Dependency Ratio

Population Dependency RatioThe dependency ratio tells us how many young people (under 16) and older people (over 64) depend on people of working age (16 to 64). The dependency ratio is worked out with this formula:

A worked example should make this clearer. Pakistan, which is a developing country, has 41% of its population less than 15, and 4% over 65. This makes 55% between the ages of 15 and 64.

New Zealand, a developed country, has 23% of its population less than 15, and 12% over 65. This makes 65% between 15 and 64.

Old age Dependency ratios

Figure 3 is a plot of known and predicted old age dependency ratios for four MEDCs. It shows a ratio ofaround 25% in the UK in 2000. This means that, at present, there are about 25 pensioners for every 100workers. However, the ratio is predicted to increase sharply after 2010, climbing to over 40% by 2040.Expressing this another way, the present ratio of 4 workers to support every pensioner is predicted to fall to2.5 workers per pensioner by 2040.

THE GLOBALISATION OF AGEINGFrom the outset, we need to be clear what is meant by an ‘ageing population’. It is simply one in which the balance between the ‘young’ (under 15- or 19-year olds) and the ‘elderly’ (over 60-year olds) components of a population shifts towards the latter. The latter does not necessarily have to be larger than the former. A shifting balance is the critical feature.

Population PyramidsThe basic cause of the change in pyramidal shape is simply a narrowing of the ‘gap’ between birth and death rates.

The changes on a pyramid can be very obvious – you would see a narrow base and wide top. Think about a a pyramid for a country in stage 4 or 5 of the DTM. However, it can be much more subtle than this as illustrated by India.

In India’s case while the death rate will remain at 8/1000, the birth rate isforecast to fall from 22 to 17/1000. This will reduce the rate of naturalincrease from 1.4% to 0.9% per annum. As a consequence, the percentageof the population aged under-15 years will decrease from 31.2 to 17.2,while that for those aged over 60 years will rise from 7.5% to 11.8%.

• Is an ageing population just a characteristic of MEDCs today or is it a global phenomenon?

• Does the ageing of a population raise the same issues, particularly so far as the elderly are concerned, no matter where you are in the world?

Discussion

Any decline in the population growth rate means a general ageing of the population

AGEING POPULATION occurs when the median age of a country or region rises. With the exception of 18 countries this process is taking place in every country and region across the globe.

The population of the world is ageing steadily, from 10% over 60 in 2005 to a projected 20% by 2050. As raw figures this is 670 million in 2005 to 2 billion in 2050. The increase in life expectancy and the decline in fertility has led to the median age of the population increasing.

Ageing populations can be viewed as the result of technological and economic progress that has led to reductions in both birth and death rates.

Pensioners will soon outnumber children in Europe and North America for the first time. Much of the predicted increase in the numbers of the over-60s will be in the better developed LEDCs, particularly in Asia, where the problem of ageing populations is likely to become as great a concern to governments there in the near future as it is in MEDCs today.

In 2000 there was ? million people aged 60 and over.

By 2025 this figure will be ? and by 2050 it will be ? .

Soon one person in every three will be over the age of 60.

600

1.2 billion

2 billion

Some facts about global ageing process

Today about two-thirds of all older people are living in LEDCs (the developing world); by 2025 the figure will be three-quarters.

Where do you think the majority of the world’s oldest people live?

In MEDCs, the very old (aged 80+) is the fastest growing population group.

Which age group in MEDCs do you think is the fastest growing?

In 2002 7% of the world population was over 65 years old. Only 1% of the population of the United Arab Emirates was over 65 years old. China has the largest elderly population (92 million) but this is only 7% of the Chinese population. Growing proportions of elderly people are partly a result of people living longer and, often, of fewer births reducing the size of the younger population. Africa is home to only 6% of the world's population aged over 65

The % of those living over 65 is increasing , with 25% over 65 in Japan, Italy and Germany, but less than 5% in most tropical African countries.

This summarises some key points. First, it underlines the basic fact that the ageing of any population is caused by a fall in either the birth or the death rate. A fall in both rates may be expected to accelerate the ageing. Secondly, when you look at the main factors shown as prompting both rates to fall, you will see that they are perhaps more evident and active in today’s LEDCs. That being the case, it is small wonder therefore that the ageing population is undergoing a spread from its pioneering core in Western Europe to many much less developed parts of the world.

