Population changes and an ageing Britain

James Beaton.

Over the last 200 years the population of earth has increased, substantially. The start of this boom occurred in the early 1800’s coinciding with the agricultural and industrial revolutions in Europe.  The increasing population has since been supported by modern medicine, reducing death rates across all ages but most predominantly in children and in pregnancy for women. This has changed the make-up of society and we shall examine the impacts of this further.

It is believed that in the 17th to 18th century the mortality rate for giving birth was between 1 and 1.5% per birth [1] whereas now it lies nearer 0.002%. Before the industrial and agricultural revolution the growth of the population was more linear increasing from around 300 million in the 15th century to around 700 million in the 18th century (figure 2). Since then the growth of the population has become exponential, increasing upward toward our current total of nearer 7 billion. The growth of the population is expected to slow down and eventually plateau with estimates placing the population of earth to be nearer 11 billion by the turn of the next century.

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This is all very interesting but where are we going with this? Well, modern medicine has drastically changed the structure of our, and developed countries in general, population. As medicine gets better we will not only see an increase in the number of elderly people but more crucially they will take up a higher percentage of the population. How has this structure changed and what results from these changes?

Not surprisingly it is hard to find an accurate population breakdown for the 1700’s, instead we will be assuming that countries with high mortality rates, generally less developed countries, will have a similar relationship [4]. Less developed countries have fewer people in each age group the older that age group is, with the reduction in numbers appearing exponential. We also see in both less and more developed countries that in each age bracket there are more women, especially at old ages. For more developed countries there is a more periodic variation in the numbers of people with an apparent 15-25 year period in age groups below 70 years of age, above which the numbers of people again decreases logarithmically [5]. These traits are not surprising, we expect higher mortality rates for less developed countries due to lack of medicine so the population will be predominantly made up of younger people [4]. For more developed counties the lower mortality rate means roughly constant numbers of people in each age group. It is interesting to see the periodic nature of the population however, roughly corresponding to one generation of people. In each case the populations have greater numbers of women as women tend to have longer life expectancies, despite a male-female birth ratio of 1.05 [6].

All together this means that, generally, the regions in which population increase is likely to occur is in areas where the current, or in the last 20-30 years, mortality rate is or was high [4]. With better medicine comes fewer deaths and so we can expect to see drastic increases in population. But what happens when a country has developed?

As countries develop the average age of the population increases, better medicine means a longer life expectancy and better education, especially in women, leads to fewer unplanned pregnancies and in many cases a postponement of having children to have a career reducing birth rates [7]. This leads to roughly equal numbers of people in each age range. Generally this is good, having a stable population, however in some countries the increasing age of people leads to problems. Both Britain and Japan are currently facing problems due to an aging population and it is with Britain we will look more closely to the impacts and responses this has.

Without enough working people paying tax various sectors of the government come under threat. Problems are linked to an increasing strain placed on health care, with older people requiring more resources to be cared for (time, money, equipment etc.) and the greater expenditure governments face paying pensions. If the size of the work force shrinks too far compared to the number of dependent people (the number of people who are unable, or lack the motivation, to work) problems are bound to occur [8].

In 1984-5 the British government was paying £15.4 Billion in pensions, the expected projections were for the total cost of pensions to increase to between £34 and £50 billion by 2023 (1985 value of the pound which in terms of the value of today is roughly between £77 and £113 billion) [8]. Instead the amount of money spent on pensions in 2016 is £156.9 billion, much larger than long term predictions had thought [9]. The cost of pensions alone is just under 20% of total government expenditure almost double the percentage that is was thirty years ago at 11% [9]. The suggestion made by Creedy et al [8] is that to compensate for the change in percentage of dependant people either effective tax rates will have to be increased or that pensioners specifically, but it also applies more generally to all those who are dependant, will have to settle with less, which is sure to be a frightening prospect for those already in need. This greater than expected increase in pension expenditure is not only due to the numbers of people entering retirement age but also on the life expectancy of those people. Pensions are paid as a fixed, regular sum from retirement until death, with higher percentages of people living into grand old age comes a higher cost of pensions. These larger than expected increases are likely continue as people born today are likely to live longer than the generations preceding them.

Additionally in the 1980’s private sector businesses became better at attracting the ‘best and brightest’ workers with better salaries than the public sector could afford to compete with. To reduce this effect final salary pensions, pensions based on the length of service and final salary, were offered in some government sectors to make the overall package of the job more favourable. Recently, and increasingly in the next few years, these pensions are being paid out further increasing pension expenditure. [From talking with current and ex workers in government sectors].

In an aim to reduce this expenditure the retirement age has been increased. For some people the prospect of working until later and later in life is a major irritation, in France strikes occurred when the government attempted to increase retirement age. There are also many current government initiatives which aim to reduce the impact of the increasing age of the population. Many of these seem unfair, and when you take them at face value they are, but with an aging population the elderly will get less than in previous years because more people will be elderly and this is something to keep in perspective. Increasing the working age has a two-fold effect, reducing the expenditure on pensions and increasing the gains via tax.

As the population ages, greater pressure is placed on the work force to support the economy. As the work force ages (not necessarily the same as overall population aging but not removed from it) one may think that productivity would shift in response, either an increase from greater experience or a decrease from older people ‘slowing down’. Twenty years ago, it had been noted that people past the age of sixty had overall lower productivity [10], However this has since been attributed to lack of experience and education with new technology, computers etc. [10]. This does raise a question about future technological advances though. As the next generation of technology takes over in the work place over 60’s may well again find themselves less productive than younger persons. Though it seems important to note they are still being productive and are saving government resources while they continue to work.

