The secret benefits of ageing workers
Just what is the impact of an industrialised, wealthy country with a falling, ageing population? And can this ever be a good thing?
Investors often fret over demographic trends. They steer clear of countries with falling populations like Japan. The reason is an assumption they cannot grow. And you can see the logic: total GDP, after all, is output multiplied by the number of workers. So it follows that this measure suffers if you have fewer people. Ageing populations are also perceived to be less innovative and dynamic. Factor in the healthcare costs and the negative points begin to mount up. But maybe, though, that’s not the whole story.
The Benefits of Ageing
According to Haruhiko Kuroda, who is a Bank of Japan governor, rapid progress in robotics means:
we might need fewer workers than in the past.
Indeed, this is something I’ve written about before:
Politicians need to make sure that society can share the benefits of robots and automation. And the easiest way to do this is via a more equal allocation of time. In Britain, the proportion of our lives we spend at work as opposed to sleeping, in education etc. has shrunk. Its fallen from about 25% a hundred years ago, to 10% today. If that percentage falls more thanks to computer-human symbiosis, then everybody can gain.
Plus as pensioners cash in their savings, this increases demand for labour-intensive industries. These include healthcare and leisure. The result is that this will kick-start entrepreneurship. Kuroda is so convinced of his idea that he reckons ageing nations might outperform younger ones. While the results so far from Japan don’t defend this, yet anyway. This is uncharted territory. We haven’t yet observed an example of an industrialised, wealthy country with a falling, aging population before. My optimistic prediction: it won’t be so bad after all, and it may actually be of benefit.
Photo by Marco Bianchetti on Unsplash