Today the population of the UK which is >65 accounts for 16% of the total population. By 2033 this will be 23%, whilst that <16 will be 18%.

Causes

The impact of an ageing populationThe policy response

What has been the impact of migration on the population structure of the UK between 2004 and 2008? Why might a government wish to encourage immigration to offset the effects of an ageing population? Do you agree with this?

Use the Geofile on the VLE ageing population 2010

In 2005, the UK’s population reached the milestone figure of 60 million. By 2010, an extra 1.3 million people had already been added to that total. 61.3 million people – crowded into just under 250 000 square kilometres– means a population density of 243 people per square kilometre

In 2009, the UK’s GDP per capita (PPP$) was $35 200 – making it one of the world’s largest and most influential economies. The UK has fertile soils and a long industrial background, but it’s the booming services sector and ‘knowledge’ economy that now dominates the country’s wealth creation. The service sector earns 75% of the UK’sGDP (compared with just 1.2% from agriculture and 23.8% from industry/ manufacturing).

However, despite its current size and influence, the British economy is facing an uncertain future. The UK has an ageing population, with increasing numbers of people moving from work into retirement. In 2010, the average life expectancy in the UK for anyone reaching their sixtiethbirthday was another 23 years! The country has the serious problem of working out how to support millions of people who might be retired for 20 years or more. Thisproblem is not helped by the fact that the UK’s birth rate is falling, and has been for decades. Where are the workers going to come from to support the pensioners of the future? What will happen to the UK’s dependency ratio? Food for thought!

The UK’s population structureFor almost every British family, there has been a consistent fall in family size since 1900. The stereotypical suburban ‘2.4 children’ per family was coined in the 1950s– having been about 5 in 1900. Now it’s about 1.7. At the same time, people are living longer. The effect of this is to

Create an ageing population in the UK.In 2010:● only 16.5% of the UK’s population was aged 0-14 (compared with Uganda’s 50%).● an almost equal proportion of the population was aged over 65 (compared with Uganda’s 2.1%).● the UK’s median age was 40.5 – one of the highest in the world.

Increasingly, however, older age groups are beginning to dominate the UK’s agesex structure (Figure 5.22). This structure currently looks like Stage Four of the DTM, but it might soon look more like Stage Five if current population trends continue

In 2010:

● the UK’s natural increase in population was just 0.7% a year – one of the world’s slowest.● the birth rate was 10.7 per 1000. In many High Income Countries (HICs), including the UK, birth and fertility rates have been falling for decades.● the death rate was 10 per 1000. It has fallen steadily over the last century. Life expectancy at birth in the UK is now almost 80. This is because of free universal healthcare via the NHS, improved treatment for the biggest causes of death (heart disease and cancer), and a better lifestyle due to increasing wealth.The falling fertility rateThe UK’s fertility rate first fell below the replacement levelof 2.1 in the 1970s. It has remained below that crucial levelever since.

The drop in fertility rate has been partly caused by theimproved status of women in British society. More womenin the UK now go to university than men. As a result ofthis higher education, many women decide to pursueprofessional careers before marrying and having childrenin their thirties, rather than their twenties. Many of thesewomen then continue their careers alongside raising a family.

UK – An Ageing Population

However, because many women now start their familieslater in life, they have to face the consequence that theywill be less fertile at that point. The chances of conceptiondecrease for a woman in her thirties, making it morelikely that family size for older mothers will be smaller –especially if they want to return to work for periods between having children.

As well as many British women starting their families later in life, increasing numbers are also deciding never to have children at all. In 2009, research by the London School ofEconomics showed that 10% of women aged 45 were intentionally child-free, and that 25% of younger women were also child-free at that point. The researchers suggested that both figures will increase in the future.

One conclusion is inescapable. At present, the UK’s population will not replace itself by natural change. Many politicians quietly believe – because the issue is sensitive with public opinion – that immigration must be encouraged to maintain a strong workforce and economy

The ageing trend‘Ageing’ is also known as the ‘greying’ of the population. By 2014, for the first time, there will be more people aged over 65 in the UK than under 16. Not only are more people surviving into retirement, but many are living to a ripe old age. There are already 1.2 million people aged over 85 in the UK.

