An elderly man manages his store selling fresh fruits. Copyright: World Bank/Samuel Goh
If demographics really is destiny, then we have much to celebrate. Healthier longevity is one of the world’s great success stories, underpinned by the remarkable gains in life expectancy globally over recent decades.
Nevertheless, demographic shifts bring a host of challenges—and opportunities—across social protection, health care systems, labor markets, economic growth, and other areas. By 2050, one third of the world’s population will be over 60 years of age – and 8 out of 10 of them will live in low and middle-income countries (LMICs).
The speed of aging in these countries is extraordinary. In France, it took close to 115 years for the percentage of the population over 60 to double from 7 to 14 percent. In Vietnam, the same leap will occur in just 15 years. Given that high-income countries such as Japan, Korea and across Europe are struggling with complex aging challenges, it would seem even more challenging for LMICs facing resource constraints.
But LMICs have the advantage of time and the ability to learn from others. Here at the World Bank, we are committed to helping countries take a ‘grown up’ approach to their growing elderly populations.
Foundational steps, no matter how small, are crucial, considering the high costs of inaction and the potential positive spillovers. A recent analysis of engagements on aging by the World Bank yields important lessons for LMICs facing aging populations. The most important overarching lessons are highlighted in three new briefs on long-term care, income security for older adults, and productive longevity.
1. Aging has profound implications for economic growth and fiscal sustainability
As populations age, countries have fewer workers and possibly lower productivity, which can lead to slower economic growth and lower public revenues. As if these challenges were not substantial enough, aging populations also increase the demand for health care, long-term care, and pensions, placing pressure on public expenditures. Just as we as individuals are reluctant to face our own aging, governments often fail to prioritize these interconnected, long-term challenges. Fortunately, there are several ways to tackle these challenges.
One approach is to offset the impact of aging by implementing policies that boost labor participation and productivity. A World Bank engagement in Thailand explored opportunities by promoting productive longevity, female labor force participation, productive migration, and lifelong learning. Similar policies were explored in Vietnam and Uruguay, among other countries. Migration also holds promise, especially through global skills partnerships that address workforce gaps at home and overseas. Modeling future long-term care and pension expenditures can help us explore reform scenarios to manage rising costs while ensuring that benefits reach the most vulnerable.
2. It is imperative to transition from siloed approaches to a multisectoral agenda
While aging presents interconnected challenges, it also presents cross-sectoral opportunities. The World Bank is emphasizing a multi-faceted approach. Notable examples include integrating pension reforms with initiatives promoting productive longevity. Similarly, fostering long-term care markets not only improves care access for older adults but also helps increase labor participation among their family members and unpaid caregivers. In Macedonia, for example, the development of home- and community-based care services is expanding coverage and providing caregivers—especially women—with the opportunity to join the labor force if they choose. Romania is another country where World Bank teams have been taking a holistic approach, including providing technical assistance to address the state of long-term care services as part of a broad engagement that covered health services for older people and the pension system.
Figure 1. Interacting policies to address aging
3. Aging is best understood as a lifelong process
Rather than perceiving aging as discrete changes in the life cycle, such as the transition from employment to retirement or from health to frailty, it's crucial to recognize it as a continuum. Solutions to the challenges of societal aging should adopt this perspective. For instance, investing in preventive health care can help contain the increasing demand for aged long-term care. Additionally, early investments in education or ‘human capital’ can support longer and more productive working lives while enhancing income security. Our programs in Nepal and Pakistan have focused on improving literacy and equipping students with foundational skills for life-long learning in the future.
4. Gender inequalities are entangled with aging challenges
Informal caregivers often reduce their paid work hours or exit the labor force entirely due to caregiving responsibilities, resulting in reduced income and pension contributions. While both men and women caregivers are affected, women are more likely to take on familial caregiving roles, exacerbating gender disparities in the labor market and access to pension systems. More needs to be done to raise this awareness and build corrective social policies – as countries such as Chile have done, covering for maternity breaks in their pension contribution systems.
Figure 2. Overarching insights for the aging agenda
Source: Authors own work
As the number of people aged 60 and older in LMICs is projected to surpass one billion within the next five years, profound social changes and innovative approaches are needed to ensure that longevity is a blessing and not a curse. Just as ‘it takes a village’ to raise a child, it will take a network of social policies across communities and between countries to make this happen.
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