Tag: aging society

Tracking the Population Crisis

Mary Pat Campbell

Link:https://www.nextbigfuture.com/2023/07/tracking-the-population-crisis.html

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South Korea only had 18,988 births in May, 2023 which is the lowest births since the agency started compiling the data in 1981. This was a drop of over 5% from May 2022. The number of deaths in the country moved up 0.2 percent over the period to 28,958, resulting in a natural decrease in population by 9,970. South Korea is losing about 120,000 people per year and the total birth is about 230,000 per year which is down from 705,000 from 1990 to 1994 and 669,000 from 1995 to 1999. However, after the 1997-98 Asian Economic Crisis, the number plummeted to an average of 500,000 in the early 2000s.

Korea’s fertility rate dropped to a new low of 0.78, the lowest among countries in the Organization for Economic Cooperation and Development, and possibly the world.

Korea would need to triple its annual births to 700,000 per year to maintain and stabilize its population.

Statistics Korea expected people aged 65 and above will take up 20 percent of the population in 2025, marking a sharp rise from 18.4 percent estimated for this year.

The Korean government sees the next five years as critical to increasing fertility and salvaging the country.

Korea’s government is considering easing the burden of gift taxes exclusively for newlywed couples, by raising the minimum amount of cash they can receive from parents without being taxed to either 100 million won ($76,000) or 150 million won.

Several municipalities have also introduced similar programs. Seongnam, Gyeonggi Province, held two couple matchmaking events in July for unmarried men and women who either live or work in the region. As a result, 39 couples found a match.

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Japan is the world’s first “hyper-aged” country, where at least 21 percent of the population is older than 65, with projections predicting 40 percent of the population will be over retirement age by 2050.

Author(s): Brian Wang

Publication Date: 26 July 2023

Publication Site: Next Big Future

China Is Facing a Moment of Truth About Its Low Retirement Age

Mary Pat Campbell

Link: https://www.wsj.com/articles/china-is-facing-a-moment-of-truth-about-its-low-retirement-age-5ed9b57f

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China has one of the lowest retirement ages among major economies. Under a policy unchanged since the 1950s, it allows women to retire as early as at age 50 and men at 60. Now, local governments are running out of money just as a wave of retirees hits. That is leaving Beijing with little choice but to ask people to work longer—a move economists say is long overdue but one still likely to meet with resistance.

China’s version of “baby boomers”—those born after China emerged from devastating starvation in the early 1960s—are retiring in droves. Even with government subsidies, by 2035 China’s state-led urban pension fund will run out of money accumulated over the previous two decades, leaving it to rely entirely on new workers’ contributions, according to projections made in 2019 by the Chinese Academy of Social Sciences, a government think tank. 

Former central bank Gov. Zhou Xiaochuan warned in a February speech that China must address its pension shortfall and communicate that many Chinese may need to rely on private pension savings

Author(s): Livan Qi

Publication Date: 11 April 2023

Publication Site: Wall Street Journal

The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity

Mary Pat Campbell

Link: https://www.aeaweb.org/articles/pdf/doi/10.1257/mac.20190196?etoc=1&PHPSESSID=e2d71946030ec8a8263aa740cdefc8bf&aeawebcookie=bKEAqeTUkYC2t76T69dF0Ci6fxe7YbxnmOV&_ga=GA1.1.1666777193.1680103456&_ga_96K6S9DJLT=GS1.1.1680103456.1.1.1680103555.0.0.0

Maestas, Nicole, Kathleen J. Mullen and David Powell. 2023. “The Effect of Population Aging on Economic Growth, the Labor Force, and Productivity.” American Economic Journal: Macroeconomics, 15 (2):306-32.

DOI: 10.1257/mac.20190196

Replication package link: https://www.openicpsr.org/openicpsr/project/173781/version/V1/view

Online appendix: https://assets.aeaweb.org/asset-server/files/18416.pdf

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Abstract:

Population aging is expected to slow US economic growth. We use variation in the predetermined component of population aging across states to estimate the impact of aging on growth in GDP per capita for 1980–2010. We find that each 10 percent increase in the fraction of the population age 60+ decreased per capita GDP by 5.5 percent. One-third of the reduction arose from slower employment growth; two-thirds due to slower labor productivity growth. Labor compensation and wages also declined in response. Our estimate implies population aging reduced the growth rate in GDP per capita by 0.3 percentage points per year during 1980–2010.

Author(s): Maestas, Nicole, Kathleen J. Mullen and David Powell

Publication Date: 2023

Publication Site: American Economic Journal: Macroeconomics, AEAweb

BlackRock, Fidelity Lose Out in $1 Trillion China Pension Market

Mary Pat Campbell

Link: https://finance.yahoo.com/news/blackrock-t-compete-free-advil-000000028.html

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China launched private pension plans for the first time last year and Beijing has ensured that domestic banks and fund managers win the vast majority of the new business in a market that may eventually grow to $1.7 trillion. Global companies including BlackRock and Fidelity International Ltd have been off to a slow start.