Is immigration the answer?Migration into the UK – together with most HICs – is at an all-time high. But, until 2000, more emigrants left the UK (for places like Australia and Spain), than immigrants arrived.Immigration into the UK has come from two main groups:● Since the late 1940s, there has been a steady flow of immigrants from Commonwealth countries such as India, Pakistan and Caribbean nations like Jamaica, together with smaller flows from Africa.

● In 2004, the EU was enlarged with ten extra countries.Because of EU rules about the free movement of labourin member states, there was a surge in immigration tothe UK from Central and Eastern Europe. Polish migrantsconstitute the UK’s largest single migration ever.Alongside social changes in the UK’s population – such asfalling birth, death and fertility rates – immigration has hada real impact, especially in the last 30 years:● Immigration from India, Pakistan and the Caribbeanduring the 1950s/60s, coincided with a baby boom inthe UK. As a result, natural increase was responsiblefor 98% of the UK’s population growth – and netimmigration just 2%.● But, since the 1980s, net immigration has contributedmore and more of the UK’s population growth. As thefertility rate has fallen, so has natural increase.● From 2001 to 2008, net immigration added 180 000people to the population each year, compared with90 000 from natural increase – a ratio of 2:1.Recent immigrants from the EU tend to be young andwell qualified. In 2008, about 70% of EU immigrants whoregistered for work in the UK were aged 18-35, andmost were graduates. Family related migration is alsobecoming more common. Those arriving with dependentchildren increased from 4% in 2004 to 15% by 2009. Birthstatistics show that the number of children born in theUK to mothers from other EU countries has increasedsubstantially since 2004.Immigrant populations tend to have a younger agestructure than the white British population (Figure 5.27).For example, large numbers of Black Africans migrated tothe UK in the mid-1980s as children. Now, many of themhave their own young families, which explains the large percentages of under 16s

Many ‘retired’ people still do part- or full-time work – to keep themselves active and to supplement their pensions. Over 25% of the employees at DIY chain B&Q are aged over 55. Retired people are useful for companies, because they can work flexible hours anddo not carry costs such as National Insurance. They also have a lot of skills, experience and knowledge, which can be passed on.

Many businesses have developed to service the ‘grey pound’ (wealthy retired people, such as those with generous private pensions). For example, DIY outlets, gardening centres, and specialist holiday companies.

The growing private health sector also regards the ageing population as an opportunity. Firms providing private healthcare insurance, e.g. BUPA, or companies such as Boots (who offer healthcare services), regard the elderly as good business.

The investment of pension funds by fund managers provides a valuable source of money for companies and organizations in both the private and public sectors. For example, many British pension funds invest in big companies like BP.

Many elderly people only have the basic State pension to live off.If the price of food or fuel rises, it’s harder for those on fixedpensions to compensate for it. Poverty amongst the elderly is amajor challenge for the government – and for non-governmentalorganizations, like Age UK, which campaign on their behalf.

The World Health Organization (WHO) warns that ageingpopulations worldwide will lead to increasing heart disease, cancers,and diabetes. Treating these is expensive and provides a realchallenge for the NHS – and the voluntary sector (e.g. MacmillanCancer), which relies on donations of money and time fromvolunteers.

An ageing population also creates a need for new housing, e.g.smaller properties with no stairs, wider doorways and lowerkitchen units for those with limited mobility. And shelteredaccommodation for those who need carers on site.

A growing pensions crisis is emerging. State pensions in the UKare paid for by National Insurance (NI) contributions from thosein work. As life expectancy increases, more people are claimingpensions for longer. The ratio of people in work compared to over65s is falling. In 2000, there were 3.7 people in work for everyperson aged over 65. By 2040, this ratio will have fallen to 2.1. Thegovernment will be receiving less tax revenue from the smallernumber of workers, just as demand for pensions and healthcare isrising.

ProblemsBenefits

Population density in the UK

Compare and contrast the age/sex pyramids shown in Figures 3 and 4. What factors help to explain their shapes? How are the economies of the two places likely to differ as a result of their differing population structures?

What are the issues that are already apparent in those countries with the most ‘aged’ populations?

