Panorama: Insights into Asian and European Affairs
Ageing And Politics - Consequences for Asia and Europe
Panorama: Insights into Asian and European Affairs is a series of occasional papers published by the Konrad-Adenauer-Stiftung’s “Regional Programme Political Dialogue Asia/Singapore”.
Even if we cannot be sure about being out of the last financial and economic crisis, there are a series of other challenges ahead which urgently demand special skills of governance at a national and an international level. One of those issue is related to the demographic change and ageing of the population, at least in some nations, both in Asia and in Europe.
Europe is the trendsetter of the demographic change which has already reached some Asian countries. The tendency in Europe is towards declining birth rates and older societies. Although the groundwork of this trend was laid some decades ago, its consequences are getting more and more obvious only recently—and so is the need for governance. With a still growing overall population on the globe, the problem of shrinking societies may have seemed to be of minor relevance. World population is expected to still grow in the next decades from 6.8 billion to 9.4 billion in 2050. But this overall increase with all its problems for resource consumption and sustainability cannot cover up anymore the increasing problems of a decreasing population in some countries and regions.
Germany, in some way, can be characterised as the frontrunner of this development. Its fertility rates have been constantly low for 35 years, with two children replacing every three adults. Since 1972, the number of newborns never exceeded the number of deaths. For some decades, immigration figures could camouflage the natural losses—and tranquilize public awareness and policy makers. But since 2003, the overall German population has declined and there is no return in sight.
By 2030, most Middle and East European regions will face similar processes of population losses. Remote rural areas with weak economies will be most affected by this trend. The majority of European countries will see a decline in their workforces over the next several decades. In parallel, in all of Europe the number of people over age 60 will rise by more than 50 percent between 2004 and 2030. The size of the working-age population (those between 15 and 64) in the European Union will shrink by 40 million up to 2050 and the number of people in the actual workforce will drop by 30 million, from 238 million (2008) to 207 million (2050). Without the foreseeable immigration the number would drop by 70 million. It is obvious that these demographic developments will have serious economic and social consequences.
Nevertheless, these challenges are not only facing the European welfare states which rely on the younger generations as premium payers for the pension funds of the elderly and the unemployment compensation—to name only the two biggest social payments. Japan and South Korea are ageing even faster. Emerging nations such as China, Malaysia, and Indonesia are discovering that they will be affected by the same demographic changes in a compressed way and they have started to perceive the possibility of growing old before becoming rich.
The demographic change by declining birth rates and ageing societies brings ahead demands for new governance responses in a wide range of areas. Tax and pension systems, organisation of the work force while dealing with the unavoidable increase of the working age, reforms of different areas of the healthcare system, adjustment of the educational system, and new ways to deal with immigration and immigrants are issues which urgently need to be handled in new ways. These reforms will provoke complicated discussions and even conflicts within the affected societies, which can already be studied in some European countries, where the extension of the retirement age is rejected by trade unions and some of the political parties. On the other hand, the younger generations refuse to pay constantly more taxes and contributions to the social system for the elderly as they do not have any expectation to profit in the same way when they become old. A new conflict between the younger and older cohorts of societies is on the way.
Among the challenges for the Asian countries is the necessity to attract young talents and foreigners. Nevertheless, this can produce tensions within a country and lead to a competition for talents between countries. However this development will go on, it seems quite predictable that the demographic change will have a huge impact on the policies and further economic development in Asia and Europe.
This edition of Panorama: Insights into Asian and European Affairs is dealing with the topic of ageing and the challenges that occur due to the demographic changes. On the one hand, we present some specific issues regarding ageing which will be discussed in overview articles for both continents, Asia and Europe. These articles specially focus on the aspects of employment, social security system, family, and policy challenges. On the other hand, we present some analyses which deal with the consequences and challenges of the phenomenon of ageing for some specific countries, like Japan, South Korea, and Singapore in Asia, and Germany, Spain, and the Netherlands in Europe. We hope to contribute to an upcoming debate which will gain intensity during the next years.
Singapore, October 11, 2010