The International Monetary Fund (IMF) published some interesting papers last week, foremost among them one about The Rise of the Silver Economy, which can be essentially summed up by one of the lines it contained: “the 70s are the new 50s”.
Among its most interesting contents were the considerations that the ageing population comes with opportunities as well as challenges – especially for populations that are aging healthily. In relation to this, it cites recent studies that have documented “significant improvements” in the physical and cognitive abilities of individuals over the age of 50 in some advanced economies.
Alongside advances in longevity, it reads, more recent cohorts of older individuals are in better shape than previously was the case, including when it comes to “cognitive capacities”.
“Data from a sample of 41 advanced and emerging market economies indicate that, on average, a person who was 70 in 2022 had the same cognitive ability as a 53-year old in 2000. Over the course of a decade, this pace of improvement in cognitive abilities is associated with an increase of approximately 20 percentage points in the likelihood that individuals remain engaged in the labor market, either by working or actively seeking employment, along with an increase of about six hours in average weekly hours worked and a 30 percent rise in labor earnings, conditional on being employed.”
The research was based on surveys of over one million people over the age of 50 testing various dimensions of physical, cognitive and mental health. It found overall that there were significant upward trends in many of the different areas, with, for example, the frailty of a 70-year-old person in 2022 found to correspond to that of a person who was 56 in 2000, on average.
The report, fully titled The Rise of the Silver Economy: Global Implications of Population Aging faces up to the fact that “unprecedented” demographic shifts are set to play out over the course of the 21st Century, and that that reality is going to present countries with some of the following concrete, unavoidable, pressing issues: Diminishing numbers of workers, and growing numbers of retirees; strained public pension systems and higher healthcare spending; while slower population growth is also linked to fewer ideas and less innovation.
This isn’t even to mention the social and cultural strain caused by government efforts to adjust to the emerging, silver economy. The pension reform riots that rocked France in 2023 were a portent of this, which saw the decision to force through measures that raised the retirement age from 62 to 64 spark backlash that drove millions of people into the streets across the country.
Of course, the French public was also frustrated by the manner in which these reforms were pushed over the line – using a special constitutional mechanism, which was widely condemned as undemocratic – but the anger at the change itself prevailed. As a result, fires blazed in the streets, public clashed with police and property damage in large French cities was rampant.
The IMF report notes that global population growth will slow from “1.1 percent per year before the COVID-19 pandemic to basically zero in 2080–2100,” while the average age of the world’s population is projected to increase by 11 years between 2020 and 2100 (from a mean age of 32 years in 2020 to a projected mean age of 43 by 2100).
The overall picture – one of ageing populations (some of which are seeing greater longevity and longer-lasting good health) and gradual economic slowdown – will nevertheless necessitate “a multifaceted policy approach can increase labor supply, boost growth, and ease fiscal pressures”.
Long-term policies to support workers in late adulthood (defined as between the age of 50 and retirement age) such as health-boosting measures, “gradually increasing” the retirement age in line with improvements in life expectancy and reducing early retirement benefits are among the suggested potential tools in the effort to stem economic decline during this period.
Despite the benefits of healthier aging in advanced economies, the IMF says that “demographic forces seem to be casting long shadows over prospects for living standards and public finances”.
While Ireland is aging at a slower pace than elsewhere in Europe, a growing proportion of older residents, coupled with a falling fertility rate, means that these issues will need to be considered here too in the not too distant future.