The Aging Readiness & Competitiveness Report

12
countries
61
% of the
Global
Economy
47
% of the
Global 65+
Population

Key

Leader
Mover
Laggard

Canada

Canada
United States

United States
Mexico

Mexico
Brazil

Brazil
United Kingdom

United Kingdom
Germany

Germany
Turkey

Turkey
Israel

Israel
South Africa

South Africa
China

China
Korea

Korea
Japan

Japan

Community Social Infrastructure
Productive Opportunity
Technological Engagement
Healthcare & Wellness

Introduction

The world is aging at an unprecedented pace. In the coming decades, large and small, industrialized and developing countries alike, with few exceptions, will experience a rapid growth in the proportion of their populations age 65 or older, driven by longer lifespans and declining birthrates. With this looming demographic transformation, a healthier, more productive, and more engaged older population is essential to building a prosperous and sustainable future. As such, a rethinking of the role of older adults in our communities and economies is imperative. AARP and FP Analytics have partnered to conduct an in-depth study of aging policy in 12 countries to produce the Aging Readiness and Competitiveness (ARC) Report.

DOWNLOAD THE EXECUTIVE SUMMARY

Percentage of Older Population in the Total Population Over Time

1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050

Filter By Date:

Filter By Age Range:

Pillars

The ARC Report examines the pressures and opportunities each country faces, as well as their policy responses in four pillars: Community Social Infrastructure, Productive Opportunity, Technological Engagement, and Healthcare and Wellness. A particular eye is given to policy innovations aimed at engaging a healthier, more independent older population and unleashing the productive and economic potential resident among them.

Community Social Infrastructure

Perhaps the most consistent feature of older adults around the world is their strong preference for aging at home. In fact, independent living is on the rise, particularly in developing countries where families are shifting away from multigenerational structures. Our first pillar looks at how countries and communities are ensuring that seniors are able to remain not only independent, but also active and contributing members of their community.

Productive Opportunity

Countries around the world are grappling with having to sustain long-term economic growth as their working-age population shrinks as a share of the total population. For industrialized countries, as well as China, this is already an issue, but it is only 10 to 15 years away for some of their upper middle-income counterparts. Older adults are part of the answer – they are living longer and healthier, possess valuable experience and expertise, and increasingly seek to remain active and productive. Forward-looking governments and companies are acting to enable this by introducing flexibility into retirement, combating negative perceptions of older workers, and providing targeted support for those seeking to re-enter the labor force.

Technological Engagement

We are entering the era of digital technology and technological advancement that could be transformative for the economic and social engagement and health of older people, but today they remain the most vulnerable to digital exclusion. Still relatively small-scale in most countries, work is beginning to promote digital literacy and to develop technology-driven products and services for this market, including from the private sector, which has been driving much of its growth.

Healthcare and Wellness

Lifespans continue to extend in most countries at a faster rate than healthspans – the years when one is generally healthy and free of disease. Extending healthy living enables older adults to engage productively in their communities and economies. There are also significant economic implications of the rising need for long-term care, which can both create a fiscal burden and draw caregivers, particularly women, out of the labor force. We looked at efforts to improve accessibility, affordability, and quality of healthcare for older adults, provide support for formal and informal caregivers, and utilize new technologies to improve the efficiency and quality of care services.

Countries

The 12 countries selected for this debut report – Brazil, Canada, China, Germany, Israel, Japan, Korea, Mexico, South Africa, Turkey, the United Kingdom, and the United States – are the largest economies by region, with the exception of Africa, where the largest upper middle-income economy was chosen. Together, they represent 61 percent of the global economy and nearly half of people aged 65 or older, and include a diversity of economic, social, and cultural contexts.

Brazil

Brazil only became an “aging” society in 2012, but the share of its population age 65 and older is projected to triple by 2050, driven by improved life expectancy and declining fertility rates. As Brazil’s population is still relatively young, aging has not yet become a matter of wide public interest. Over the past two elections, in 2014 and 2016, not a single major candidate for president or mayor talked specifically about older Brazilians.

Lack of attention to this looming demographic shift is clear in the government’s failure to fully implement policies that have been on the books since the 1980s to protect the rights and interests of senior citizens. However, there are positive signs in recent moves by the government, including a push to build age-friendly cities and healthcare plans oriented specifically toward older Brazilians.

The productive potential that is dormant in the older population is also under the radar of most policymakers and companies, but awareness of the economic potential of older adults is beginning to grow. This is evidenced in several recent hiring programs launched by private employers that target experienced talents. The market opportunity for digital products specifically targeting older people is also gaining traction. Private-sector interest in courting older consumers is growing, especially when it comes to digital healthcare products. The government has also played a role in developing this market by funding the development of information and communication technology products aimed at older consumers.

Brazil’s pace of aging, in terms of growth in the share of the total population, will be the fastest among all the countries in this study. By 2050, Brazil will have the world’s fourth-largest older population, behind only China, India, and the United States.

