The Key Contributory Factors to Population Ageing and the Major Consequences of
Population Ageing in Australia.
Introduction
There has been a lot of publicity in recent years for those who fear the ‘greying’ of society i.e. the change in demographics that means that the population is on average older than it once was. This has been given greater publicity than reports from the opposite point of view or regard initiatives to make changes. The Australian Bureau of Statistics in a year 2000 press release reported that death rates had decreased throughout the 20th century, although the figures they give range from 1857 per 100,000 to 737 per 100,000 for men and 1485 per 100,000 to 460 per 100,000 for women, between 1909 and 1999, and life expectancy rose by over 20 years for both sexes during the period..
Reasons for the Change
It would be too obvious perhaps to say that the main reason the main reason for population ageing is that people just are not dying as young as they once did. Yet for a number of reasons this is exactly what is happening and the oldest age group, that is those over 80, is growing fastest of all.
Better care of mothers during pregnancy meant that healthier babies were born, whether in Australia or from one of the many countries from which its present population has migrated such as the United Kingdom and various European countries as well as from places such as China and Vietnam.
Successful vaccination programmes have meant that diseases such as poliomyelitis and tuberculosis, while not totally eliminated, have been much reduced.
There have been of course many other medical advances, the treatment of heart disease, childhood leukaemia, kidney transplants and all the rest. The Australian Medical Association reported in February 2008 in its journal ‘The Medical Journal of Australia’ that despite the increasing average age of Australians the outcomes for heart bypass patients has remained constant and the mortality rate is lower than in the United States of America.
Each of these factors has made a contribution to an every increasing ageing population. Life expectancy has increased by 1.5 years since the mid 1990’s according to GlaxoSmithKline [1]In the ‘British Medical Journal’ for instance Stephen Pincock reported, in October 2006, that though breast cancer is on the increase, rates having doubled in the last twenty years, the number of survivors is rising even faster.
There have, and continue to be wars around the globe, but, although Australian armed forces may be involved, the country is protected by its relative physical isolation and so has not been invaded, nor have its cities been bombed and its civilian population devastated at any time in its recent history.
In the1950’s and 1960’s Australia was short of workers and therefore the government heavily subsidised migration. Although this policy is no longer in place on the same terms as it was, the people that it bought in, mostly now in their 80’s and 90’s, are in many cases still residing in Australia. They did not often come alone and the small children that accompanied the migrants from that time are themselves now reaching retirement age. Normally an influx of migrants will serve to bring average ages down, but the change of government policies and the consequent decrease in migration for a period has had the opposite effect. There is still of course a need for skilled workers and these are still being invited to come just as they have been since at least the1850’s, but skilled or not they will eventually retire and may call on services just as earlier less skilled migrants did. In contrast SkillClear reports that in 2004-2005 a record number of migrants came, presumably welcomed by the government, but perhaps a problem for the future. There needs to be a balance between the need for skilled workers and the future demands that these extra people will make upon available services. Will the increase of 294% compared with 2003-2004 in the number of doctors migrating and the 40% increase in the figures for nurses make a difference? Also the population is gradually spreading out across and especially to the north of Victoria, the traditional area of highest population. There have been changes in proportions of people working. The Australian Statistics Bureau in its 2001 report on social trends ‘Paid Work: Trends in Employment Population Ratios’ stated that in the years from 1980 and 2000, men’s employment rates decreased from 82% to 77%, while more women were working with women’s employment rates increased from 47% to 61%.
Another factor is the declining fertility rate. This has been happening since the1960’s and in 2001 reached its lowest ever figure of 1.7 babies per woman – a rate that is below replacement level i.e. the population is declining. Easily available and effective contraception such as the birth control pill, which has been available since the late 1960’s, have meant that women could at last have a choice in the number of children they bore and so women were both less likely to die in childbirth and were also less likely to die as the result of a botched amateur or shoddy attempt at an abortion. Added to this we have fact that the members of the ’baby boom’ of the1940’s and early fifties are reaching, or have reached, retirement age. The age pyramid of earlier years has been replaced by a demographic in which the various ages are much more evenly distributed. The ageing of a population is thus related to the demographic transition, that is the shift from a population characterized by relatively high rates of fertility and mortality to one that has lower rates.
