Subscribe
Share
Share
Embed
In the first episode of this series, we dive deeper into the research and predictions explored in our Shifting Demographics report.
Professor Sarah Harper CBE, Director of the Oxford Institute of Population Ageing and Charlie Willans, report co-author and Head of Responsible Investment, discuss the trends in population ageing across the world, the opportunities it creates in emerging economies and the risks for China, as well as the implications for labour supply and climate change.
Professor Sarah Harper CBE, Director of the Oxford Institute of Population Ageing and Charlie Willans, report co-author and Head of Responsible Investment, discuss the trends in population ageing across the world, the opportunities it creates in emerging economies and the risks for China, as well as the implications for labour supply and climate change.
Professor Harper is an industry leading expert on demography and gerontology. Her highly regarded book, How Population Change Will Transform Our World, explores how fertility rates and age structures of populations in different regions of the world are likely to affect societies, economies and the environment in the future.
This podcast is brought to you by TrinityBridge – trinitybridge.com.
Creators and Guests
What is Insight Talks?
Our in-house experts share our views on the current market conditions facing investors. Brought to you by TrinityBridge.
Hello, and welcome to this first podcast on our recently launched IC series. My name is Charlie Willens, head of responsible investment here at Trinity Bridge and coauthor of the series. In IC, we hope to cut through the headlines and noise of today by exploring four structural long term trends, which will impact the economy now and into the future. We have recently published our paper on the first of the four trends, shifting demographics. The report focuses on the rapidly aging global population, its macroeconomic consequences, and industries that are likely to benefit.
Speaker 1:We explore the various age demographic trajectories that countries face and consider which countries will experience the biggest shifts. To discuss the report and demographics more broadly, I'm delighted and very excited to say that today we are joined by professor Sarah Harper, CBE. Sarah is one of the preeminent voices on population aging globally. She is professor of gerontology at the University of Oxford and director of the Oxford Institute of Population Aging. Sarah has served on the Council of Advisors of Population Europe and chaired the UK government's foresight review on aging populations.
Speaker 1:Sarah has authored multiple notable works on demographics, including the 2016 book, how population change will transform our world, and she was appointed a CBE for services to demography in 2018. Sarah, welcome, and thanks so much for your time.
Speaker 2:No. Thank you. And thank you for the report. I thought it was a really sort of perceptive report that you took a slightly different angle. So it's great.
Speaker 2:I enjoyed reading it, and and thank you for enabling me to chat to you about it.
Speaker 1:That's great to hear. And how did your interest in demographic shifts originate?
Speaker 2:Well, I actually started with migration. I became very interested as a student about the way that populations were moving around the world, why they were moving, what the implications were. And then later, I realized that no one was actually picking up on this big age shift that we were having, so falling fertility and falling late life mortality. And the way that it was running out across the world, sort of starting in Europe with a demographic transition about two hundred and fifty years ago, But now we were seeing it in all the continents. And even in Sub Saharan Africa, the fertility transition was beginning.
Speaker 2:So it seemed to me that this was a gap in our understanding and knowledge, but it had huge implications.
Speaker 1:Brilliant. And it's and it's really interesting to us that you brought up so many different countries there because one of the observations we make in the report is that the speed of aging isn't uniform across the world. It it varies region to region. And what we're seeing is a population dominance that is shifting from countries that have historically led global economic policy and growth towards emerging economies with younger populations. I mean, we have India gonna have one fifth of the global working age population by by 2030.
Speaker 1:So what in your view is really driving the shift in population dominance? And maybe if you could expand a bit on the opportunity that India and Indonesia and countries like that have with respect to having a younger population.
Speaker 2:I mean, think before we start focusing in on countries, if if we just stand back, I mean, we have two big drivers that are happening at the same time. They both come out of what we call the demographic transition, which has occurred in different places across the world for about two hundred and fifty years, and we're now seeing end of that demographic transition. But basically, we're seeing now very dramatic falling fertility, particularly in high income countries, but not exclusively in high income countries. In about two thirds of our countries, women are at near or below replacement level. And really only in Sub Saharan Africa do we not see the dynamics of falling fertility.
Speaker 2:All other countries have started or even finished the fertility transition. And we're now combining this with falling late life mortality, So much so that when we look at life expectancy, we don't really think of life expectancy at birth in high income countries because almost everyone is gonna make it to 60, and half the population is gonna make it to 80. So that interesting dynamic really affects the growth of the over eighties in particular. And that means that we're going to have a real increase in the number of people with chronic diseases in the last fifteen to twenty years of their life. And in high income countries, that's going to put a real challenge for our health services.
