force participation rate of the age group 55-64, 2010

Source: Eurostat 2012 EU-27 average

Non EU countries

EU countries





Working longer is an option, but employing

the elderly needs adaptation in several areas

Lifelong learning

New pension system

New salary system



… even if such measures are not

cheered by parts of the electorate



Increase female

labour force

participation



Increase labour

productivity



Bring in more

migrants



Source: Eurostat, 2010.

Median EU-27: 40.6 years

Median Immigrants: 28.4 years

Migration helps reducing the pace

of demographic ageing

EU-27, age structure of population and of immigrants



The challenge is to attract the right skills



… via smart migration policies?

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Figure 7c: Migrants' level of education by generation and

country of residence - 2001

5,0

7,0

9,0

11,0

13,0

15,0

17,0

1930 1940 1950 1960 1970 1980

Year of birth

Avera

ge n

um

ber

of

years

of

sch

oo

lin

g

US*

Canada

Italy

Spain*

Source: Fargues 2010

The US more easily attracts talent and skills

Immigrants of birth cohorts 1935-1975 in the US, Canada, Italy

and Spain by average years of schooling



Tomorrow, the developed

world will compete for

workforce, especially for

young and skilled migrants



...but today, the problem

seems to be another one

Youth unemployment (age 15-24, in %)

Source: OECD



None of the mentioned

strategies alone is

enough to overcome the

ageing problem, but their

combination might do it



All strategies are highly

unpopular in Europe, but

much less so in the US

and Canada



Challenge no. 2:

Integration within

increasingly diverse

societies



How to encourage integration?



How to deal with ethnic, cultural

and religious diversity?



If you want to know more

Overcrowded World?

Global Population and

International Migration

Haus Publishing

ISBN: 978-1-906598-10-5

€ 9.95; $14.95, £ 9.90



Thank you for your attention!

[email protected]

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2012 05-29 global challenges-ageing and shrinking lf_final rm