So we can see that there has been a major shift in population trends over the last 50 years. However the trend is not a consistent one. The Australian Bureau of statistics reported a rise to 1.81 in the fertility rate for 2005, especially in women over the age of 30. A rise, but still a figure considerably below the boom rate of 1961, when it reached 3.55.
Government Concerns
Despite this the general shift in population trends has been so large that it has become a matter of concern and in 2004 GlaxoSmithKline produced a report on the subject ‘Submission to the Productivity Commission Study of the Ageing of Australia’s Population’.[2] This followed the Australian Treasury’s Intergenerational Report of 2002, a report which some perceived as being excessively gloomy. There had earlier been, in 1999, a conference whose theme was ‘the Policy Implications of the Ageing of Australia’s Population’. The GlaxoSmithKline report states in its introduction that its findings are somewhat at variance with those of the Intergenerational Report. Their report quotes estimates that by 2051 there will be 6.6 million Australians over the age of 65. This is an increase of 1.2 million over a twenty year period. The Australian Bureau of Statistics reported an average life expectancy in 1999 of 76.2 years for men and for women the figure is 81.8.
World View
Leonid Gavrilov and Patrick Heuveline, in a 2003 article entitled Aging of Population, speak of ageing populations as being a global rather than a regional or country concern. Japan and Western Europe are the areas where the proportion of the aged in the population is at present at its highest. Australia, New Zealand, the United States and Canada also have fertility levels that are below replacement levels, but each of these places have high levels of migration. Generally though the trend is a worldwide one and as such it requires global initiatives rather than lots of individual ones. There are very real concerns about the world being a vast nursing home. Gavrilov and Heuveline see the problem as at present being mainly one of industrial countries, but they predict that eventually it will be a common situation throughout the world. They define the ageing population as anyone above the age of 65 years and state that a population can be considered relatively old when the percentage over 65 reaches 8 to10 percent. The CIA World Book page on Australia gives the following population breakdown:-
0-14 years: 19.1% (male 2,014,230/female 1,920,604)
15-64 years: 67.5% (male 7,005,588/female 6,895,817)
65 years and over: 13.4% (male 1,226,432/female 1,538,185) (2008 est.)
That is a rate considerable over 8%. This means of course, however optimistically we may look at old age, an increase in the elderly dependency rate, that is the ratio of retired people being supported by the working population. Gavrilov and Heuveline report that in the year 2000 very few countries i.e. Germany, Greece, Italy, Bulgaria, and Japan had more elderly people than young ones, but that this number would rise dramatically and, so they predict, would include all developed countries by 2030.
The age of the average Australian in 2008 is 36.8 years according to the Australian Bureau of statistics. The CIA World Fact Book puts its slightly higher at 37.4. This compares with an average in the United Kingdom (2006) of 39, according to National Statistics online, 37.1 in New Zealand as recorded by the World Fact Book, 25.1 in India and only 15 in Uganda. The average median age world wide is 36 in developed countries and is double that of the African nations. We see from these figures that the problem, if it is such, is one of affluence and relative good health. The CIA World Fact Book reports after all that Australia in the1990’s had one of the world’s most rapidly growing economies. The Australian Bureau of Statistics for instance records any death as premature which occurs before the age of 78, while there are countries where the average life span is only in the 40’s.
