The population of the world is gradually ageing. There is an increase in the number of older people in the society of all countries in the world. The current community is ageing is expected to be one of the most significant transitions of the twenty-first century. The implications of the transformation will be felt in almost every sector of the society, including labor, transportation, financial markets, and the demand for goods and services due to the shifting consumer preferences. Therefore, world nations are expected to prepare economically and socially for the shift brought by ageing to ensure the progress of development towards attaining the objectives entailed in the world vision 2030 Agenda. An ageing population presents a challenge in the economic and social sectors of the economy as countries will be forced to change their policies to accommodate the transformation.
Consequently, numerous economists have critically challenged the increasing ageing population asserting that the rate of productivity will be significantly lowered. Other economists maintain that the issue may have been blown out of proportion and that with an appropriate and integrative economic plan sustainable developments may still be achieved. After several analyses were carried out, economists have determined that there is no negative relationship between an older population and the GDP (Bloom, Canning, & Fink 2010). On the contrary, some of the results indicated that there might be some positive implications on the Gross Domestic Product after all although the relationship appears to be weak. Therefore, the supposition that older populations would stifle the economy is fallacious given the prevailing economic conditions (Mason & Lee 2017). World nations should thus incorporate policies that accommodate the fundamental demographic changes. The demographic changes in the world are expected to have economic and social implications which will change the current course.
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Research indicates that by 2050 over two billion people will be above 60 years. The predicted change will gravely affect society and the corporate world. One of the significant aspects of the economy that would change is the supply of labor. Many companies will be forced to adjust to the changes in the labor market (Bloom, Canning, & Fink 2010). Organizations will be faced by two viable options which include either employing more youths into their workforce or employing more workers from the older population segment. An example is a retail industry which will mainly find the transition to be impactful since it is a labor-intensive industry. As a result, the retail sector will be forced to consider and review some of its employment practices to avoid a high labor turnover rate (Mason & Lee 2017). Additionally, the industry will be compelled to enhance its work processes and environment to make it more attractive to an old labor market. Effectively, the industry may assign sales and customer service roles to employees above 50 years and give the youth more strenuous tasks.
Incorporating an older workforce into the organization would mandate the management to make strategic changes to accommodate the demographic transition. Older people need a conducive working environment that is considerate of the age, sex, and health of the workforce (Mason & Lee 2017). Organizations will also have to consider regular training programs to keep their employees abreast with the changes in technology and the industry at large (Bloom, Canning, & Fink 2010). This will imply that organizations will have to cater for the extra cost of training. Additionally, companies are mandated to adopt effective approaches that will ensure that employee retention is maximized.
In almost 10 to 15 years, the world shall witness a substantial generational shift from the young to old. The economy is currently changing at an alarming rate since the 1950s. The demographic change is thus expected to have an impact on consumer spending and demand. Although more research has focused on the implication of the change in productivity, a minimal emphasis has been placed in determining the consequences of the transition on consumer patterns (Graycar 2018). Approaching the matter from the supply side, one can note the apparent shift in production networks due to the following change in demand elements. There is compelling evidence that customers in many nations change their consumption patterns as they age to healthier choices in goods and services (Bloom, Canning, & Fink 2010). Thus, an ageing population will lead to an increase in the supply of certain products preferred by the elderly and a significant decrease in other commodities. Therefore, an ageing population would exacerbate the current inequalities in the market.
Additionally, an ageing population has dire effects on small business. Critics have however argued that an ageing population may present both boons and banes for individuals operating small businesses. In the 1990s, small enterprises were faced with the pertinent issue of lack of adequate funding amongst others such as stringent government regulations and high tax rates (Mason & Lee 2017). In the present, the more pressing matter is the shortage of labour due to a fast ageing population. Due to their nature of the operation, small businesses are expected to feel the harsh reality more than other well-established organisations because of the lack of economies of scale. Thus, small businesses will be forced to raise their salaries and wages to attract employees in a highly competitive market (Kaplan & Inguanzo 2017). When smaller companies continue to struggle with the labour shortage, then they may potentially face stagnation or a decline in their output. Hence, an ageing population will negatively impact the existence and growth of small businesses.
There are a few reasons that tend to explain the drastic shift in the demography of the world. One of the causal agents is the changes in senescent mortality due to using medications that postpone ageing. As a result, numerous individuals in the world fall in the old age bracket thus increasing the number of ageing population. Poor healthcare has also led to the aggravation of the matter since there is an apparent decline in fertility witnessed all over the world (Kudo, Mutisya, & Nagao 2015). Although very little is understood concerning the relation between low fertility rates and the increase in ageing population, it is undeniable that a decline in the fertility rate would imply that the number of a younger generation is relatively lower to the current ageing generation. Thus, in the future, the world may an even smaller population of youths and children compared to old people (Sander et al. 2014). The rate of dependency will also significantly increase as a large number of people are old and unemployed expressing a tremendous burden on the government.
Whether an ageing population is detrimental or beneficial to the society remains debatable. Numerous concerns have been raised over the increasing number of older people in the community. Economists argue that various aspects of the economy such as labor markets and the demand for goods and services will be affected. The retail industry is expected to be the most affected industry given its labour-intensive practices. An ageing population has also been determined to have great repercussion on small businesses due to the shortage in labor supply. Small industries are thus forced to operate under costly labor policies which lead to a stagnation in production. There are several factors that cause the increase in the world ageing population namely; the decrease in mortality rate and the decrease in fertility. Therefore, despite ongoing debate on whether the effects of the transition in the demography will be negative or positive, it undeniable that an ageing population will implicate the normalcy of the society and economy.
Bibliography
Bloom, D. E., Canning, D., & Fink, G. 2010. Implications of Population Ageing For Economic Growth. Oxford Review of Economic Policy , 26 (4), 583-612. doi:10.1093/oxrep/grq038
Graycar, A. 2018. Policy Design for An Ageing Population. Policy Design and Practice , 1 (1), 63-78. doi:10.1080/25741292.2018.1426972
Kaplan, M. A., & Inguanzo, M. M. 2017. The Social, Economic, and Public Health Consequences of Global Population Aging: Implications for Social Work Practice and Public Policy. Journal of Social Work in the Global Community , 2 (1), 1-12. Retrieved from DOI: 10.5590/JSWGC.2017.02.1.01
Kudo, S., Mutisya, E., & Nagao, M. 2015. Population Aging: An Emerging Research Agenda for Sustainable Development. Social Sciences , 4 (4), 940-966. doi:10.3390/socsci4040940
Mason, A., & Lee, R. 2017. Economic Implications of Population Ageing. Oxford Medicine Online . doi:10.1093/med/9780198701590.003.0012
Sander, M., Oxlund, B., Jespersen, A., Krasnik, A., Mortensen, E. L., Westendorp, R. G., & Rasmussen, L. J. 2014. The Challenges of Human Population Ageing. Age and Ageing , 44 (2), 185-187. doi:10.1093/ageing/afu189
