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Say yes to the elderly

Implications of the increase in life expectancy - Interview with Prof. Dr. Werner Weidenfeld

By Hadas Manor, Globes (Israel)

17.03.2008 · Globes (Israel)

This is the doctrine that Professor Werner Weidenfeld, Director of the Center for Applied Policy Research at the University of Munich and one of the world's leading experts on aging populations, has put all his energy into promoting. In an interview with Globes, Weidenfeld warns of the socio-economic and political implications for the Western world in 40 years time if we don't prepare properly for the increase in life expectancy, which will lead to a threefold increase in the number of seniors to over two billion. On a world that is aging.

Today there are 675 million people over the age of 60 in the world. Yes, that's all.

But in 40 years time, thanks to awareness about issues such as nutrition and quality of life, and developments in medicine and biotechnology, the number of people aged 60 and over will rise threefold (!) and there will be more than 2 billion people in this age group. This has far-reaching socio-economic implications, well beyond healthcare system costs and pensions, researched by Professor Werner Weidenfeld.

Weidenfeld is Director of the Center for Applied Policy Research at the University of Munich, the largest university research institute in Germany and one of the largest of its kind in Europe, and is considered one of the world's leading experts on socio-economic implications of aging world populations. He also advises German Chancellor Angela Merkel as a strategic expert. He previously served 12 years as coordinator of German Government policy vis-à-vis the United States, and in this capacity, set up policy centers for Germany-United States and United States-Europe relations at several leading universities in the United States including Harvard, Georgetown, Berkeley and Brandeis, which he defined as the leading Jewish university in the United States.

The interview was held in Israel, during his visit as a Board member of the Israeli company Shahal, to mark its 20th anniversary.

Until half a century ago, people over the age of 60 were considered old. Today, at least in Western industrialized democracies, this is the average age of the leaders, managers and top professionals and frontrunners in their respective fields.

What will happen to us with the aging of the population? How will it change our lifes?

"Studies on the rising life expectancy conducted at our institute, C·A·P (Center for Applied Policy Research), casts a heavy shadow over the continued existence of Western society as we know it.

The most intriguing line is that in 40 years time, in 2035, there will be more elderly people than young people, and this has economic, social and political implications."

From now on say: middle aged.

"The very definition of t he world 'elderly' in relation to people aged 60 and above, is today detached from reality, says Weidenfeld, himself 55. And indeed, the time has probably come to change the name of this age group, say to 'middle-aged' because, as he says, "there is almost nothing that this age group is too old for, because in a technically advanced, modern Western society, almost none of the work is physical. Mental capacity is the most important factor in most jobs, all data and information is computerized, so that instant memory becomes less and less of a valued commodity, and most importantly, it is a society in which experience and insights accrued with age is of more value than ever before."

What is in store for us when the population of those 60 and over constitutes more than 2 billion people in the world?

"In less than 40 years time the expression that "the world belongs to the young" will be a vague slogan of bygone times, detached from reality, and if Western society does not prepare itself properly for the rising life expectancy, the term "social bankruptcy" will become the prevailing precept of the day.

Only leaders who can identify tends and make long-term decisions accordingly will enjoy long-term political success. In Germany, for example, the world's third largest economy, as well as in other developed Western countries, the implications of the phenomenon of an aging population is at the heart of those governments' agendas – because of the far-reaching changes that is expected to bring about in all the socio-economic systems.

One of the changes that is already starting to happen in some sectors and countries is the introduction of flexibility to the pension age, so that people can choose to retire at the age defined by law or continue to work as long as they are fit and their experience and talents can make a contribution. Some have even continued to work to the age of 80 or more, such as Supreme Court judges and university lecturers."

How will an aging population affect trends that are loaded with sophisticated technology?

"From a consumerism perspective, this will help to create a new generation of electronics and communication products that will hide the sophisticated technology instead of glorifying it. Instead of the question 'how to deliver more sophisticated and innovative technology', the next generation of developers will ask 'how to simplify the use of devices'. This trend will enable to appeal to a growing audience that – at a certain point along the way - stopped to understand or stopped to want to understand technological innovations.

Because the population that is unable to use new devices is rising steadily the market for simple devices such as a mobile phone with a couple of simple buttons or user-friendly computers, will continue to expand. Smart companies are already starting now to simplify the devices of the future, and this trend will continue, because even a 90 year old in the year 2050, having grown up in the age of computers and the Internet, will not be able to keep up with the fast pace of changing technology in the last decade of his or her life. And therefore, the first companies to offer simplicity will be the first to win over this audience.

What can also be expected is the establishment of information, referral and service centers for seniors. The centers, for a monthly subscription or on a pay-as-you-go basis, will do all the things that the elderly need including ordering statements from local authorities, making doctor appointments, ordering tickets for concerts etc."

How should countries prepare for an aging population from a socio-economic perspective?

"The way a country involves its seniors in its society will affect the vitality of the society and its economic structure. By vitality I mean: Can you involve seniors in society or do you leave them at home. In this context, I am working to integrate remote medicine, a field in which Shahal also provides services in as many health services as possible in the Western world. Telemedicine, for example, monitors a person's physiological and health data remotely, so that a doctor can provide medical instructions over the phone at any given moment. Therefore, people can be released from hospital and live in greater comfort at home.