Speaker 2:So I think as a sort of broad frame, there are sort of four four broad challenges that we need to look at. One is around productivity and economic activity, and the fact that we now have a growing group of people aged 50 to 70 who actually are well educated. A lot of them are in very good health. And in the knowledge economy, we have to think how can we keep them in our labor markets to compensate for the falling fertility. We then have to look at, as I say, the health shift.
Speaker 2:How do we keep health across the life course, and in particular prevent people in their seventies and eighties going into dependency, and and how can we really help societies cope with those kind of health challenges? How do we provide financial support? And although we tend to focus on older adults, when we come to places like India and Indonesia, it's also actually going to be financial support across the life course as demographic change really is going to coincide with things like technological change and and the way that many jobs that we have today are going to vanish, and particularly if we're spreading work across the life course. And then finally, something which we don't always talk about, and that's around intergenerational equity. So with an aging population, as resources get shifted to the over fifties, how can we ensure that people under that age also are having the health and education and support, and and feel, you know, empowered within their society.
Speaker 2:You you talked about Indonesia and India. And I think not just those countries, but but if we look at our middle or lower and middle income countries, they're gonna have this massive youth bulge. And whereas the high income countries have lost that youth bulge, they're still present in the middle and lower income countries. One of the problems, however, that we have to ask that does a country like Indonesia or India, does it have the infrastructure to capitalize on what we call the demographic dividend? So do they have the financial, legal, regulatory frameworks?
Speaker 2:Do they have sufficiently high quality and appropriate education and health care? And so it's it's not just looking at, well, there's a lot of young people. We can do something about this. It's actually can that support society, support those young adults so that they really can drive a demographic dividend before those countries really start to age. And you always, at the back of your mind, have to remember, as I said, to think about technology.
Speaker 2:And particularly now, what is AI going to do to the kind of jobs that particularly middle income countries are supporting?
Speaker 1:Yeah. Absolutely. And you touched a bit on it there with respect to the issue that advanced economies are gonna face with respect to more dependency. You By 2050, developed countries are gonna have one over 65 year old for every two workers, which is pretty stark. That's ultimately gonna stress public finances.
Speaker 1:We've got this divergence between life expectancy and healthy life expectancy. You know, someone the age of 60 now, probably in developed economies, can expect to live for another twenty years, but only 15 of those are really gonna be healthy. Maybe if you just expand a bit more on why it's so important to keep over 55 year olds economically active, and what role governments have in mitigating against these risks of dependency?
Speaker 2:I think you're absolutely right, Charlie. The really, really important thing is to look at healthy life expectancy, and what do we do about this growing health gap. We also, however, have to look at inequalities, and they are particularly acute in The US at the moment. They are also acute here. Many high income countries have them.
Speaker 2:But look at a country like India, where you have this burgeoning middle class, but you also have tremendous levels of poverty. And we know that not only the life expectancy, but the healthy life expectancy of populations within a country, let alone within a region, are going to be important. So building on what you were saying about twenty years of life, maybe only 15 will be healthy, when we were doing the government foresight review, we looked at some statistics in The UK, and they suggested that if you divide The UK into 10 deciles and you have, at the bottom, the three most disadvantaged areas in the country, and at the top, you have the three most affluent, a 65 year old man who is living in one of those disadvantaged 30%, he will probably have a life expectancy of 80. He'll probably make it to 80, but nearly all his seventies will be in ill health. So if you look at a man who's living in the most affluent, he will probably live to his late eighties and he won't even go into ill health till he hits 80.
Speaker 2:So even within a country like The UK, we have to do something about the inequalities. The government is talking about, for example, of raising state pension age. We know it is actually in its already agenda. We've now hit 66. We will soon be hitting 67.
Speaker 2:Denmark, as you probably know, has just announced 70. And that only works if you can do something about the fact that a large percentage of the population will be highly educated, healthy, and will be in the knowledge economy, and will probably be able to work into their late sixties and even into their seventies. But what are going to do about those people who are still, for example, in manual work or if they're in poor health? So governments can put the policy frameworks in place. But the two questions are, will there be jobs for older adults, particularly the 50?
Speaker 2:And what do the corporations and employers have to do to retrain, retain, and recruit older people in order to boost a country's productivity? And so lots of companies are looking at HR, they're looking at ergonomics, they're looking at training across the life course, they're looking even at sort of providing health care within their industry, they're looking at occupational health. I think at the moment we're quite tinkering. There is still a view that actually most people 50 probably are not that productive. The most recent figures that have come out show that actually at the moment in this country, the over fifties are more productive by some measures than the 20.
