Ageing populations cause many problems. Elderly people depend on the working adult population. They put pressure on medical services, and on the state – for pensions. These resources are expensive, and must be provided for by the economically active population. However, as the proportion of old people is increasing, the proportion of working adults is decreasing. The number of consumers relative to the number of producers is growing. Therefore more pressure is put on the working adults to provide for the elderly.
One of the most serious consequences of an ageing population is that more money is required to pay for the retired sector: more pensions are required. Most MEDCs have a state pension system – people pay taxes to the government to guarantee they are provided with a pension when they retire. The more pensions needed however, the harder it is for the government to provide adequately for everyone. Most MEDC governments are searching for an effective solution to overcome this problem.
Pensions could be made less generous, but, as elderly people must still have decent standards of living, reduced pensions would not be the most desirable solution. State pensions could be abolished, and people could be made to pay for their own private pension plans. Currently, many MEDC governments are encouraging people to enhance their state pensions with private plans, to allow them to be more comfortably off in their old age. In some countries, such as Chile, there have been radical reforms, and now private pension schemes are the sole source of income for most retirees. However, in Germany, the first step towards reform and adopting a private pension scheme failed. The least popular solution would be to raise taxes, so as to generate more money for pensions. An alternative way of raising more money would be to increase the workforce, so that there are more taxpayers, instead of increasing the amount of tax paid by each individual worker. This could be achieved by encouraging the immigration of young adults from LEDCs or other foreign countries, or by discouraging the emigration of workers. There could also be financial incentives for larger families. Another solution would be to raise the retirement age, so the workforce would increase, elderly people would not require pensions so soon, and would remain productive and pay taxes for longer. This would reduce the number of pensions needed. This is currently the most realistic option, and many countries are looking into this.
A greater percentage of the population over 65 means that expenditure on health services will inevitably increase. As your health is more likely to deteriorate with age, more elderly dependants will require more healthcare. Health services, such as nursing homes, drugs, and home-helpers are expensive, and more money will be needed to pay for them. At present, the UK government promises to pay the cost of care for those who cant afford it, but it may not be able to keep its promise in the future. Raising taxes and increasing the workforce are possible ways to fund healthcare services, but there will also be an increased demand for professions such as nurses, doctors and carers.
An ageing population could cause changes in consumer demand. More elderly people will require more of certain products, for example, wheelchairs. Businesses that cater for the aged could prosper, causing a shift in the most affluent sectors of the market away from those that cater for younger people. Some industries, such as the fashion, tourism and housing industries, may have to adapt to provide for the needs of the growing number of elderly people, if they are going to remain successful.
As there are more and more elderly dependants, there are less economically active workers. If ageing population trends continue, some countries could find themselves with labour and skill shortages, as increasing numbers of workers retire. To resolve this, the workforce could be increased by the methods mentioned previously, and likewise, the retirement age could be raised, keeping old people productive for longer.
Although this trend has been predicted for about 40 years, as a direct result of the post World War II baby boom, as of yet, no government has come up with an affective solution for combating the problems caused by an ageing population.
It is inevitable that the ageing of the population is going to have many consequences, and most of these will create many problems, the main one being that providing for the elderly will become more difficult as the ratio of elderly dependents to adult workers increases. Because no effective strategies have yet been implemented to solve these problems, the ageing of the population is going to continue to be one of the most serious issues confronting the developed world.
