Demographics isn't destiny

Western policy makers have been grappling with the global economic crisis and its legacy for eight years. Slow growth, deflation and austerity risk becoming the 'new normal' for many countries. Faced with such pressing threats it is no surprise that profound, long-term shifts in the economy and in society are getting less attention.

Demographic change is one such issue.

The world is in the midst of a remarkable population boom, one that has gathered pace since the onset of the Industrial revolution. It is estimated that the population of the world was about five million in 10,000BC and that it had reached about 300 million by the birth of Christ. It took almost 2000 years, until the early nineteenth century, to reach one billion. Since then growth has been explosive, doubling in the hundred years to 1920, to reach two billion, rising to three billion by 1960 and 7.4 billion today. The United Nations' Population Division estimates that that world population will surpass ten billion in 2056.

In the nineteenth and early twentieth centuries the populations of the rich, Western nations boomed. Today these societies are ageing and growth in the world's population is coming almost entirely from emerging economies. 99% of projected growth over the next 40 years will occur in countries in less developed regions of the world, particularly Africa. Its share of world population is forecast to rise from 17% today to 54% in 2056. India, with its continued rapid population growth, is expected to overhaul China by 2022 as the world's most populous nation. Nigeria's population is expected to more than double in the next 40 years, to 400 million, making it the third most populous nation after China and India.

Life has become increasingly urbanized. 30% of the world's population lived in urban areas in 1950. Half do today and by 2050 two thirds of the world's population is projected to live in towns and cities. The number of so-called mega cities, urban areas with populations greater than 10 million, rose from four in 1975 to 29 today. Eight of these meet the newly created UN status of metacity, an urban area with more than 20 million residents.

The world's population is also ageing. The proportion of people aged over 60 has risen from 8% in 1950 to 12% today and is expected to reach 22% - or 2.2 billion people – in 2050. The process of ageing is most advanced in the rich world, but China, South Korea and Taiwan are moving into a period of rapid ageing. Other, lower income emerging economies will follow. The UN estimates that, with the exception of Niger, the nation with world's highest birth rate, populations will age in every country by 2050.

Population growth and ageing creates challenges. Ageing raises spending on pensions, health and long term care while population growth requires investment in education, training and infrastructure. The world will need to create more than half a billion new jobs in the next 15 years to match growth in the world's population. Heavy use of land, water and natural resources driven by a rising population threatens the environment. Some countries face de-population, others will see rapid population growth. Eighteen countries, mainly in Eastern Europe and including Russia, are likely to see their populations contract by more than 10% by 2050; thirty, mostly sub-Saharan African nations, will more than double their populations over the same period.

These are daunting changes. But we can draw some comfort from the fact that the world has done far better in recent decades than some feared in coping with population growth. In the 1960s and 1970s many influential voices warned that rising population growth would cause mass starvation, conflict and environmental collapse. The Limits to Growth, a book published in 1972, brought these challenges to a wide audience, selling 30 million copies and making it the best-selling environmental book in history.

Population growth has certainly been rapid, with the world's population doubling since the early 1970s. But far from being accompanied by famine, food production, life expectancy and incomes have risen around the world. World poverty is falling; the proportion of the world's population living on less than $1 a day (in real terms) has dropped from just under 27% in 1970 to just over 5%.

As incomes, education and child survival rates improve family size shrinks. In 1950 the average woman had five children. Today she has 2.5. The world's population is continuing to expand, but the pace of growth, at 1.1% per year, has virtually halved since the late 1960s.

History suggests that demographic change spurs innovation and offsetting behavioral and institutional change. Demography is not destiny; economies and societies can and do adjust. Such adjustments explain why the worst fears of the population pessimists of the 1960s and 1970s have been confounded.

But what changes will be needed to manage an ageing world population?

Governments and families can increase support for the elderly. But in the rich world more politically sustainable and equitable changes are those that prolong employment for older people and maintain their productivity.

Formal retirement ages have not reflected the growth in longevity of the last hundred years. In 1908 when the UK introduced the state pension life expectancy was 55 and the retirement age was 70. Today life expectancy is 80 and the state retirement age is currently 65 for men and 63 for women, although rising.

Improvements in education, health and the organization of work can also help improve the labour market opportunities available to older people. An increased focus on disease prevention, through healthier diets, physical activity and adult vaccinations, for instance against flu and shingles, can play a part.

Change is already starting to happen. In last five years the fastest growing section of the working population by age has been the over 50s. In the US I am struck by how often I come across workers in their 60s or 70s in shops, hotels and restaurants.

The challenges are formidable. To manage them requires changes in policy, behaviour and institutions. Politicians need to signal the choices involved so people have the time to adapt. But, as the experience of recent decades demonstrate, the world has shown a remarkable ability to cope with a growing population. Society is not powerless in the face of demographic change.