Given their tiny asset bases in China, most foreign money managers have so far been excluded from pilot trials in 36 cities, allowing banks like Industrial & Commercial Bank of China Ltd. and China Merchants Bank Co. to grab all the inflows. To cement their lead, the banks are offering everything from cash incentives to free ibuprofen for each new account.

“The first bite at the cake here won’t be easy” for foreign companies, said Zhou Yiqin, president of GuanShao Information Consulting Center, a financial regulations specialist.

While it’s still early days for the new pension scheme, the head start for domestic companies illustrates the daunting challenges for global firms eyeing a piece of China’s $60 trillion financial services sector. From mergers advice to stock sales and trading, Wall Street is struggling in a market that combines endless potential with stiff local competition and regulatory roadblocks.

China’s fledging private pension system is loaded with promise, as Beijing desperately tries to entice retirement savings to support an aging population. The number of people over 60 is expected to jump more than 50% by 2040, according to the World Health Organization. China’s population shrank last year for the first time in six decades.

To address the problem, China has launched three pension pillars. The first two — a compulsory state-backed plan and a voluntary corporate matching option — don’t come close to meeting the future needs of most pensioners. Savings in the government-led program covering urban employees may run out by 2032 and face a shortfall of more than 7 trillion yuan by 2035, according to Citic Securities Co. estimates.

Author(s): Bloomberg News

Publication Date: 28 Mar 2023

Publication Site: Yahoo Finance

Japan PM says country on the brink over falling birth rate

Mary Pat Campbell

Link: https://www.bbc.com/news/world-asia-64373950

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Japan’s prime minister says his country is on the brink of not being able to function as a society because of its falling birth rate.

Fumio Kishida said it was a case of “now or never.”

Japan – population 125 million – is estimated to have had fewer than 800,000 births last year. In the 1970s, that figure was more than two million.

Birth rates are slowing in many countries, including Japan’s neighbours.

But the issue is particularly acute in Japan as life expectancy has risen in recent decades, meaning there are a growing number of older people, and a declining numbers of workers to support them.

Japan now has the world’s second-highest proportion of people aged 65 and over – about 28% – after the tiny state of Monaco, according to World Bank data.

Author(s): George Wright

Publication Date: 23 Jan 2023

Publication Site: BBC

China’s population falls for first time since 1961

Mary Pat Campbell

Link: https://www.bbc.com/news/world-asia-china-64300190

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China’s population has fallen for the first time in 60 years, with the national birth rate hitting a record low – 6.77 births per 1,000 people.

The population in 2022 – 1.4118 billion – fell by 850,000 from 2021.

China’s birth rate has been declining for years, prompting a slew of policies to try to slow the trend.

But seven years after scrapping the one-child policy, it has entered what one official described as an “era of negative population growth”.

The birth rate in 2022 was also down from 7.52 in 2021, according to China’s National Bureau of Statistics, which released the figures on Tuesday.

In comparison, in 2021, the United States recorded 11.06 births per 1,000 people, and the United Kingdom, 10.08 births. The birth rate for the same year in India, which is poised to overtake China as the world’s most populous country, was 16.42.

Deaths also outnumbered births for the first time last year in China. The country logged its highest death rate since 1976 – 7.37 deaths per 1,000 people, up from 7.18 the previous year.

Author(s): Kelly Ng

Publication Date: 17 Jan 2023

Publication Site: BBC

South Korea spent $200 billion, but it can’t pay people enough to have a baby

Mary Pat Campbell

Link: https://www.cnn.com/2022/12/03/asia/south-korea-worlds-lowest-fertility-rate-intl-hnk-dst/index.html

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South Korea recently broke its own record for the world’s lowest fertility rate. Figures released in November showed the average number of children a South Korean woman will have in her lifetime is down to just 0.79.

That is far below the 2.1 needed to maintain a stable population and low even compared to other developed countries where the rate is falling, such as the United States (1.6) and Japan – which at 1.3 reported its own lowest rate on record.

And it spells trouble for a country with an aging population that faces a looming shortage of workers to support its pension system.

Author(s): Paula Hancocks

Publication Date: 3 Dec 2022

Publication Site: CNN

Baby bust: China’s looming demographic disaster

Mary Pat Campbell

Link: https://www.spectator.co.uk/article/baby-bust-chinas-looming-demographic-disaster

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According to a new UN report, China’s population growth has collapsed by 94 per cent, from eight million a decade ago to just 480,000 last year. What’s particularly worrying for Chinese leaders is that this means a rapid reduction in the working population. The previous set of projected figures suggested that by the year 2100, China’s 15- to 64-year-old population would be 579 million. This has now been revised down to 378 million, a 35 per cent fall. If this prediction plays out, the implications for China – and the rest of the world – could be brutal.

