Trend: Increasing Impact of Ageing

A trend indicates a direction of change in values and needs which is driven by forces and manifests itself already in various ways within certain groups in society.

Ageing and shrinking populations have implications for economic growth and inequality, political behaviour, geopolitical balance of power and the sustainability of public finances. Population ageing also has direct impact on health care and pension systems and other forms of social protection. It affects intergenerational relations and perceptions of fairness in societies.

Old-age poverty is more pronounced in low- and middle-income countries than in Europe where it has decreased significantly. But it disproportionately affects women everywhere. As pension income in developed countries tends to be more stable and less affected by periods of economic crisis than market incomes on which younger generations depend, inter-generational tensions could become an issue in the context of growing public spending on health care and long-term care. Ageing could impact the way democracy functions if age-driven political preferences become increasingly divisive. 
 

This Trend is part of the  Megatrend  Increasing demographic imbalances

Manifestations

Developments happening in certain groups in society that indicate examples of change related to the trend.

Old-age poverty

In most countries outside of Europe, the risk of poverty increases with age despite the safety net often provided by the family. Considering the growth in the global old-age population, the issue of old-age poverty will become increasingly important – particularly in low- and middle-income countries without public pension systems. Older women have a higher risk of poverty than men. Uneven access to social security in old age is linked to gender inequalities such as women’s lower labour force participation, for example.

Although Europe's elderly faced a high risk of poverty or social exclusion for a long time, this trend has been reversed. Between the mid-1990s and the late 2000s, their income grew faster than that of the rest of the population in many countries. In 2019, only 18.6 % of the population above 65 were at risk of poverty or social exclusion, making it the least affected age group. For those aged 18-24 years the rate was much higher at 27.8 %. It can be assumed that the COVID-19 crisis will reduce the income of people of working age, while public pensions will be less affected.
 

Signals of change: EP, UN DESA, Eurostat

Pressure on public expenditure

The question of how a smaller labour force can provide material and fiscal support for a larger number of retired people is increasingly a matter of concern in regions of the world. In countries that have a comprehensive public pension system, rising old-age dependency ratios might put unprecedented stress on the financing of public pensions if pensions are funded by a ‘pay-as-you-go’ system, dependent on pay roll-based contributions.

In the EU, the fiscal impact of ageing will become a significant challenge according to European Commission projections for 2016-2070. The cost of ageing overall in the EU, such as public spending on health, long-term care, pensions, education and unemployment benefits is estimated to increase by 1.7 percentage points between 2016 and 2070 and thus reach 26.7 % of GDP. Fairness between generations could become an increasing concern because inequalities between the older and the younger generation are increasing due to pension income being more stable and less affected by periods of economic crisis than market incomes. 

Signals of change: OECD, EC, JRC, Journal of Population Ageing, OECD

Pressure on health care systems

Reshaping health and long-term care provision will become a key question for the future as the ageing population puts pressure on health-care systems. With the growing number of people affected by non-communicable diseases (like Alzheimer’s, other forms of dementia, Parkinson’s, cardiovascular and respiratory diseases, cancer and diabetes), ageing will increase demand for care facilities, home care services and supporting technologies. Moreover, rapid population ageing can make age-related health inequalities more critical. Some senior citizens already face serious disadvantages in accessing affordable quality care. Disparities in health among older people reflect accumulated disadvantages related to socio-economic status, gender, location and ethnic background, as well as the long-term effects of unhealthy behaviour, like smoking, harmful alcohol drinking, unhealthy food, overeating, lack of outdoor activities or no physical exercise. 

Signals of change: JRC, UN DESA, WEF & Harvard

Power: implications for voting behaviour

Ageing leads to an increasing electoral weight of senior citizens. Put together with higher voter turnout at elections, which is particularly obvious in urban areas, this could make it more likely that political decisions will be taken according to their fiscal preferences. It could mean reallocation of fiscal resources towards spending on pensions and public services provided to senior citizens, at the expense of spending on education, social housing or public infrastructure. This could potentially lead to political under-representation of the (younger) voters who will be impacted by the outcomes of the democratic process for much longer. However, research shows that age-based ‘divides’ in political preferences appear to be issue dependent and ageing may not necessarily lead to more divisive societies.

Signals of change: Oxford Academic, JRC

Interesting questions

What might this trend imply, what should we be aware of, what could we study in more depth? Some ideas:

• What will the growing importance of digitalisation and prevention in health care mean for the elderly? 

• How to maintain and adapt the welfare state in ageing societies? 

• How to prevent inter-generational tensions at times of crisis and its aftermath?