UNITED NATIONS, Feb. 18 (Xinhua/APP): The issue of aging should not be seen through a negative lens only, as it is not necessarily a bad thing even in economic terms if managed properly, an expert with the United Nations Population Fund (UNFPA) told Xinhua on Thursday.
Aging means higher life expectancy coupled with lower fertility rates. Living longer is a good thing for individuals, while the decline in birth is not certainly a bad thing if it is by choice, said Michael Herrmann, a senior adviser on population and economics with the UNFPA.
“I think what is really important here is — from a UNFPA perspective, from a rights perspective — women and men should be empowered to have the number of children they want to,” he said.
Most of women and men, who want to have two children, have fewer than two. The discrepancy shows that there is a space for policies to help women and men have more children, the expert said.
“It’s really about, in summary, three balances: work and life, the income and the costs of having a child, and gender balance — how much women and men share responsibilities in housework. If we get these balances right, people will have more children,” he said.
There are also occasions where some people do not want children even if the conditions are balanced.
“We see a bit of a culture shift, attitude shift. People also have anxieties about the future. We have seen studies that people are worried about the environment. They don’t want to have children because they fear global warming; they fear environmental collapse,” he said.
Herrmann pointed out that fears for aging are often exaggerated.
There are many tools to address skills shortage or labor shortage, he said, including activating those inactive people in the labor force, engaging women to participate more, recruiting older people in different ways, involving immigrants and so on.
Germany, for example, has a very old population. But the increase in labor productivity in Germany offsets the contraction of the labor force. Many other countries are in the same situation.
Also, there is uncertainty in future labor demands, he said, noting that economies are undergoing major changes with the development of artificial intelligence, robotics and other technologies which may lead to change in the labor demand in the future.
Worries about the consequences of aging on the economy are largely unfounded, said Herrmann.
Aging has implications for more pension funds and health care financing. But these implications can be fixed through three variables: increased contributions, decreased benefits, or a combination of the two. It is not a question of whether economies can finance pensions or health care, but who pays for it. It’s a distributive question, he said.
Herrmann said people always focus on the problems and threats of aging, while completely overlook the economic benefits of aging such as a second demographic dividend and the silver economy.
Countries that invest in human capital throughout the life course which increase labor productivity are able to realize something called the “second demographic dividend.” They can benefit from human capital, labor productivity growth, capital accumulation, thus accelerating economic growth.
The second demographic dividend is even bigger than the first demographic dividend, which came with an expansion of the labor force in countries at an earlier stage of the demographic transition, according to an earlier report by the UNFPA. “This is an opportunity,” he said.
The economy related to aging is a billion-dollar business. Older people get pensions, but they also spend their money, he said, noting that they may spend it on all kinds of things including health care, which is a promising business that creates jobs and feeds back into the economy.
Herrmann said what worries him is that the response to aging is mostly “negative, reactive and fragmented.” To address the problems of pension funds and health care financing, more integrated and flexible systems that are resilient to demographic changes are needed.
“We have systems that are complementing a linear life path — I go to school, I work, I retire. But in the future, our life path will be completely different. Random. We will do all kinds of things at all kinds of times. And it will be schooling in between. We move from employment to self-employment, unemployment, and entrepreneurship,” he said.
“We need systems that complement such a life path. So we have to really think of integrated systems: How do you connect this to pensions? How do you connect this with health care? With social security benefits? How do you invest in people so that they get back on their feet and can participate in society?”
Herrmann said aging changes everything: the way people live, move, think, the household structures, the real estate markets and the financial markets.
The problems with aging are real. But by just focusing on the problems, people lose perspective of what aging is and lose perspective of the positive side. The anxieties are exaggerated because people are overlooking the positive aspects. And there is a need for a holistic approach. Only in this way can countries come to terms with aging.
Follow the PNI Facebook page for the latest news and updates.
