Sunday, July 5, 2009

Developing world faces age crisis

New research warns of a population time bomb for developing nations as the ratio of elderly people rises faster than in the industrialised world.

A report for the French Institute for Demographic Studies says poorer states have only a short time to set up workable pension schemes.

The alternative is the prospect of vast numbers of their elderly people living in poverty, the report warns.

The trend has not begun in Africa's poorest states but experts say it will.

It is well known that the proportion of older people is rising in richer countries, where many governments and companies are already struggling to meet pension commitments.

Historic advances in medical science - such as vaccines - have been one reason, as have improvements in public hygiene, such as piped water, and the advancement of birth control methods.

But the French research, by social scientist Gilles Pison, says the trend is now hitting parts of the developing world - and at a faster and gathering pace.

Gathering pace

An indicator of the speed of this "population ageing" is the time it takes for the proportion of people over a retirement age of 65 to double - from 7% of the overall population to 14%.

In France this process took more than a century.

In China, the world's most populous country, the process has only just begun - but is projected to take less than a quarter of that time, some 25 years.

The study says economic advances that increase levels of education and global mass communications are making people change their habits far more quickly than they did in the old industrialised nations.

Education levels are rising faster in much of Asia now, for example, than they did in Victorian England.

Strapped for cash

In Vietnam and Syria, the French researchers say, "population ageing" is set to rise even faster than it is now in China. The proportion of elderly in these two states is set to double over a mere 17-year period, beginning in a few years' time.

People living longer sounds good - for now.

But it may also mean that the governments of developing countries, already strapped for cash, have only got a few more decades of having enough people of working age, who pay taxes, to set up practical retirement finance schemes.

If the French researchers are right, it means the current pension crunch in rich countries may look relatively insignificant compared with what is coming in the future for the rest of the world.

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