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OECD warns ageing population will hit global growth
Global economic growth will decline to about 1.7 per cent a year over the next three decades unless older people are encouraged to work longer to offset declining birth rates, according to the Organisation for Economic Co-operation and Development. A study into the impact of an ageing workforce on labour markets warns of rising wage inflation, increased pressure on public finances and declining growth unless the demographic time bomb is defused. By 2050 there will be an average of more than seven older, inactive people supported by just 10 active workers in OECD countries, compared with a ratio of four to 10 in 2000. The pressures on public finances and welfare systems will be even more intense in Europe, where the ratio of active to inactive workers is expected fall to one to one by 2050, says the report. It estimates that GDP growth in OECD countries will be 30 per cent lower than the rate achieved between 1970 and 2000 unless more older employees work longer to overcome skill shortages. âAgeing on this scale would place substantial pressures on public finances and reduce growth in living standards,â it says. The study calls for an overhaul in labour market attitudes, pension arrangements and welfare benefits to discourage employees from opting for early retirement. Raising the age at which state pensions are paid will not work on its own, if countries also provide generous unemployment and other welfare benefits, making it less attractive for older people to remain in work. âIt is essential,â says the OECD, âthat older people do not face a large implicit tax if they choose to continue to work.â Employers also needed to change their ânegative perceptionsâ towards older workers. Flexible and part-time working opportunities must increase while more training would enable older employees to develop new skills. The problem of higher wage and non-wage costs, such as health insurance, which rise more steeply with age than productivity, will also have to be resolved, says the report. It criticised companies for adopting mandatory retirement ages but warned that employment legislation to protect older workers could be counter-productive if it discouraged employers from hiring older age groups. Last year it said âless than 60 per cent of population aged 50 to 64 had a job in the OECDâ.
Posted by: lotp 2005-10-11 |
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