The existing economic legislation in the leading Western countries was formulated at the beginning of the 20th Century, at a time when people did hard physical work in the manufacturing industry and their physical capability cane to an end a little after the age of 50. Today, people work in offices, in advanced industry, in basic industry that is entirely mechanized, in high-tech, in occupations and services that require thinking, and there are people with vitality who are no longer used in the labor market.

The key question today has to be: does society in each country reflect this change in the proper manner, and does it provide a solution?"

What is a worthy solution in your opinion?

"Do not force people to continue to work. Most Western countries have changed the laws and changed the pension age defined by law. Rather, enable an interim period in the legislation, in which people can decide whether to retire at the pension age defined by law or to continue working in a full or part-time capacity. This issue will be raised and discussed with growing vigor in all Western countries in the coming years."

What will the stage be that follows the interim period?

"Legislation will enable one person to retire at the age of 52 with a reduced pension, while someone else at the age of 75, who still feels in possession of all his faculties, may continue to work and to earn more than is due to him from his lawful pension. This will lead to a new flexibility in the labor market and in work patterns, and of course, will make the labor market more flexible for all age groups."

Managers and companies will rely on the mental capacity of 75-year-olds?

"Studies have clearly proven that people preserve their mental faculties when they continue to work, Leading company directors are 75 years old because the have the opportunity to continue working. In Germany, university professors decide at the age of 65 whether to continue working, and if so, on what scale. I have friends of 80 who are at full strength and some who at 65 collapsed physically and even died young."

What will the economic implications of an aging population be on the world as a whole and on Western countries in particular?

"The whole issue of health becomes more important in an aging society, and it is quite possible that the percentage of people with chronic illnesses will grow. In economic terms, it is becoming an extremely important issue in national budgets.

In this health market, for example, one of the aspects that is continuing to gain ground in the European Union is that of remote medicine due to pressures to reduce health costs. By incorporating high tech one can resolve people's fears because they know that a professional is dealing with them. I think that remote medicine is one of the key answers to an aging society, otherwise people will go and live in hospitals. In Germany, for example, people who enrol in a health service today, check whether it includes a telemedicine service."

You claim that an aging society is a model of a compensating society that combines two conflicting trends, what do you mean by that?

"The 'model of a compensating society' addresses the fact that almost every sphere has conflicting trends. For example: Globalization and the opposite trend to preserve local dialects; a secular-scientific society is concomitant with the strengthening of religious feelings. In the realm of an aging society we see a trend towards the use of high-tech, and conversely, the growing perception that people forge their own life: personal service, empathy and casting off pressures. By the way, as a result, I believe that in another decade at most, remote medicine will be a comprehensive service in Western countries, and in Germany this may be in place in six years time already."

Global aging figures

  • For most of human history until about a hundred years ago, the elderly population of 65 and over never exceeded 2% to 3%. Today, in the developed world, this age group constitutes 15% and in 2030 is expected to reach 25%.
  • In 1980 the median age in the oldest society in the world (Sweden), was 36. In 2030 the median age for the entire world's population is expected to reach 45. In Japan and in extensive parts of Southern and Eastern Europe the median age will be over 50.
  • The developing countries will remain much younger than the developed countries for the foreseeable future due to a shorter life span and much higher birth rates. In contrast, some developed countries – including Germany – have a negative population growth rate.
  • Predictions are that in the next 50 years 97% of growth in the world's population will be centered in poor developing countries. The population in the 48 poorest countries of the world will increase three-fold by 2050. Identically, already today one third of the world's population growth can be attributed to the birth rates in India and China.
  • The developing countries will are also aging and that is why the term describing this phenomenon called 'global aging'. In the first half of this century, several key countries in East Asia and Latin America – including China, South Korea and Mexico – are expected to reach similar levels to those of the developed countries in terms of the number of seniors which are economically dependent on the state.
  • The main factors for this phenomenon are the global decline in the family fertility rate from five children per family in the mid 1960's to a world average of 2.7 today. In the developed countries the average is 1.5, much less than needed to maintain the present ratio of youngsters to seniors.
  • Since the Second World War the average life span in the world has risen from about 45 to 65, so that in the space of the last 50 years the figure ha leapt ahead more than in the entire 5000 years that preceded it. In the Western world alone the average life span rose from the mid and late sixties to the mid and late seventies in many countries – including Japan and Italy – to over 80. In some African countries the average age even today (due to AIDS and war) remains at 40 to 50.
  • Factors exacerbating the financial burden caused by global aging are: early retirement, a significant rise in health expenditure, personal savings that are insufficient for the pension years which are getting longer and a steady decline in the family support structure.
  • The main challenges posed by global aging are a growing fiscal burden, estimated at another 10% of the GNP on average in the developed countries over the next 30 years. The estimates show that this will require to choose between destructive tax increases, politically unfeasible social cuts or fiscal deficits that will erode countries' reserves and harm their economic growth.
  • As the labor force ages shrinks, the developed countries are liable to suffer from a labor shortage, which in turn will drive a new type of migration pressure, oblige countries to invent new micro-economic models and threaten financial stability, particularly in countries with a very low birth rate, first and foremost Japan and Germany.
  • The social and cultural implications also raise several questions: the familial changes for example, when there are more grandfathers and grandmothers than grandchildren, re-adoption of programs to encourage higher birth rates, aging voters who will probably block reforms to cut welfare budgets, the impact of aging savers and investors on risk taking and entrepreneurship, the impact on migration patterns, on the fiscal balance, on movements of capital, on voters' attitudes and on defense expenditures.

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