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The End of the Population Pyramid

Wolfgang Fengler's picture

This is a surfer’s dream: catching a great wave, far from the shore, and riding it for long beautiful moments as it stretches further and further gathering momentum until the very end, when it breaks right at the beach. This is how my generation, born in the 1970s (when the Beach Boys released their iconic Surf’s Up album), should feel, as we are riding on a “global demographic wave” which keeps extending further and further.
 

From a demographic standpoint, this generation is different from the previous one in two fundamental ways: it is both less “fertile” and more “durable.” We all live longer than our parents – dramatically so in emerging economies – and smaller families are becoming the norm. This is also why we will soon need to say “good bye” to the “population pyramid,” one of the key defining concepts for any high-school or university student of our time. The next generation of students will learn instead about the “population barrel.” Already today, the pyramid is gone. The distribution of world population has the shape of a bell (see Figure 1).



This may seem counterintuitive. Given that population growth is at near record levels, with world population adding another “net” 80 million each year why is the pyramid is not expanding further? As this blog pointed out four years ago, today’s rapid population growth is driven by longevity, and no longer by high fertility: there are more and more adults in the world. This is why we can experience both declining fertility and rapid population growth at the same time.

By 2050, there will be an additional 2.2 billion people in the world, bringing the total to approximately 9.5 billion (or about 30 percent more than we are today). Roughly speaking, Africa and Asia will each grow by a billion, while the rest of world will add some 200 million. Collectively we will be significantly older too.

To get at the bottom of this phenomenon we project the breakdown of these additional 2.2 billion by age group, both in absolute terms and compared to their current size. Here are the results (see also Figure 2):

  • Children and teenagers (0-19 years) will remain the largest group but only grow modestly from 2.5 billion to 2.7 billion (an increase of 8 percent);
  • Young adults and parents (20-39 years) will only see modest changes (the biggest shifts in this group already happened over the last 30 years) growing from 2.2 to 2.6 billion (a 14 percent increase);
  • The "new middle aged" (40-59 years) will experience major growth. Rising from 1.7 billion today to 2.2 billion in 2050, this group will add more than half a billion people (plus 38 percent);
  • The grandparents (60-79 years) will gain the most and more than double in size from 760 million to 1.6 billion (a 100 percent increase);
  • The new “oldies” (80+) are also expected to rise sharply but from a very low base. From 120 million today, they should add another 380 million by 2050 (plus 211%).


The bulk of future population growth – more than 1.4 billion – will happen in the middle of the distribution. Those born in my generation and the ones right after will be between 40 and 79 years by 2050: they will fill up the top half of the barrel. And if they stay healthy enough, they will then join a small but rapidly growing group of octogenarians still listening to the Beach Boys and, why not, surfing their retirement away!
 

Comments

Submitted by Michael Gerdts on

Belonging to the fastest growing group I suggest we look at our employment policies as well. "Early " retirement at 60 or 65 years of age seem to me rather inappropriate looking at the challenges of aging societies and a tremendous waste of experience and expertise. Politicians and trade unions are slow in understanding this.

Submitted by Wolfgang on

Dear Michael,

you are absolutely right. If you look at these inevitable trends it is absolutely counterintuitive to lower the retirement age. It also seems very inconsistent with previous policies which raised it to 67 years.

However, I think we need to overcome the notion of "retiring" more fundamentally. The current debate is very much driven by a 20th century mindset which assumes that people have to do for many years an unpleasant job until they earned their retirement. Today, most people actually enjoy their work and (if they are not involved in manual work) could do it well beyond the traditional retirement age. If we all paid a little more attention to the quality of management then you could get to a situation that people actually don't want to retire. They may work less at a certain age but still remain engaged.

Wolfgang

Submitted by Joana Maria on

Two very interesting comments from Michael and Wolfgang.
I partially agree: we should continue the debate about people retiring at the age of 65 or 67 and how this puts a huge burden on young(er) tax payers.
Nevertheless, we should keep in mind that people staying longer in their jobs will undeniably create a bottleneck for youngsters willing to take higher positions (and many of them do have the necessary qualifications), but they can't due to the fact that the senior management does not want to leave the job.
This can be seen in the example of Lufthansa. Many Captains or - in general - older pilots really enjoy their jobs and don't want to give it up. This causes fresh pilot graduates to find themselves in waiting line, often serving as stewards as long as they cannot commence their duty in the cockpit.

Submitted by Wolfgang on

Actually, more people at work do not necessarily mean more bottlenecks and fewer opportunities for the younger generation. Otherwise, countries with a large workforce would be worse off than smaller countries. But in Europe, Germany has the largest workforce and also low unemployment, especially among the youth. The cake is not fixed, it keeps growing! There are, however, some sectors where the opportunities are more restricted. I am surprised, however, that Lufthansa pilots are a good example. Weren’t their striking to maintain their right to retire early? And if young pilots don’t have sufficient opportunities in Germany they would have in other parts of the world where airlines are expanding rapidly, especially in Asia.

Submitted by Katharine Frase on

This change in demographics also challenges business models across many industries. Not only does the assumption of "tax young workers to provide for the elderly" fall apart, but even life insurance and bank investment assumptions will have to change. So many of our business practices are grounded in the pyramid model! On the positive side, perhaps retailers will stop designing clothes only for the teenagers.

Submitted by Wolfgang on

Nice points Katharine and I will also look forward to the new fashion designs.

Wolfgang,
Very true. Developing countries have taken to educating women and the higher the grade attained by a woman, the lower the number of children she gets. This in itself not just "less fertile" is a major contributor to population control. Hence the emerging shape.

Submitted by Wolfgang on

Well put Ndemo. Women's education and urbanization are among the greatest predictors of the number of children per family. Both trends will continue to rise rapidly, especially in Africa.

Submitted by Anders Ronquist on

Thanks Wolfgang for an interesting article, and for ditto responses to the same. Let us use this new demographic scenario and the "barrel" to inspire our organisations to prepare better for the aging and - still - working "grandparent" group. There are tremendous opportunities for creative and productive mentorship schemes (having older colleagues supporting younger ones and vice versa) that could help our organisations and businesses get better results and continuity by combining new talent with seasoned expertise.

Submitted by Wolfgang on

Well put Anders, especially as the nature of work is changing as well. Even though our brains are said to reach their peak in terms of "raw power" at age of 24, the growing dominance of "White collar jobs" is providing ample opportunities for people to work beyond the traditional retirement age. However, policy would need to adapt and change the binary approach to work and retirement.

Submitted by Tom Achoki on

It would be interesting to project what this will mean in terms of healthcare costs..I suppose not all these old guys will be healthy. Not to mention the fact that lifestyle diseases are on the rise in these emerging economies where the population growth is expected..

Submitted by Wolfgang on

Tom you are right that there are new pattern of diseases which come with an ageing society: many emerging economies are facing a "dual burden", communicable diseases (Malaria, AIDS, etc.) are still high even though they are declining while non-communicable diseases (diabetes, cancer, etc.) are rising (see here the example form Kenya: https://blogs.worldbank.org/africacan/punished-twice-kenya-s-dual-health-burden).

Everything else being equal, healthcare costs are set to raise rapidly. At the same time, this sector has so much waste in the healthcare that you can get a lot of efficiency savings with new and smarter systems: (see: http://blogs.worldbank.org/futuredevelopment/can-computers-outperform-humans).

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