These are mainly in Europe and perhaps surprisingly they include most of the Catholic countries of southern Europe. Recent research in those countries has revealed two related causal factors:

1) the wish of increasing numbers of women in those countries to havecareers, and

2) a lack of nursery facilities, crèches, etc. to look after children whileparents at work.

The tension between these two factors is such as to persuade manycouples to opt out of having children altogether.

So what are your perception of an ageing population?

• more old people (more ‘Saga louts’)• rising ill-health• increased expenditure on services• higher levels of dependency• hindered economic growth.

What about positive perceptions….?

WOOPies

JOLLies

SKI holidays

Well Off Elderly PersonsJet-setting Oldies with Loads of LootSpending the Kids Inheritance on holidays

Special needs of the elderly

These needs are not just medical (important though they are). They range from large-print books to meals on wheels, from stair-lifts togranny mobiles. The last two perhaps remind us the one of the most acute needs is to reduce the impairing effects of restricted mobilityboth within and outside the home. Foremost here then are services that help the elderly to retain their independence and quality of life.The growing stocks of granny flats, wardened and sheltered accommodation, care homes are a sign of things moving in the right direction, but not fast enough. Developers and local planningauthorities have been slow to anticipate the demand simply because they have not bothered to look at forecasts of demographic change.

Coordinating care

Meeting the diversity of needs suggested above means theinvolvement of public and private agencies of all kinds. All too often the right hand does not know what the left is doing. There is great scope for improving cooperation and coordination. Maybe it will not be too long before governments realise the benefits of bringing together the many agencies under a Ministry for the Elderly.

Cost and access to services

When the costs of an ageing population are calculated, it is usually the cost of pension systems that dominate the debate. But there is another cost of almost the same proportion to face – that of the healthcare and long-term care for the elderly that we have just implied. Cost obviously leads to access. The aim should be equality of access for all to all those things that contribute to the quality of life of the elderly. Is this an unattainable ideal? Sadly, differences in income and in levels of development lead to the creation of insurmountable hurdles.

Who cares?

Clearly, this links with health. Much also hinges on the prevailingfamily type and housing situation. The extended family still prevalentin LEDCs is likely to have a good measure of in-built care. Thenuclear family has shifted the onus to professional providers in theform of sheltered accommodation, care homes, etc. This in turncreates a serious financial issue for many families.

There is a large amount of global evidence to show that the elderly areincreasingly the victims of neglect, violence and abuse. We are only too well aware of the first two in the UK. In LEDCs, abuse relates more to widowhood rites harmful to women, and traditional practices involving older persons.

A feminised cohort

Given the biological fact of greater female longevity, there is the prospect of an expanding elderly cohort increasingly dominated by women! Is this a heaven or hell prospect?

Migration moves

Three types of migration are becoming increasingly conspicuous in MEDCs- 1) retirement, downsizing moves; 2) bereavement moves occasioned by thedeath of a partner, and 3) moves into specialist care accommodation. Thereis the prospect that the convergence of these migration moves could easilyresult in the creation of ‘grey ghettos’, particularly within towns and cities.There is also a wholly different type of migration becoming evident.As work in the care sector becomes less attractive to ‘native’ workers,both in terms of image and pay, so increasing numbers of migrantworkers are being drawn in from overseas to fill key jobs - fromcooks and cleaners to nurses and doctors.

Retirement & pensionsThe fact that people in MEDCs are, on average, now experiencingbetween 10 and 20 years of retirement is creating enormous pressureson pension schemes, both state and private. As the proportion of thepopulation creating wealth and paying taxes goes down, soon a pointis reached when income from taxes cannot keep pace withexpenditure on welfare. At present, an average of 25% of GDP goeson welfare spending in EU countries. Just under half of thisexpenditure goes on pensions.

In the UK, where state pensions are already reduced to a pitifulpittance, two moves are afoot. The first is to raise the age ofretirement. For women, it is already going up to 65; it may soon be67 for everyone. Raising pension ages reduces the pensionerpopulation at a stroke. The second move is to encourage everyone toinvest in their own private pension schemes. Recent scandalsassociated with the selling of private pensions have created a greatdeal of distrust.