The differences in figures between those of Australia itself and the CIA figures may seem small, 0.6 years, but may be significant when it comes to assessing forecasted needs. The CIA also gives figures of 11.9 births per 1000 as against 7.62 deaths and a migration rate of 3.72 per 1000, which gives an increase of 8 per 100
In 2002 the United Nations produced a report ‘World Population Ageing:1950-2050’.It concluded that ageing in the world population was unprecedented and that during the twenty-first century there will be an even more rapid ageing process than that which occurred during the 20th century. It was they said, a global phenomenon, but that different countries were at different stages of the process. The conclusion was that those where it had begun at a later period would experience rapid change, so much so that they would have little time to prepare for it. Also this would be most likely to occur in countries that were less stable economically. The purpose of the Second World Assembly on Ageing was said to be the adoption of a proposed international strategy which would deal with social, cultural, economic and demographic realities. The aim was to pay especial attention to the situation in poorer countries. The conclusion reached in the report was that not only was the older population increasing in size, but the younger one was decreasing at the same time. By 2050, so they predict, for the first time in history the older population will be larger than that of their younger brethren. The group with the largest increase will be those over 80. Currently this group is increasing in size at the rate of 3.8 % per year. They occupy 10% of the older age group, the larger proportion being women and, as a general rule, this is the group likely to require the most support in both time and money, because of their average increased fragility levels, both physically and mentally. Demands upon full time care facilities, whether at home or in care homes and nursing homes will increase as will the need fro occasional or part time support. By 2050 the United Nations predicts that one fifth of the elderly population will be in this very aged group. Although many will continue to lead independent lives, this will nevertheless have far reaching effects on society and the intergenerational bonds that hold it together. The World Health Organization predicts a large rise in cancers, heart disease, type 2 diabetes, senile dementia simply because people are living long enough for these to develop. There was concern about the Potential Support Ratio ( PSR). That is the number of youths and adults under 65 who could possibly support one older person. In the second half of the 20th century this number fell from 12 to 9 and will continue to fall as time goes by. The U.N. prediction is that it will fall as low as 4 by 2050. Jill Curnow claims that the age based dependency ratio is inaccurate, because it equates the degree of dependency of all the ‘dependent’ age cohorts. A retired person may own and maintain a home, drive a car and be capable of doing their own shopping and cooking They may also assist in, or even run the family business, care for grandchildren, and work as volunteers in the community .The Australian Bureau of Statistics, in its 2001 report on Social Trends reports that the value of unpaid work carried out in Australia in 1997 was estimated at $261 billion and the majority of volunteers tend to be those of retirement age and over. Older people may be financially as well as physically and mentally independent, yet, because of age, people such as this are classed as dependant statistically. Children, on the other hand, rely on others for their needs, and this reliance can continue into early adulthood to some extent. It is inaccurate to compare the dependence of a child or young person with that of a healthy and independent elderly person.
Economically there will be huge pressures on the job markets, on pensions, taxation, savings and so on. Traditionally countries such as Australia, with a higher than average per capita income, are less likely to have older members of society in the work force. In the most developed countries only 21 % of males aged 60 or over are earning. This compares to 50 % in the third world according to the United Nations report.( page xxxi)
Figure 1 Potential Support Ratio per Elderly Person
Socially there will be effects in such areas as housing. At present in more affluent societies many elderly people continue to live, either as a couple or alone, in a house that one was home to several more people. Should they be positively encouraged to downsize or to move in with other family members?
Politically an ageing population can affect voting matters and fair representation.
The following chart shows the percentage of elderly people, i.e. those aged 65 or above, from a low of 8% in 1950 to a predicted high of 21% in 2050 based upon current figures.
Figure 2 Percentage of world population aged 65 or over
This represents an increase in the elderly population from 200 million to 600 million in 50 years. The increase is some 2% per year, a greater increase than that found in the general population.
Consideration must also be given to the food available to feed an increased population of whatever age. The United Nation report concludes by saying the situation is a challenge for all society.
Financial Consequences
As Australia looks to the future there are obvious implications for the kind of social security schemes where the salaries of current working age people help to pay towards the care of the older members of society. Cliff Stoneman reported in April 2002, in his article ‘The population debate – Recruitment – Australia faces problem of aging population’, that without a policy change there will be economic decline by 2027. He believes that retirement ages will and must rise. He also raises a concern about the number of young Australians who are leaving the country because of possible financial incentives elsewhere. The suggestion is that most businesses haven’t yet come to terms with this as a possible problem for the future. He compares this to China which he says is targeting skill training among the working population.
Stoneman quotes figures of an average age for Australians of 46 by 2050 and there then being some 2.8 people in ht every elderly group who are 80 plus.
For instance someone who has a company pension and intends to retire at 65 is going to take large amounts out of that company in the years that follow. As Associate Professor John Evans said in September 2007 ‘ Longevity issues are a major issue for the future, as the longer people live the more capital they need.’ There may be need for public sector pension reform as well as study of ways to optimize funds for retirement, and consideration of the tax implications for an ageing population both for the retired and the working population. Curnow quotes figures such as the fact that older children can be much more expensive than younger ones and that 47% of those aged between 15 and 24 live rent free in the family home. According to figures from 1996 almost half of those in their early twenties are still living at home and even among those of from 25 to 34 some 12% are still living at home according to the article by R. Gittins, ‘Knowledge – parents pay a high price’ of February, 2000. Curnow also quotes a figure from 1995 of one in five people of working age receive some kind of social benefit according to Birrell et al in their ‘Welfare Dependence in Australia’ of 1997. The Australian Bureau of Statistics, in a press release of June 2001, stated that the proportion of people of working age who were in receipt of income support increased from 4 per cent in 1969 to 21 per cent in 1999. This was because of a number or reasons including a decline in full-time employment as well as increased levels of unemployment. There were also increases in the number of people participating in education programmes of various kinds. Yet the aged based dependency ratio is falsely based upon the concept of people being fully independent from age 15 and above.
