As the world's population is ageing, countries are rising the retirement age.

 

By 2030, 1 in 6 people will be 60 or over. This means we are living longer healthier life but it also presents some challenges.

 

Ageing populations mean a lower proportion of people in the work force, generating less income tax revenue that will be used to pay for pensions and welfare schemes.

 

In the 1960, there were 6 people of working age in the world for every retired person. By 2035 there will only be 2.

 

Around the globe, nations are unveiling plans to delay the retirement age.

 

Young men in Turkey can countdown retiring at 65 rather than 52 as they did in 2020. While young Danes may have to wait until 74 rather than the current age of 65.5.

 

More than half of the 38 OECD nations (Australia, Austria, Belgium, Canada, Chile, Czech republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israël, Italy, Japan, Portugal, Slovak, Republic, Slovenia, Spain, Sweden, Swistzerland, Turkey, United Kingdom, United States) are planning to delay retirement.

 

In many places the population is also declining outright. 23 developed countries from Spain to South Korea could see their populations halve by 2100 which adds to the demographic pressure on the welfare system.

 

However and some places the population is still booming. By 2050 the population of sub Saharan Africa is set to double. Its labour force will grow by 144 million or 30% every decade. 

 

The case of India:

 

With an average age of 29, India has one of the youngest populations globally. 

 

As this vast resource of young citizens enters the workforce, it could create a ‘demographic dividend’.

 

 A demographic dividend is defined by the United Nations Population Fund as economic growth resulting from a shift in a population’s age structure, mainly when the working-age population is larger than the number of dependents. 

 

India is home to a fifth of the world’s youth demographic and this population advantage could play a critical role in achieving the nation’s ambitious target to become a US$ 5 trillion economy. 

 

Around 62.5% of India’s working age population is aged between 15 and 59 years, ensuring that India will have a demographic advantage all the way to 2055. This is an attractive proposition for investments both locally as well as via FDI. According to CII and EY, India has the potential to attract Foreign Direct Investments (FDI) of US$120-160 bn per year by 2025.

 

Investors are already considering India as an investment hub for its skilled and young working population. Initiatives such as the Make in India program encourage manufacturing investment in India, where the workforce is a key differentiator.

 

 Several global brands see the advantages of both a labour pool and a key market in the same country, and have set up their factories in India. Thus, pioneering electric vehicle maker Tesla is likely to set up an electric car manufacturing unit in Karnataka. 

 

While India has the advantage of a large population of educated youth, most countries will fall short of working-age people, caused by lower birth rates and an ageing working population. 

 

In such a scenario, India can provide a host of services to several countries in various labour intensive sectors such as IT, healthcare, pharmaceuticals, etc. 

 

Sources : Economic Diplomacy Division - Ministry of External Affairs, India, WHO and WEC