Speaker 2:And if we look at health, we get the same kind of picture that unfortunately among our 20, there's quite a lot of mental health. As we know, a lot of them are not in work education or training. And so we really have to look at productivity across the life course, and that has to be contributed to by both government policy and by corporations.
Speaker 1:It sounds like governments have got a lot of work on their hands. Yes. And if you look at the other side of the demographic equation for advanced economies, they also have to deal with this issue of labor supply. Yes. I mean, in Europe, we've seen the working age population in decline since 2011.
Speaker 1:I think China's working age population is gonna be in continuous decline from 2028. The issue with the labor supply is currently under migration trends and trends in participation rates to workforce. It's unlikely that that gap's gonna be plugged. We've seen in the paper that sorry, the report that we produced that net migration from emerging economies peaked around 02/2007, 02/2008, and a young yeah, younger workforce cohort has been plateauing with respect to participation rates. So what can be done to drive labor productivity from here in the knowledge that the labor supply is gonna be challenged?
Speaker 1:And is there a role more for technology and AI?
Speaker 2:I mean, think your report was very, very good on that area. And particularly the way that there is going to be competition, huge competition for skills. And it's sort of ironic that just at the time when we should be opening up our labor markets and enabling freedom of skills to move, as you say, particularly from, you know, the the middle income countries in particular, who many of those people now have a reasonable level of health and education and skills, and enabling them to move, maybe for a time, to a high income countries. Just at that time, politics is intervening and and preventing that. So a lot of the work now is actually looking at the the productivity.
Speaker 2:How do we boost productivity within our own labor market? Because, obviously, labor supply is going to be constrained. We have falling fertility. Now some people say you boost fertility, you get more workers. But of course, when you think about that, it's going to be twenty years before a baby that is born today is going to be in the labor market.
Speaker 2:And if anything, all you're doing is just boosting your dependent your dependency ratio because you'll have a growing number of older adults and you'll have a growing number of children. Women are much more likely, obviously, to be in the labour market if they don't have childcare responsibilities. So actually falling fertility from a productivity point of view can actually be very helpful, because it means that young men and women who might be spending a lot of their time bringing up children, they're now really very focused on the labor market. And then, of course, as I say, it's the 50 to seventies that we really have to focus on. And a lot of that is around going back to that conversation at the beginning, really understanding health care and understanding how individuals and governments and employees can really promote health care and well-being across the life course.
Speaker 2:And and we know how to do that. It's just a matter of sort of implementing it. And then, of course, skills training. And so when we did the foresight review, one of the things we we said was it was really important that we kept up skills across the life course, and that retraining was essential. The problem we had is who's gonna pay for this?
Speaker 2:You know, are governments going pay for it? Are employers going to pay for it? Are the individual going to have to pay to sort of train across the life course? So it's there is no one easy question but health sorry, one easy answer. But definitely health and education and the right kind of institutional frameworks can boost productivity across the life course and actually among younger people and older people in particular at the moment.
Speaker 1:So we've touched on the two impacts or two of the impacts of of ageing with respect to labor supply and rising dependence. And nowhere is this more of an extreme example than China, who are gonna need to find an improvement in labor productivity from somewhere. 30% of its population will be 65 or older by 2050, and its working age population peaked in 2015. But perhaps most worryingly, there's also discussions around the so called lying flat generation where younger cohorts are wrestling against the relentless work ethic and that's driving down participation rates. I know you've done some work within China with respect to eldercare, but perhaps you could paint a picture of what ageing could do to the economy, noting that migration levels in China have been persistently low or outflowing, And maybe also touch on the health of the population as well.
Speaker 2:Yes. I mean I mean, think your report points a very very good picture that China has really lost its opportunities to offshore work or to increase its its migration. One of the things obviously that people are concerned about is, as you say, the whole health of the population and particularly the growing number of older adults who are going to have to be cared for by a small number of generations. And and and we all know what the statistics are. And we all know that despite the fact that China has tried to now boost its population by abandoning the one child population by abandoning the one child policy, the actual impact is minimal.
Speaker 2:And they have a one child society. They've created this one child society. Why would you want to have more than one child? Because everyone you know is just a one child. You're probably now, in fact you're almost definitely now, a one child.
Speaker 2:So people worry about the burden of providing health care. And I think sadly, if you look at Chinese society, which has been so dependent on care from families, care in communities, it isn't like The States where they are pouring billions into health care, very, very high level tech health care for older adults, a lot of acute medicine. In Europe, we tend to look much more at community based social care, palliative care than they do in The States. In China, it's still, in many cases, at very, very simple level. And I think probably what will happen is that we will just have families struggling, we'll have older adults struggling.