Changes that need to be made
Companies as well as the govenment need to plan strategically for the inevitable changes that will occur.In this way they can gain an advantage over global competitors. Those already employed need to be effectively managed and given regular and adequate programmes of training and development. There needs to be an adoption of efficient new methods of attracting young people of the highest calibre, especially those who are presently leaving the country for work overseas.
CPA Australia suggests that the government must reduce personal tax rates or else increae the thresholds so that the tax system will be able to meet fresh challenges.
Consideration needs to be given to the adequacy and sustainability of any pensions and other forms of retirement income as well as to the financing of health and other services fro the elderly. New financial products which address increased the situation of increased longevity need to be developed such as Lifetime Health Cover, introduced in July, 2000. this has led to More people are now covered by private health insurance than in the 1990s. The rise has been rapid with a leap from 32 per cent to 46 per cent in just 6 months in 2000.
Conclusion
Is an ageing population necessarily such a bad thing? Older people are much more than cheap babysitters. Jill Curnow in her 2000 article ‘Myths and Fears of an Ageing Population’ describes the trend as a ‘slow social trend’ and not one necessarily to be feared. While not ignoring the fact that some place a stress on resources because of their physical and mental needs the majority are still able to make a positive contribution to society. Curnow believes that the negatives are over reported and the positive side of the coin is relatively ignored. Charity workers for instance come mainly from this sector as do many carers, either or partners or even dependent children. Older people have life experience and time. They can offer support and advice to younger members of society as well as, in many cases, being able to continue to use the skills they have learnt as well as passing these on. The average person in a developed country is far fitter than their grandparents. Should they really expect to live a life of leisure just because they have reached a certain age? When the older generation are the larger group who will do all the jobs if the retirement age remains the same? On average women outlive men and among the very elderly this is particularly so. This needs to be allowed for in long term plans.
Consideration needs to be given to the accuracy of statistics when making plans such as the expected dependency ratio for instance. The present way of assessing this gives a very false picture. It needs to be assessed according to what is actually happening, rather than just obtaining crude judgements based on age alone.
Another point is that if the problem, at least in part, is due to the baby boomers and previous migration patterns, then it is a problem which will decrease naturally over time.
It is also a problem of an affluent society. There will be costs and problems, but when compared to what is going on elsewhere Australia is in a very strong position. On the positive side, the health status of older people of a given age is improving over time now, because more recent generations have a lower disease load. People can enjoy vigorous and active lives until a much greater age than did their ancestors and if they are allowed and encouraged to be productive, they can contribute economically too. It is usually only in the last few years before death, at whatever age, that a period of great dependency is reached. As the number of men who are active economically in old age decreases so the proportion of women working past normal retirement age is on the increase, but the general trend is still towards lower levels of economic independence in the elderly.
Whatever happens it seems that more than ever younger members of society will be increasingly responsible for the care of older members. This will for some mean taking in an elderly relative, for others it will mean planning on local, national and international scales, whether by the training of more nurses, the building of day centres or the reconsideration of social and economic provision generally.
This will all take time, but the situation is changing slowly and Australia has time to cope. Jill Curnow in her 2000 article predicts that by 2050 there will be only 14% young people and 24% elderly. However she also makes the point that generally countries with a relatively young population are not usually the most successful. She cites the examples of Greece, Sweden and Italy where average at present is older than in Australia. These are all countries which can be judged to be successful when compared with countries such as Papua New Guinea and Indonesia which have only 5% of people aged 65 or over. So although the Australian people and government, local and national, may have concerns, it seems that the picture may turn out to be not as black as it is being painted and that, though adjustments need to be made, matters can be kept under control. The Australian Psychological Society revealed in a 2007 survey that more than 60% of Australians are actually looking forward to their old age and 76% of those surveyed valued the contribution that the elderly are able to make to society.
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[1] GlaxoSmithKline report, 2004 , page 5
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