CAN you imagine a community where the line for senior citizens is longer than that of the rest of the customers in the shopping mall or where less than half of the population is young and cannot support the rest of the population who are older folk? Think of the social security cost to the government who will most likely pass it on to the working generation as they have done in developed communities!
Well, that is happening in many parts of the world especially in developed economies where the so-called “grey dawn” (referring to the grey-haired folk) has arrived. Other population scholars have also described it as the “demographic winter or bomb.”
What would be the economic impact of this development? First of all, economic growth will be held back because growth trends will slow down sharply in the next 20 years, according to Moody’s.
For those unfamiliar with Moody’s it is a highly respected institution that is involved with credit ratings. It recently upgraded the credit worthiness of the Philippine economy as announced triumphantly by the Aquino administration. In financial circles its pronouncements are regarded as oracles from Delphi if not gospel truth.
As per Moody’s, the demographic bomb could cause a serious drop in household savings as the young ones pay up more in social security payments to support the oldies. Indeed it goes on to say that this could reduce the trend of annual growth worldwide by 0.4 percent by 2019.
Between 2020 and 2025, it adds, the impact could be “much larger,” amounting to 0.9 percent. Moreover, more than 60 percent of countries which feature in its credit ratings will be classified as aging by next year (2015), as more than 7.0 percent of their populations would be aged over 65.
By 2020, according to the credit agency, the number of “super-aged” societies (countries), where people 65 and older make up more than a fifth (25 percent plus) of the population, will increase from three today to 13. By 2030, the number will reach 34. In sum, the aging will no longer be “just a developed-world problem” but a worldwide epidemic. Additionally this demographic transition, frequently considered a long term problem, is here now and significantly impacting on growth levels.
“The demographic dividend now enjoyed by this country that drove economic growth will produce a demographic deficit that will ultimately slow this growth for the most countries worldwide,” the report added.
This is because all countries, with the exemption of a handful in Africa, will face either a declining working-age population or a slower rate with the working-age population falling by more than 10 percent in about 16 countries including Germany, Russia, Ukraine and Japan between now and 2030.
The credit rating agency has only high praise for the Philippines’ young population which it projects will become a key asset for the country’s long-term growth prospects even as the economic outputs of some of the world’s developed and emerging economies are dragged down by their aging populations in stark contrast.
Indeed, Moody’s report revealed that the Philippines will not suffer any “aging” population problem up to 2030. That’s because the elderly in the Philippines is estimated to be only around 4.1 percent of population by next year, or way below the nearest threshold as it projects the elderly in the Philippines to expand to around 5.6 percent by 2025 and 6.3 percent of the population by 2030.
The bottom line, according to the credit rating agency, is that countries with slow, gradual aging processes will likely be better able to gradually adjust policy than countries with rapidly aging populations that require dramatic policy changes over a short period. Of 68 out of the 112 countries classified as aging by next year, 34 will be “aged” and five will be “super-aged” societies. One can imagine how many senior citizens of these countries will be demanding 20% discounts from shops and eateries which will probably drive the smaller ones into bankruptcy—an Orwellian nightmare indeed!
It is unfortunate that the Aquino administration has not contented itself with the demographic dividends it receives yearly from a young labor force that remits no less than about 100 billion pesos a month from their overseas employment. Our government has instead embarked on a short-sighted population control policy, thanks mostly through the propaganda and lobbying tactics of foreign pharmaceutical firms.
If the administration does not immediately reverse its Malthusian and anti-natalist inclination, it will doom us Filipinos into soon discovering that once the contraceptive mentality sets in it becomes irreversible. We have seen this happen in all the countries of the developed world. There about 50 years ago, the contraceptive mentality quickly drove their societies into the population pitfall plunging them down to their present demographic abyss.