Coping with a Ballooning Older Population: The Looming Inter-Generational War

And you thought the world had enough problems already? Just wait, it’s going to become a lot more tense, especially among generations.

The world is going through a massive demographic transition that will reshape nations, economies and markets over the next 100 years. Forecasts by the United Nations show the world’s population peaking and then stabilizing in the next 40 years (around 2050). Why the sudden halt to what has been exponential growth since the Industrial Revolution? It has to do with the improvement in economic conditions around the globe, most recently with emerging economies. China, in particular, has finally brought under control its population growth as a result of its one-child policy.

However, with any substantial global shifts come other challenging issues, most notably a radically changing demographic composition that varies from region to region. For example, between 1950 and 2000 those older than 60 years of age grew as a percentage of world population from 8 to 10%. However, by 2050 this age group’s share will leap to 21%. But that’s only the world average. Here’s the shocker: in Japan and some Western European countries those over 60 will account for over 40% of their respective populations!

I’ve noted China’s situation, but which comes with a dual price. First, the country faces a rapid rise in the 60 plus age group, from a current 11% to 28% by 2040. Second, it’s estimated that because of the country’s repressive one-child policy and the desire to have boys and not girls (encouraged through horrific accounts of female infanticide), there’s an imbalance of an excess of 40 million males. The long-term social costs stretch one’s imagination. To put this in context, Canada’s TOTAL population is a mere 37 million.

In many other developing countries birth rates are still elevated. Examples include Southeast Asia, the Middle East, Afghanistan, Pakistan and Africa, the last of which is expected to experience a jump from 9% of the world’s population to 20% by 2050.

So have I bored you to tears yet? “Who cares!” you might say. Well, we should all care.

If there’s one issue on which corporations and governments are asleep it’s that of population change and the implications for policy development and markets. It’s well understood by most economists, business people and academics that human capital development is the key distinguishing factor when it comes to competitiveness. Without it, technological progress is stunted, achieving much less of its potential. As a consequence productivity growth is limited.

This is the big picture view, but what of the effects within countries and at the firm level?

Let’s take a look at the impending pressures on Western society. Elderly people (yours truly is 62 with a 97 year-old mom) use up over six times the medical resources as young people. In the past this wasn’t an issue, with an age pyramid that reflected a strong base of youth and working age people. Now, the pyramid is getting inverted, moving from a bulging middle as we Boomers get older to a top heavy situation. Here are two basic questions:

1) Where are the money and resources going to come from to fund the growing healthcare needs of an ageing population?

2) How are Western nations going to address the human capital issue?

It was suggested by one sage at a World Economic Forum a few years ago that perhaps in the spirit of saving pension (social security) dollars that the elderly be relocated to lower-cost countries, such as Libya, where the standard of living is albeit lower but where you can really stretch a dollar. I can just imagine telling my 97 year-old mom that the government wants to move her to Argentina to save a few bucks. Dream on.

But when you look at a country such as Japan, you can understand the enormous pressures the government is under. The Japanese government did attempt a few years ago to place more of the financial onus on the elderly over age 75 for their healthcare costs, but it was soundly rejected. This is a country with an extremely serious ageing population problem. I recall one population forecast a few years ago which concluded that based on Japan’s current birth rate and zero net immigration, that its population would totally disappear by the year 3000.

The lesson for me from all of this is that we’re in the infant stage of addressing the looming ageing crisis. As the old adage goes: “Money talks…BS walks.” It’s time to do something about the problem.

For one, the leadership challenge is enormous but not impossible. Within organizations, managing and leading in the context of a four inter-generational workforce is not for the faint-hearted. Generation Y, creamed by the Great Recession and the ensuing slow recovery, has Gen Z on its heels. Gen X is slowly taking over the reins of power from the outgoing (but not-yet-dead Boomer generation), and a small portion of the Silent Generation (72 plus) is lingering around, now that their 401Ks have been decimated. So I suppose we’re actually on the cusp of a workforce spanning five generations.

There are two paths when it comes to how people will work together in the future: either we continue maintaining the fences and silos around our respective generations, or we flatten these barriers and figure out how to collaborate. There’s an enormous amount at stake, with respect to our collective future and quality of life.

At the heart of this is leadership, how it’s perceived and practiced by all. Effective leaders tear down barriers to communication and collaboration, articulate a shared vision of the future through enrolling others in its creation, take action to make things happen, and sustain this action over the long-term.

• Where do YOU personally stand on the challenges facing society and organizations from an ageing population?

• Do YOU want to play a role in finding solutions, whether it’s dealing with mushrooming healthcare costs, encouraging the elderly to remain an active part of society or becoming an inter-generational barrier buster?

Please take a moment to share your thoughts and ideas on this post.

Great things are not done by impulse, but by a series of small things brought together. (Vincent van Gogh)

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