So, what’s the next stage? What is the British population going to look like in the next 20 years and what implications will this have? It’s impossible to tell for certain, but population changes in developed countries tend to be small and slow. The difference in the shape between figures 3 and 4 is a good example. While individual numbers have changed the shape remains fairly constant so we can say, fairly confidently, that the distribution in the next 20 years will be similar. The baby boom that occurred post World War II had large effects, but over time we can expect these effects to settle and the population is likely to become more even across age groups. This may mean that actions taken by the government now to deal with higher numbers of the elderly could be overturned once the baby boom generation comes and goes. However there may well be large scale problems in the health care system if the levels of the elderly continue to rise as the baby boom generation reaches old age and if proper investment isn’t made into these sectors. Recently the need for carers and nurses has been on the increase and I feel that this is likely to continue for the foreseeable future, similar to the demand in Japan. Many of these jobs are filled by foreign workers, these people are generally quite young which may help to mitigate some effects. Many people in Britain feel threatened by workers from abroad, with the population density of Britain already high and seemingly low amounts of jobs. However, young workers may remain in Britain only for a few years. In many cases these people are of much greater value both economically and socially as they tend to contribute more in tax than they take care.

Beaton2

The number of people in Britain is also likely to begin falling within the next 20 to 30 years. As one can see from the figure (4) there seems to be a slight trend that there are less people in the lower age groups than in the higher ones, if periodic variations are taken into account. This next stage will likely bring new challenges but as few countries are experiencing this it’s hard to predict what will come from it. Hopefully this will remove a stigma against workers from abroad as jobs may become more freely available.

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Figure 4-Population pyramid for the UK 2015 and 2005 [11]

Japan currently has the oldest population on earth and that doesn’t seem to be changing. The numbers and age of the elderly in Japan is continuing to climb and as such Japan is paving the way for many other nations to follow. In 2000 Japan introduced a healthcare sector for the elderly, prior to this family members were expected to care for their relatives in old age. As a consequence there were widespread reports of neglect of the aged [12]. Since then Japan has largely succeed in providing decent care for the elderly with costs fairly similar to the costs experienced by the British government. At the moment people who wish to receive such benefits pay in past the age of 40 [12] similar to how an individual pays into a private pension scheme. The main problem the Japanese government is facing is the increasing cost facing this as more, less wealthy, people sign up. As such, I am hopeful that other countries can follow Japans successes or learn from their mistakes.

To date the British government has recognised some of the successes of Japans approach but has not committed to anything leaving the vacancy in the market to the private sector. This may seem like an error in judgement, but as we have previously examined the increasing cost of caring for the elderly is not a simple matter. The government will want to commit to a solution if in the coming years it ends up losing money, money which at the moment the government does not have.

Summary

In summary; over time the global population will increase but hopefully at a decreasing rate. In general, the areas that have the highest likelihood of population booms are developing countries as modern medicine reduces death rates. As a country develops, birth and death rates slowly decrease and population diversity (in terms of age) increases. As a population ages increased stress falls on the government, and the workforce in the case of Japan, to care for its aging members. Britain is likely to continue seeing average age increase as the post-war baby boom generation reaches dependency age. Hopefully the care industry will grow in response, attracting young workers from abroad to meet demand and provide the government with a work force that will not become dependent. Once this generation passes we should expect to see a slight decline in the population of Britain. While this decline may not change the structure of the British population we can hope that the numbers of dependant people will fall as jobs become more freely available and a higher percentage of people find work.

References

[1] Helmuth, L. (2017). The Never-Ending Battle Between Doctors and Midwives. Which Are More Dangerous?. [online] Slate Magazine. Available at: http://www.slate.com/articles/health_and_science/science_of_longevity/2013/09/death_in_childbirth_doctors_increased_maternal_mortality_in_the_20th_century.html [Accessed 4 Jan. 2017].

[2] Blog.dssresearch.com. (2017). World population growth over time | DSS Research: Looking Beyond The Expected. [online] Available at: http://blog.dssresearch.com/?p=229 [Accessed 4 Jan. 2017].

[3] Our World In Data. (2017). World Population Growth. [online] Available at: https://ourworldindata.org/world-population-growth/ .

[4] http://eprints.lse.ac.uk/268/1/Arnold.pdf

[5] Fathersforlife.org. (2017). Population pyramids for selected countries in the regions of the world. [online] Available at: http://fathersforlife.org/population_politics/world_population_pyramids_selected_countries.htm .

[6] Scientific American. (2017). Is a pregnant woman’s chance of giving birth to a boy 50 percent?. [online] Available at: https://www.scientificamerican.com/article/is-a-pregnant-womans-chan/ .

[7] World Economic Forum. (2017). The relationship between women’s education and fertility. [online] Available at: https://www.weforum.org/agenda/2015/11/the-relationship-between-womens-education-and-fertility/ .

[8] Creedy, J. and Disney, R. (2017). Can we afford to grow older? Population aging and social security.

[9] Ukpublicspending.co.uk. (2017). UK Central Government and Local Authority Public Spending 2017 – Pie Charts Tables. [online] Available at: http://www.ukpublicspending.co.uk/

[10] Brookings. (2017). Is an Aging Workforce Less Productive? | Brookings Institution. [online] Available at: https://www.brookings.edu/blog/up-front/2013/06/10/is-an-aging-workforce-less-productive/ .

[11] Ons.gov.uk. (2017). Population Estimates for UK, England and Wales, Scotland and Northern Ireland- Office for National Statistics. [online] Available at: https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/populationestimates/bulletins/annualmidyearpopulationestimates/mid2015 .

[12] the Guardian. (2017). Japan’s solution to providing care for an ageing population. [online] Available at: https://www.theguardian.com/social-care-network/2014/mar/27/japan-solution-providing-care-ageing-population .

Population changes and an ageing Britain

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