Contracting labour supply

A contracting labour supply, not just in the care sector, is something that none of today’s employers has ever seen. Obviously, population ageing is the prime cause, but there are other factors also contributing to the skills and labour shortages. These include early retirement and employers’ reluctance to recruit what they see as ‘grey’ labour (oftenanyone over 50, and often the fall-out of redundancy). Ignoring the skills and experience of the over 50s is clearly a case of employers shooting themselves in the foot.

The grey pound

An ageing population means a broad shift in the pattern of consumer demand. Again, elderly people have need of a particular range of goods (possibly described as ‘the A to Z - from armchair recliners to Zimmer frames). Retailers need to be increasingly alive to the grey market as the young free-spenders dwindle in number.

The grey vote

With a sizeable percentage of the electorate of pensionable age (itmight be approaching 50% in the UK), the grey vote has, in theory, apowerful political punch. In this country, politicians and pensionersare only just beginning to wake up to this potential power.It was perhaps surprising that in the recent General Electioncampaign in the UK there was little focus on the elderly other thanindirectly in the contexts of the NHS and spending on social services.As to the future, it seems clear that MPs and political parties need tobeware of one reality – ignore the grey vote at your peril!

The grey lobby

Also adding to this political clout is the lobbying potential of theelderly. They have the time, and most often the expertise, to presstheir particular interests. They can be much more single minded. Ifmobilised, the elderly could readily become an articulate andinfluential pressure group. Indeed, it could be that an active pursuit ofelderly issues could lead eventually to the formation of a Grey Party!

The grey MP

Given that there is no upper age limit on serving as a member ofparliament, the elderly cohort might find itself better represented thanin the past. Elderly MPS are more likely to be disposed to fight theircorner on issues close to home and to the heart.

Some concluding points

At present, the issues of an ageing population are most evident in MEDCs where, because of greater life expectancy, the elderly are a much more conspicuous component of the population. It is too early to say whether or not the issues will be the same in LEDCs as their populations become more‘grey’. At present, short life expectancy and the prevalence of the extended family mean that retirement, pensions and care are not major issues. But should there be a significant change in either of these two factors, then the whole situation could change quite dramatically.

As the world’s population grows older, governments in MEDCs must address the possible economic consequences. Although operating under different names and in different ways, welfare systems exist in all MEDCs. Welfare systems cover pensions, health care and social security. The roots of the economic problem are not hard to identify:

• The proportion of working people, who create wealth and pay direct taxes, is going down.• The proportion of the elderly people dependent upon thewelfare system is increasing.• A point must be reached where the amount being paid in cannot keep pace with the amount that needs to be paid out

At present, an average of 25% ofGDP goes on welfare spending inEU countries. Just under half thisexpenditure goes on pensions. Therest goes on unemployment benefitsand maternity, housing and familyallowances, which are spread morebroadly through the age ranges. Inaddition there is significant state spending on health services,available to all age groups, but which are consumed more by the elderly.

In his recent book, Agequake, Paul Wallace predicts that ‘Populations in Europe generally are poised to plunge on a scale not seen since theBlack Death’. He speaks of a glut of retirees, supported by fewer and fewer workers; of overloaded state pension systems facing bankruptcy.

The breakdown of European economic and monetary union, and stock market crashes as the babyboomers start cashing in their shares (in around 2024, if you want the most likely date) are other elements of this scenario. Agequakereads a bit like Malthus, but the focus of the book – the change in demographic structure within theworld’s most developed countries – lies beyond even the wildest dreams of the Reverend ThomasMalthus.

What are the strategies to manage an ageing population?

Encourage larger families

Raise retirement age

Encourage immigration

Increase health care provision

How do these work?Why may they be controversial?Which ones would you adopt?

Case studyManaging Populations – Ageing Population UK

Complete a mind map. Include…….

Why does the UK have an ageing population?

Facts and figures Scale of the issue

What problems does an ageing population cause?

What is being done to manage the ageing population and are they sustainable?

We need to make sure we understand:

Causes of an ageing population (social, economic and political)

Impacts of an ageing population

Managing an ageing population

Figure 1:Distribution of people aged 65 and over in the UK 2003.

Describe the patterns shown on figure 1 (5 marks)

Suggest reasons for the patterns you outlined above (5 marks)