Mass ageing poses a challenge we’ve never faced before | Mint

Mass ageing poses a challenge we’ve never faced before

India already has the second largest population of elderly folks at nearly 100 million.
India already has the second largest population of elderly folks at nearly 100 million.

Summary

  • The data is staring hard at us and we had better start trying out a variety of solutions

The world is ageing rapidly. In 2022, there were nearly 800 million people aged 65+ years, globally, representing 10% of the world’s population. This is likely to increase by 5-6% every 30 years to reach 16% by 2050 and nearly 1 in 4 people by the end of the century. The wider implications of ageing societies will increasingly occupy our mind-space in the decades to come.

What’s fast becoming a reality is that ageing is the dominant global demographic trend. Rapid and accelerating ageing is taking place on account of declining fertility, increasing longevity and the movement of large cohorts into the ranks of the elderly. The population structure has changed substantially over the years. Global life expectancy has more than doubled over the last century and is expected to continue climbing along that path. At the same time, fertility has dropped in every country around the world. In many developed countries, fertility rates, recorded as number of births per woman, have dropped to nearly 1.3 or lower. South Korea recently reported a fertility rate of 0.9. India’s fertility rate has more than halved to 2.0 in just four decades.

The power of this mega-trend is so great that even a global event like the covid pandemic has only slightly affected population size and growth, despite an estimated 15 million direct and indirect covid-related deaths and a two-year decline in life expectancy for the duration of the pandemic. Any long-run impact on fertility from the outbreak of Sars-CoV-2 is still uncertain.

All countries face major challenges to ensure that their social and health systems are prepared for this change. The shift in age distributions began in high-income countries like Japan and Germany, but it is now low and middle-income countries that are experiencing the biggest changes. By the middle of this century, two-thirds of the elderly will live in low and middle-income countries. Since this is happening over the same time span as climate change, it will add to the financial burden of each country at a time when their resources are already stretched.

There are opportunities and challenges that arise from this dramatic shift. As societies age, it offers an opportunity to tap the experience of elderly individuals who possess a wide range of functional capabilities. If done systematically and creatively, what might otherwise be perceived as a liability can be converted into an asset. The biggest challenges, of course, are related to income security, healthcare (and related costs) and, no less importantly, ensuring lives of dignity for the elderly.

Many in India probably consider this issue as one for the future. Au contraire, India already has the second largest population of elderly folks at nearly 100 million. By the end of this century, that number will rise to 330 million people, nearly the same as the population of the entire US today. With that size, issues of elder care, health systems and income and pension security are already upon us.

The ‘wicked’ problem for India is that even as the country works on the important issue of providing employment to young persons, it will need to consider extending the retirement age, increasing what employers put in for pensions, and providing incentives for household savings and elder care.

The issue is further complicated by the fact that there is a stark difference between states in demographic structure. Many of the states with higher GSDP per capita, like Maharashtra, Tamil Nadu, Gujarat, Karnataka and Kerala, have fertility rates well below 2.0, while Uttar Pradesh (UP) has a fertility rate of 2.4 and Bihar (highest of all states) of 3.0. While the median age of India will rise from the mid-twenties to the mid-thirties over the next decade, Tamil Nadu and Maharashtra will be closer to 40 and Bihar and UP closer to 30.

Additionally, women outlive men by about 3-4 years on average, which compounds the income security problem.

Like many other developing countries, India is underprepared for this complex demographic evolution. Defined benefit pensions (DB, where benefits of income and healthcare are assured) have given way to Defined Contribution plans (DC, where tax-advantaged contributions are made). DB plans are unaffordable to employers and DC plans are generally insufficient to cover the cost of increases in lifespan. The net result is a household deficit for elder care. As the absolute number of school-going children reduces in some states, schools will need to be closed and hospitals opened instead.

A whole range of solutions will need to be tried. The first is to increase the productive lifespan of people by gradually raising the retirement age, so that in both full-time and freelance capacity, the elderly can contribute and in turn receive some income security. Healthcare and wellness will need to be strengthened from birth to old age including early-motherhood prevention and mitigation of lifestyle diseases like diabetes and hypertension. A ‘calorie’ mindset should give way to a ‘balanced nutrition’ mindset; all this to increase ‘health spans’ and lessen the financial burden on households and society at large. An increase in permissible contributions to DC plans will be required, so that the magnitude of savings work for longer lifespans.

As it happens, humankind has never faced this problem before.

P.S: “In the end, it is not the years in your life that count. It’s the life in your years," said Abraham Lincoln.

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