Today, 5-year-olds are doing better than before.
In the richest nations at least more than half of these little ones will live up to 100 yearsaccording to the expectations of the Stanford Center for Longevity.
But a society filled with centenarians poses a major challenge for the world’s advanced economies and many of their companies:
How do you adjust to an aging world and pay for the inevitable pension explosion that lurks as this cohort of super-agers approaches retirement age?
As the Stanford Center states:
“The life of 100 years has arrived. We are not ready.”
The true effect of worries about the long life paradox became more than evident this week:
in France, nationwide strikes and protests have paralyzed the country in the face of the government’s deeply unpopular attempt to reform pension rules; in China, authorities said the population was declining for the first time in six decades; and at the World Economic Forum of DavosSwitzerland, business leaders and policy makers have faced the consequences of this demographic dilemma.
a time bomb
In France (life expectancy: 82), workers and students took to the streets to protest against the president’s initiative Emmanuel Macron reform the pension system and raise the minimum retirement age from 62 to 64 by 2030, in an effort to contain the country’s rising social welfare costs.
(In the United States, where life expectancy is 77, the typical retirement age is 67but 62-year-old workers can already start collecting social security benefits).
France spends just over 14 percent of its GDP on pensions, one of the highest rates in the group of rich countries that make up the Organization for Economic Co-operation and Development.
“We have to work harder,” Macron said in a New Year’s speech, to “leave our children a fair and lasting social model, because it will be reliable and bankable in the long run.”
The situation is more serious in China (life expectancy: 78 years), as it faces a declining population.
One reason: in some parts of China it costs more to raise a child than in the United States, a reality that is driving families and professional women to choose not to have children (despite the many government incentives to do so).
The impact not too far off: Worker shortages could jeopardize economic growth and destroy Beijing’s ability to raise enough funds by taxing its younger workforce to support the largest retiree population on the planet.
S&P Global, the credit rating agency, sees similar warning signs as China and France around the world.
Falling fertility rates, instability in public finances and rising interest rates, combined with lengthening life expectancy, are creating a “global old age crisis.
Unless countries take serious “policy action to cut age-related spending,” two Standard & Poor’s analysts Samuel Tilleray and Marko Mrsnik wrote in an article this week, there is likely to be a surge in rankings. trash triggered by longevity, which will increase costs for future generations.
“Slightly more than half of the 81 sovereign countries we analyzed would have credit metrics that we associate with sovereign credit ratings of speculative degree (‘BB+’ or lower) in 2060”.
Welcome to the “longevity economy”
At the World Economic Forum, organizers did their best to change the grim Malthusian narrative on aging.
They’ve stopped talking about time bombs or “grey-hair tsunamis,” in favor of high-level debates on what the forum calls the “economics of longevity.”
A central theme: if we are expected to live longer, we must too set some goals of our life and our work for several years.
Darryl White, CEO of Canadian bank BMO, said the company needs to consider another kind of life hack.
To begin with, you need to abandon the “study first, then work, and then retire” scheme.
Life is “non-linear,” he told a panel discussion on overcoming.
“Maybe I decide I want to start work sooner.
I may decide that I want to retire later or that I want to re-commit to my career by reinventing myself.”
Professional development and retraining are important to this strategy, an investment obligation that must be shared by employees, employers and governments.
The benefits: The WEF estimates that if access to retraining and lifelong learning improves, the labor productivity would increase and would add $8.3 trillion to global gross domestic product by 2030.
Giving workers the opportunity and resources to work well beyond retirement age is good for society and business, says Lynda Gratton, professor of management practice at London business school and co-author of “The Life of 100 Years. Living and working in the age of longevity”.
“We know that when people stop working as soon as they turn 60, their social capital deteriorates.
Their networks deteriorate.
They are not as cognitively active,” he explained to DealBook.
Furthermore, a longer stay in the labor market would help their personal finances, which would ease the pressure on the pension system.
According to her, age discrimination is increasingly prevalent in the business world and this could affect the productivity of companies.
“I would like companies to be held accountable for age discrimination, just like they are for any other type of discrimination,” she said.
“I wish companies should report how many people are employed at different ages so you can get a sense: ‘Are you hiring people in their 60s and 70s?'”
In his view, such a measure would put pressure on managers to hire older people.
And companies would see the benefits to create jobs multigenerational.
“A huge burden for the younger generation”
Young people struggling to make their way in their careers may also want this data reported.
Noura Berrouba, president of the National Council of Youth Organizations of Sweden, told the WEF panel that age discrimination affects the job prospects of both older and younger people.
“If we’re being honest, the way our demographic curve is sloping will place a huge burden on the younger generation,” he said.
He has proposed more progressive tax policy, fairer wages and tighter corporate governance scrutiny to ensure enough money goes into the collective fund to fund more people who receive a Social Security check.
Governments have introduced constant changes to their national pension policies in recent years.
The OECD average for the minimum retirement age is 62.5, but this will rise to 64 in the coming years as several countries, including Denmark, the Netherlands and Swedenraise the minimum retirement age to adjust for the increase in life expectancy.
Hervé Boulhol, an OECD pensions economist, is spooked by the idea of an aging time bomb threatening the world’s major economies.
But he sees a risk if policy makers and businesses don’t address the problem.
“Yes, time is running out,” she says.
c.2023 The New York Times Society
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.