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DEMOGRAPHIC CHALLENGES FOR THE 21ST CENTURY

DEMOGRAPHIC CHALLENGES FOR THE 21ST CENTURY

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  • 1. DEMOGRAPHIC CHALLENGES FOR THE 21ST CENTURY Dr. Roby Nathanson
  • 2. The current situation  Available projections suggest that all Western countries face the prospect of population aging.  The problem is even more pronounced in the euro area, although there are considerable differences across countries concerning the pace of aging  Important consequences for economic growth, labor markets, markets. public finances and possibly financial
  • 3. Global Aging • Population dynamics, accompanied by significant improvements in health and longevity among the elderly are leading to growing percentages of ageing populations and growing rates of old age dependency. • The prevalence of two population models is clearly seen, at the regional level, reflecting the varying impact of population dynamics (fertility and mortality).
  • 4. 1949 1951 1953 1955 1957 1959 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 Living Longer Israeli Males Israeli Females CBS (2012) Jewish Males Jewish Females 85 80 75 70 65 60
  • 5. United Nations, Department of Economic and Social Affairs, Population Division (2013) Living Longer Israel 95 90 85 80 75 70 65 60 55 50 45 US World Europe
  • 6. Living Longer  In most parts of the world, people are living significantly longer lives than in previous decades.  For the world as a whole, life expectancy increased by two decades since 1950 (from 48 years in 1950–55 to 68 years in 2005-10).  During the current half century, the UN Population Division projects global life expectancy to rise further to 76 years.
  • 7. Declining Fertility OECD members 4 3.5 3 2.5 2 1.5 1 World United Nations, Department of Economic and Social Affairs, Population Division (2013) European Union Israel
  • 8. Declining Fertility  The world’s total fertility rate fell from 5 children per women in 1950 to roughly 2.5 today, and is projected to drop further to about 2.2 by 2050.  As families have fewer children, the elderly share of the population naturally increases.
  • 9. Old-Age Support Ratio Number of people of working age (20-64) per person of pension age (65+) Italy Japan Korea Mexico OECD (2011), Pensions at a Glance Turkey OECD Israel 16 Younger OECD countries 14 12 10 8 6 4 Older OECD countries 2 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
  • 10. Employment to Population Ratio International Labor Organization (2011) Israel 65 63 61 59 57 55 53 51 49 47 45 OECD members World European Union
  • 11. Employment (ages 55-64) OECD (2013) 65.0 60.0 55.0 50.0 45.0 40.0 35.0 30.0 Germany Israel 2005 2006 Italy 2007 2008 United Kingdom 2009 2010 United States 2011 2012 OECD
  • 12. Problematic aspects of Aging  Lower birth and death rates increase the aged dependency ratio, only partly relieved by lighter youth dependency ratio.  Generally adverse effects on economic production/consumption balance; lower economic growth than previously.  Specific problems: labor shortage, possible inflation, care arrangements for elderly, adequacy of pension provisions, possibly a less creative older workforce.
  • 13. Social Security Implications  Aging is leading to a rethinking of pension scheme parameters and structures all around the world.  Aging creates tensions with regard to generational equity, it requires responses from and adaptations to all systems, such as: youth and senior citizen employment and restructuring of health and retirement systems.  There is certainly no single solution as regards the best pension system.  The concept of optimal financing varies from one country to another and can focus on stabilizing contribution rates, redistributing revenues or encouraging savings.
  • 14. Social Security Implications  Valid policies for adapting to aging are those that focus on:  The capacity of individuals and households to make the necessary adjustments (through professional activity, saving or private transfers).  And on the other hand, the capacity of institutions to support and bring about the necessary modifications in individual behavior.  Adaptations to employment and social security policies must aim for life-long training, guaranteeing a minimum coverage and promoting a culture of prevention in the labor market in terms of health and safety.
  • 15. Social Security Implications  Social security must be driven by a culture of prevention in all its components, objectives and methods of implementation in the labor market and in other sectors.  Extending the working life is key to the success of many pension reforms. Achieving this requires that people be healthy and well-trained, making prevention and life-long learning highly important.
  • 16. Social Security Implications  Population aging creates an increasing need for long- term care services and protection against related costs, and countries are beginning to pay more attention to this important risk.  Finally, the aging challenge calls for an in-depth revision, which has already begun, of fragmented social security systems, making sure to maintain a multi-dimensional and multi-risk approach.