We're all acquainted with the aging graphics is pyramid form:
the distinction this type of charts makes between male and female is not always helpful -especially not for the point I try to make. Instead, let's take them together and see what happens if we group them together, and follow the total population at working age (16-65).
In the charts beneath I took Spain as an example for its dramatically high youth unemployment (40%). The green bars reflect the population at working age, grey at retiring age and the blue bars reflect age groups under 15 years. The first chart is the population by age in 2000, but for the color coding I reflected the situation in 2010 (so the age group 5-9 in 2000 are at working age 15-19 by 2010). The red bars roughly indicate the % unemployed within the age category.
Being a positive guy, I immediately see two reasons to be optimistic about the future of Spain:
- while the ratio of working people vs. retired people (green vs grey) will indeed rise dramatically, the ratio of working people vs. people who need care (green vs grey+blue) will hardly change (from 1.75 to 1.21). This is stretching it a bit, of course, since retired people cost much more to society than very young people -who are being taken care of by the parents. But then, we might expect that the pension system such as we know it will collapse somehow and that children will partially need to take care of their retired parents in the future (not that I like the thought !);
- Secondly, if you look at the amount of available jobs in 2010 (the green bars) and compare this to the number of people at working age in 2050, you see an almost exact match. There would be 21.7 million jobs, for 22.57 million people -a projected 3% unemployment notwithstanding, which in economic theory equals full employment.
So does this mean youth unemployment will 'naturally' dissolve as the population ages? Not so quickly...
- Plenty of jobs in 2010 are in fact government jobs (either directly -as public servants- or indirectly -subsidized jobs). There's no good reason to believe countries will be able to keep the same amount of such jobs in the decades to come;
- This doesn't take into account efficiency gains, which in fact will reduce the number of employees needed to provide the same output (however, a completely new economic dynamic can compensate for these job losses... but no clue about what this dynamic might look like);
- With youth unemployment at such levels (40%) for -possibly- the coming decades, one might wonder whether these structurally unemployed will ever fit in the job market to take over the roles of elderly.
In short, aging population will partially resolve youth unemployment, but it remains uncertain to what extent it will do so.
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ReplyDeleteDefinitely youth unemployment couldn’t be dissolved as the result of ageing. And wnhat about rising retirement age in many European countries (currently a hot topic in Poland). The most important problem which I see from local perspective is how to provide jobs for people over 60 while creating jobs for young? Both age groups are not very welcome by employers. People between 50-65 are perceived as too old, without relevant skills, young – are obviously no experience and lack of skills, and what’s interesting … young are also ICT illiterate (according to EU almost a quarter of Europeans aged 16 and over have never used the internet). What’s worse, economy is fragile… We definitely need smart social economy solutions
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