When one discusses the rapid aging of populations, the discussion quickly tends to turn to Japan - and for good reason. As of 2016, more than a quarter of Japan’s population is now older than 65, whereas in the US that figure stands at only 15%. As an extreme example of this dire situation, Business Insider has reported that for the last six consecutive years, adult diapers have outsold infant diapers in Japan.
Indeed, the situation in Japan is complicated as there are many factors that have contributed to this crisis, some of which stem from cultural and societal aspects unique to the country. Among them are, of course, attitudes regarding gender roles in the workplace and the general rigid corporate structure to which younger generations have had to adapt. For example, workers have traditionally expected lifetime employment in a single corporation, thus increasing inflexibility in the labor market. Furthermore, Japanese employees work some of the longest hours in the world. The OECD reports that 22% of Japanese workers work 50 or more hours per week, which is exactly double the rate as in the US, and nearly four times higher than that in certain European countries. It need not be said that this phenomenon has affected the ability of young people to start and raise families, leading to what many have described as a fertility crisis. Furthermore, as a result of this fertility crisis, experts have gravely warned of an impending “demographic time bomb” - where falling spending leads to a shrinking economy, thus impeding the future growth of families, further depressing the economy further, and so on.
However, this phenomenon is not unique to Japan. While it is currently the most serious in that country, most experts agree that many industrialized nations will have to face similar or worse problems in the near future. It is a fact that populations in the Americas and Europe are aging rapidly. In the latter continent, birthrates have been at or below 2.1 children per woman - the threshold known as the replacement rate - for decades. Without taking immigration into account, this will lead to immediate population decreases.
The most obvious consequence of a shrinking population is a smaller active labor pool. Indeed, while this might drive wages higher, it will be at the cost of diminished year-over-year economic growth. This is exacerbated by the decreased productivity of older workers, who will presumably have an even harder time as technology in the workplace advances far beyond levels for which they were originally trained. However, perhaps most importantly for Europe, aging populations will place an ever-increasing strain on social services such as healthcare and social security, which are generally quite extensive in these countries. As the proportion of working young people who can pay into these systems decreases, such nations will have to face tough decisions about what the best course of action will be to prevent the total breakdown of the entire welfare system.
Regardless, in order to avoid an eventual economic catastrophe, Europe will have to prevent its population from decreasing, either through immigration or policies that incentivize families to have more children. However, in the near future, nations will have to deal with the additional challenge of a changing climate and potentially dwindling resources. Ideally, Europe will find a way to maintain its population. However, it will have to reconcile this objective with the question of whether supporting many more millions of people at a high standard of living is really sustainable. As developing nations’ populations continue to burgeon, Europe, Japan, and North America will all have to reckon with what this will entail.