The future of global ageing

After impressive reductions in mortality and fertility during the last century, global ageing is now inevitable, despite the uncertainty underlying demographic projections. Yet the process is uneven with some regions expected to converge much more rapidly than others. The oldest and most rapidly ageing countries, especially many former socialist countries where demographics and productivity have not moved in tandem, are concerned about the anticipated large increase in the ratio of old to working age people. The threat is twofold: first, the direct financial impact on public pension, health and other programmes and second, the potential for indirect negative effects on productivity. In the richest countries, research suggests that current projections are likely to err on the conservative side in terms of longevity gains. It is increasingly accepted that as people in richer countries live longer, they will have to work longer in order to avoid a public finance crisis. In sharp contrast, poor countries have vast, untapped mortality gains to exploit, even within the confines of known potential longevity. While there has been significant progress over the last few decades, economic stagnation compounded by human immunodeficiency virus (HIV)/AIDS, especially in Africa, threaten to prolong or even stall the demographic transition. Nevertheless, differential ageing may also be an opportunity to take advantage of the complementary needs of older and younger countries in terms of the global distribution of labour and capital. Policies that facilitate better allocation of both factors can raise overall productivity, benefiting everyone and leading to faster economic and demographic convergence.