X-Message-Number: 17432
From: "Mark Plus" <>
Subject: "Ageing populace is killing economy"
Date: Fri, 31 Aug 2001 08:49:48 -0700

http://www.guardian.co.uk/population/Story/0,2763,544116,00.html

Ageing populace is killing economy, says study

Report urges action on destabilising effect of falling birthrates and rising 
life expectancy

EducationGuardian.co.uk
Special report: global population

Jonathan Watts in Tokyo
Thursday August 30, 2001
The Guardian

The rapid ageing of the developed world is pushing the global economy 
towards the edge of a demographic abyss, an international panel warned 
yesterday.
In the most detailed study yet of the implications of falling birthrates and 
rising life expectancies, the Commission on Global Ageing said that urgent 
action was needed by world leaders to prevent protracted "ageing recessions" 
and financial turmoil.

"The challenges of global ageing are fundamental, unprecedented and 
potentially destabilising to global prosperity," the commission noted in a 
report after a three-day conference in Tokyo.

It added: "The major social crises of the 21st century will be the byproduct 
of labour shortages."

Since 1950, advances in medicine and public health have produced a nearly 
three-fold rise in the elderly populations of OECD countries, but fertility 
rates have plunged.

In the next 10 years, the population of Japan will start to shrink, followed 
within the next few decades by the European Union and even China. The United 
States and Canada will continue to grow but far more slowly.

"We are seeing a tipping effect," said Maria Livanos Cattaui, secretary 
general of the international chamber of commerce.

"Global ageing has been slow to develop in the past two decades, but we will 
see a sudden change around 2010. The process is moving much faster than 
legislation and government policy," she said.

The decline in workforces will put downward pressure on productivity and 
growth. There will be fewer young people to pay tax or contribute to pension 
and health insurance systems, but more elderly people will be drawing on 
funds and requiring medical care. Meanwhile, ageing countries face a flight 
of capital as investors look for higher growth rates overseas and put 
pressure on governments for increased immigration.

Many of these symptoms are already apparent in Japan, which has suffered 10 
years of economic stagnation.

"Among developed nations, Japan stands closest to the edge," said Ryutaro 
Hashimoto, the former Japanese prime minister, who was one of the chairmen 
of the commission. "The demographic trend is the fundamental cause of the 
dire straits we now face. It has taken us too long to recognise that."

According to the conference organiser, Paul Hewitt of the Washington-based 
Centre for Strategic and International Studies, many nations face almost 
permanent "ageing recessions" unless they can find a substitute for 
workforce growth, which has accounted for more than half of the world's 
economic expansion over the past 50 years.

To minimise the pain, the commission said it was important to begin 
preparing for the problem immediately by putting the issue permanently on 
the agenda of the G8 group of industrial states. It said that world leaders 
should strengthen pension and health systems, increase immigration, revise 
labour laws and change financial service structures and family policy.

Immigration, it said, could soften the impact of ageing. It suggested that 
governments should encourage non-native residents to become citizens or be 
given permanent residency.

To raise the fertility rate, it said governments should offer greater tax 
incentives for having children and improve the childcare services. Noting 
that the high pension and health insurance payments put many young people 
off having children, it urged governments to assure greater equality of 
burden and benefit between generations.

"Delaying responses will make effective action far more difficult in both 
economic and political terms," the report said.



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