Trends for 2010: #1 – Demographics

This is the first in a series of trends to think about for 2010 and beyond.

Population trends are predictable decades in advance, similar to an anaconda digesting a rat, today’s 20 year olds, will be the next decades 30 year olds and the population pyramid predictable evolves over time barring major negative events like war, famine or disease. Population growth is forecast by the UN to stabilize at just over 9 billion by 2050 from approximately 7 billion today. The composition will change dramatically in two ways. Firstly, the population in the developing world will grow much faster than in the developed, this is simply because parents in the developing world are, on average, having more children. Whereas a parent in the developed world has, on average 0.8 children today (implying the population will decline) a parent in the developing world has 1.1 children (implying population growth). The difference is stark, how much of the population growth will be due to population growth in the developing world? All two billion of it. The population in the developing world will be basically flat. When you consider that population growth is a key contributor to economic growth, this is a crucial statistic.

According to World Bank predictions, by 2030 just the middle class in the developing world will exceed the entire populations of the US, Europe and Japan combined.  Secondly, the population in most developed countries will age significantly. South Korean is the most extreme example, today there are 4.5 working age Koreans, for every Korean over 60. In 2050, that ratio will fall dramatically to 1.2, meaning there is roughly one working Korean for every Korean over 60. This will have a major social impact from demands on healthcare to treatment of pensions. If you think Korea is an anomally, consider that the average age of a person on planet earth today is 29 years old, in 2050 that average will be 38 years old.

Whilst these trends will take time to be fully felt, the implications are likely to be significant and require us to start to think about the implications today. Medical expenses and pensions will become a significant part of GDP, and the issue of pension ‘time bombs’ have been frequently discussed. In addition, greater immigration of people to achieve a greater balance between old and young might be desirable, either retirees moving to countries where there is a greater abundance of potential young staff to look after them, or perhaps more likely young people moving to areas where there are more jobs providing services for retirees. Increasingly, projects will have to utilize global virtual teams to get the mix of talent required at competitive rates particularly in countries with aging populations.

If you are interested in exploring this topic further, the UN publishes a comprehensive, rich database here, which was the source for most of the data in this post and allows you to explore their population forecasts in detail.

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