Today, every 100 working-age Chinese need to support 20 retirees. If trends continue, by the turn of the next century, every 100 workers will have to support 120 retirees. This means China will have the largest drop in working-age population among any of the G20 economies by 2030, with more than 23 million fewer Chinese. In percentage terms, Japan and South Korea will shrink even faster – but they became rich before birth rates began plummeting.

Author(s): Rana Mitter

Publication Date: 6 Aug 2022

Publication Site: The Spectator UK

A Filmmaker Imagines a Japan Where the Elderly Volunteer to Die

Mary Pat Campbell

Link: https://www.nytimes.com/2022/06/17/world/asia/japan-plan75-hayakawa-chie.html?smid=url-share

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The premise for Chie Hayakawa’s film, “Plan 75,” is shocking: a government push to euthanize the elderly. In a rapidly aging society, some also wonder: Is the movie prescient?

TOKYO — The Japanese film director Chie Hayakawa was germinating the idea for a screenplay when she decided to test out her premise on elderly friends of her mother and other acquaintances. Her question: If the government sponsored a euthanasia program for people 75 and over, would you consent to it?

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Close to one-third of the country’s population is 65 or older, and Japan has more centenarians per capita than any other nation. One out of five people over 65 in Japan live alone, and the country has the highest proportion of people suffering from dementia. With a rapidly declining population, the government faces potential pension shortfalls and questions about how the nation will care for its longest-living citizens.

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Aging politicians dominate government, and the Japanese media emphasizes rosy stories about happily aging fashion gurus or retail accommodations for older customers. But for Ms. Hayakawa, it was not a stretch to imagine a world in which the oldest citizens would be cast aside in a bureaucratic process — a strain of thought she said could already be found in Japan.

Euthanasia is illegal in the country, but it occasionally arises in grisly criminal contexts. In 2016, a man killed 19 people in their sleep at a center for people with disabilities outside Tokyo, claiming that such people should be euthanized because they “have extreme difficulty living at home or being active in society.”

Author(s): Motoko Rich

Publication Date: 17 June 2022

Publication Site: NYT

As our entitlements crisis gets closer, a solution moved farther away

Mary Pat Campbell

Link: https://www.washingtonpost.com/opinions/2022/06/09/social-security-medicare-crisis-approaching/

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The annual Social Security trustees report is once again upon us, and this year it actually bears some good news: The projections give us an extra year before the trust fund is exhausted in 2035.

At least, this sounded like good news when I first heard it. Then I remembered that I have been writing about these trustees reports for more than 15 years. When I started, all these projections sounded comfortably far off — we had decades to fix the problem! Now we have 13 years. And in all that time, we have done nothing at all, except watch the date of insolvency advance.

In 2008, it was 2040, and the people likely to be worst affected — those who would be eligible to retire just as the trust fund was exhausted — were 35. Now, the people facing the most disruption are 54, much closer to retirement than to their college graduation.

In the meantime, the politics of fixing America’s old-age entitlements has gotten considerably worse.

Author(s): Megan McArdle

Publication Date: 9 June 2022

Publication Site: Washington Post

The state pension – a creaking centenarian

Mary Pat Campbell

Link: https://cpd180322.pensions-expert.com/

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Separate SPAs for men and women were introduced in 1940 — age 65 for men and 60 for women, with a decision to equalise the SPA for men and women trailed in the 1993 white paper ‘Equality in state pension age’. Now that the same age applies for both men and women, at 66, there is still huge controversy over the notice period and quality of information given to women over the age of 50 on the exact timetables for this change. 

Demography has increasingly put the whole system under strain. Andrew Tully, technical director at Canada Life, warns: “By 2045, the number of people of pensionable age will grow to 15.2mn, an increase of 28 per cent on the level in 2020. The ‘oldest old’ cohort is also increasing, with the number of people aged 85 and over projected to almost double to 3.1mn by 2045. 

“At the same time, the working age population will increase by much less — around 4.5 per cent up by the mid-2030s, but then remaining around that level by 2045. Meanwhile, we are seeing a decrease in the number of children, with those aged 0 to 15 projected to fall by nearly 9 per cent by mid-2030.”

Author(s): Stephanie Hawthorne

Publication Date: 18 March 2022

Publication Site: Pensions Expert

Animated Chart: China’s Aging Population (1950-2100)

Mary Pat Campbell

Link: https://www.visualcapitalist.com/cp/chinas-aging-population-problem-1950-2100/

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The one-child policy defined China’s demographic transition for over three decades.

But to combat an aging population and declining birthrates, the government scrapped the policy for a new two-child policy in 2016. Despite this massive change, China still faces a growing demographic crisis.

The above animated population pyramid from James Eagle looks at the distribution of China’s population by age group since 1950, with projections up to the year 2100.

Author(s): James Eagle

Publication Date: 27 Dec 2021

Publication Site: Visual Capitalist