Nowadays, the issue of ageing population is a subject of much attention in all over the world. Population ageing is a change in the composition of a country population toward older ages. This means there are an increase in the number of elderly people who are over 65 years old and a decrease in the number of younger people. It is predicted that the trend for an ageing population will rise in the next centuries. On the other hand, we now have more elderly people than ever. The ageing of the population presents serious problems for governments in terms of what the effects will be on healthcare, care services, pensions and future labor supply.
One of the major worries about the growing number of elderly people in our society, which is likely to put significant pressure on public spending programs is how healthcare system can afford to support all of old people. Healthcare is the area that is firstly affected by the changing age structure of the population, especially the increasing of older age groups. The more elderly people, the bigger a mount of money is spent on public healthcare. Moreover, it is the effect of increased life expectancy on per capita healthcare costs, and it implies that as the life expectancy lengthens, total healthcare costs are also likely to rise. A question is that how governments can support enough money, as well as medical treatment. The increase in amount of retirees means the decrease in amount of working ages. Therefore, governments will lose significant tax for the state income. In addition, the extra money which is spent on ageing population may lead to the lack of money for other social activities or for economical development.
Besides, in some countries in which hospitals are private, the healthcare costs are very high. In this case, some old people who do not have much money may not be able to afford the costly medical treatment after a certain point in their life. Consequently, the living standard will decline and other social problems may happen such as criminal.
Another problem is that governments has to give a lot consideration about sheltered housing to adapting the design of new builds to ensure that they are suitable for ageing population such as: level access, wide corridors, doorways, bathroom facilities, sockets and light switches at a convenient height.
Moreover, ageing population also affect on the demand for these social services, especially for pensions. Medical progresses over the last few decades have greatly lengthened our life expectancy. Although no one knows exactly how long people will live on average but it is clear that recently there has been a very sharp improvement in longevity forcing the governments to support a greater number of pensioners for longer periods. This problem as well as healthcare costs have being exacerbated the national fund.
The ageing will have a serious effect on future labor supply. Ageing population means fewer youth who is the main labors in almost factories and companies. In many countries, unexpected demographic changes will lead to significant declines in the growth of the labor force over the next decades.
Furthermore, the ageing will also affect on the industry, as essential skills will be lost when employees retire (given that there are fewer young professionals participating into the industry to replace those retiring). This is more and more serious because of the fact that the number of new recruits is declining and there will be nobody available to replace those retiring. This could also mean that our society is losing a valuable teaching resource, because older worker often teach new entrants their skill, expertise and also their experience.
In order to solve these problems above, the governments should have some solutions to prevent the economy and society getting worse and improve the living standard for all people. One of major policy options which are governments should do to adjust state budget is to control pension systems. Some solutions can be done such as: delaying retirement, lowering pension payments (including replacement rates) and increasing contribution rates.
Increasing retirement age or delaying retirement actually leads to people working for longer. It will help the industry to avoid the decline in labor participation and also providing the decreasing in number of pensioners. However, governments should ensure that all state workplace are suitable to older worker remaining in employment or encourages retirees to return to the labor force by exempting tax.
Other solutions to adjust pension system are lowering pension payments and increasing contribution rate. Lowering pension payments is another way leading to old people continuous working. These days, goods price and medical treatments costs increase dramatically, if government lower pension, which means elderly people may not afford to pay for their leisure entertainment or for healthcare treatments or even buying food. Therefore, they have to return to their job to earn more money to protect their life due to the fact that governments are not able to support them. Lowering pensions together with increasing contribution rate may alleviate the budged burden for government. Increasing contribution rates can be seen as a means of raising overall tax revenues.
Another solution which the government can do to balance the rate between the number of old people and young people is reducing the cost of raising children, especially the education costs. These days, many parents can not be able to pay for raising their children. The education costs are too high even thought they send their children to state school.
Furthermore, immigration should be another cure for the failing of young age groups and ageing population. Because immigration can provides more workers to simulate economic growth. However, the number of low skilled immigrants in the total number of immigrants should not be higher than the proportion among native people to prevent unemployment from rising.