Speaker 2:And we definitely did a very interesting piece of work looking at the position of particularly young women trying to go into the labor market, but really feeling the burden of having to care for their parents and feeling terrible responsibility and guilt, but just not having either the financial or the social resources to be able to care for their parents. So so I think the societal impact is going to be huge in terms of health care. In terms of the economy, I mean, China is now just battling so many issues. You know, the the tremendous boom of a middle class, and then, if you like, almost a contraction, young people who feel very disenfranchised, AI and other technology coming in and taking away jobs. And and I think it's it's it's really interesting, isn't it, that that on the one hand, we're very worried about productivity because we're still thinking we need people to do jobs.
Speaker 2:But actually, just around the corner, so many of the jobs that we are used to, particularly in in our knowledge economy, are going to be taken over by AI. So we're really on the cusp, and I think it's it's quite difficult actually to see how this is going to roll out anywhere, but particularly in China because there are so many other tensions in that society.
Speaker 1:Yeah. I I think China's gonna be one to watch not only for the speed and quantum of its its aging
Speaker 2:Yes.
Speaker 1:But also the fact that it's so competitive on the tech landscape Yes. And how they're gonna use that, as you say, to deal with a lot of the challenges that come with an aging population. Perhaps if we just change tack slightly, I'd like to cover the relationship between climate change and demographics. Thinking that absolute carbon emissions are driven in a large way by socioeconomic development and population growth primarily through the increased use of fossil fuels. But already today, we've seen absolute carbon emissions go up year on year.
Speaker 1:So to what extent should we think that population development within emerging economies is gonna continue this trend in increasing carbon emissions?
Speaker 2:I mean, I I I think that is absolutely crucial to understand. And I think, obviously, one of the issues that we have at the moment is that we seem to be particularly in The US at the moment, and that's a sort of geopolitical discussion, we seem to be in a society where high income countries are just over consuming, over consuming, and over consuming. And we have to recognize that if you look at the levels of consumption, particularly in Sub Saharan Africa, I think it's unthinkable that across this century we are not going to see dramatic increases, increases in consumption of goods, consumption of services, consumption of calories. I mean, you know, we're talking about millions and millions of people in Africa who are dying of malnutrition and famine. And we're also talking about quite a few millions in The US who are dying from obesity.
Speaker 2:So we're a very unequal world. But but it's it's it's very difficult to think that that I mean, basic equation that as you develop from a rural agricultural society into an urban industrial society, and industrial in in the broadest sense, obviously taking in tech as well as traditional industry, you don't increase the consumption. So Africa's Africa's population is going to go up. At the moment, it's predicted to go to 3,000,000,000. Some of the research we've done has suggested it may go to 5,000,000,000, and their consumption is going to go up.
Speaker 2:And unless the rest of the world starts to ease back on its consumption, then it is very difficult to believe that we are not actually going to go over to quite quickly. And I would say it's shifted also much more into a geopolitical battle. Mhmm. And what we've seen over the last six months I'm sure you're going to do a podcast on this this idea that we just abandon all these goals. And particularly in The States, personally, for the first time, I'm now actually quite depressed about how this is going to play out.
Speaker 2:A lot of scientists are now turning to things like adaptation and mitigation, because I think we've realised that we have almost lost the battle about keeping those carbon emissions within a sensible range.
Speaker 1:Yeah, and it definitely seems that the conversation is changing now to adaptation and realising that two degrees is almost looking
Speaker 2:Yes, yes.
Speaker 1:Well, that's a fascinating, if not incredibly daunting note to end on, and leaves us much to go away and think about. So that's a wrap for this episode. We hope you enjoyed it. I'd like to thank Sarah for her time and expert insights. If you'd like to find out more about her work, please visit ageing.ox.ac.uk.
Speaker 1:Mean, Sarah, is there anything our listeners should look out for in the near future with respect to your work?
Speaker 2:Well, I mean, definitely we're doing a lot of work on climate change and population. We're doing a lot of work in Africa at the moment. And then, of course, you know, I've worked in China for many years. So I they're the really big issues. What's gonna happen in China?
Speaker 2:What's gonna happen in Africa? What is gonna happen to climate change?
Speaker 1:We'll be keeping a very close eye on that, I'm sure. We'd love you to share this podcast with colleagues, friends, and family. The full length shifting demographics report can be found on our website and LinkedIn. And make sure you keep an eye out for our next IC report on the energy transition, which will be published later this year. So from me and the wider Trinity Bridge team, goodbye for now.