Canada

In 2015, for the first time, Canadians age 65 and older outnumbered those younger than 15. Even though older adults make up a smaller share of the population in Canada than in many OECD countries, the growth of this segment has dramatically outpaced that of the general population every year since 2011, when the post-World War II baby boomers started to turn 65. By 2026, Canada is expected to become a “super-aged” society as the share of people age 65 and older will exceed 21 percent of the total population.

Coupled with the aging population is the slowing growth of Canada’s workforce, which could threaten the country’s long-term prosperity. As a result, the government has made it a priority to encourage the labor participation of all adults, including older workers, through national programs that have effectively helped with job placement for older unemployed workers. Older Canadians’ economic engagement is also being facilitated by their greater digital aptitude than that of their counterparts in many other OECD countries, partly thanks to efforts made by the federal and provincial governments, as well as community and non-profit organizations, to narrow the digital divide. Both the public and private sectors have also stepped up efforts to develop and commercialize digital products and solutions that meet the needs of older adults.

Social connection among older Canadians is strengthened by the government’s effort to advance community social and home-based care, aimed at supporting healthy, independent aging while also helping to relieve pressure on the country’s hospital system. While some longstanding national campaigns have been in place to fund community-based projects, governments have more recently strengthened financial support to family caregivers through tax credits and allowances.

More than 92 percent of those age 65 and older live in private households rather than in collective dwellings such as nursing homes, and 81 percent live either alone or with a spouse. While this percentage has been relatively stable since the 2000s, the share of those who live alone has declined slightly due to improvements in the life expectancy of men.

Source: Statistics Canada 2015

China

China is home to nearly a quarter of the world’s population age 60 or older, which is projected to double over the next two decades. The country is growing old before it gets rich. The fast aging of the population is coupled with simultaneous change in the family structure, as a result of one-child policy adopted in late 1970s, as well as rapidly growing urbanization and migration. These unique circumstances are driving a need for the country to enhance its social infrastructure and to develop new models to accommodate a healthy, productive, and active aging population.

The Chinese government has responded to the demographic transformation with policies to support older adults’ independent living and social engagement. With the most aged population among developing countries in this study, China is also a leader on increasing access to long-term care and improving the quality of healthcare for older adults. As the economy slows down and shifts toward a more consumption-driven growth model, the government is eagerly seeking to turn the service sector for older adults into a new growth engine and to integrate digital technologies with new products and solutions for older adults.

The government has failed to capitalize on the productive opportunity resident in the older population. Although older Chinese are relatively more active in the workforce than counterparts in industrialized countries, largely driven by financial need, they receive little government support or legal protection.

China’s population age 60 or older had reached 210 million as of 2014, as large as the populations of Germany, the United Kingdom, and France combined.

Source: UN Population Division

Germany

Germany is currently one of only five “super-aged” societies in the world, and its population of those age 65 and older will continue to grow, reaching nearly one-third of the total population by 2050. In light of this demographic shift, German policymakers are working to increase labor force participation among older adults through various training and education programs as well as retirement system reforms. While labor force participation is still relatively low, Germany’s older adults have high levels of volunteerism, partly thanks to the government’s endeavors to create various opportunities for older adults to remain active in their communities.

Germany is a leader in leveraging digital technology to accommodate a healthier and more engaged older population, and the government has established programs geared toward helping older adults gain the necessary skills to use basic technologies. The country’s healthcare sector has begun to embrace e-health solutions as a part of a broader effort to improve service to the older population. Germany is also one of the few countries with mandatory long-term care (LTC) insurance. In order to address the growing need for care, the government has been working to broaden the scope and inclusivity of its LTC system, placing particular focus on improving conditions for both recipients and providers of home-based care.

Germany’s population age 65 and older is projected to grow by 41 percent to 24 million by 2050, accounting for nearly one-third of the total population. At the same time, the population ages 15 through 64 will shrink by 23 percent – from about 53 million in 2015 to about 41 million by 2050.

Source: UN Population Division

Israel

Israel stands out among high-income countries for its relatively young population. Although its population age 65 and older is projected to more than double through 2050, Israel will still have the youngest population among OECD countries, largely a result of its comparatively high fertility rate. Despite the lack of demographic pressure, Israel has been ahead of its time in terms of developing various long-standing social programs and a robust network of support for community centers and caregivers to accommodate a healthier, and more productive and engaged older population. This is partly thanks to cultural values focused on social inclusivity, as well as honoring the generations who founded and built the country.

Israel boasts high levels of labor force participation, compared with other OECD countries. The government actively engages in promoting the employment of older people and improving their employability, often in collaboration with non-governmental organizations (NGOs). For a relatively young country, Israel also stands out for its early planning to ensure access to, and comfort with, technology. In line with the “Startup Israel” ethos, tech companies are moving into the silver economy, innovating new products and services to ease access and improve well-being.

As of 2015, only 11.2 percent of Israel’s total population was 65 and older, just over two-thirds of the average of its peers. By 2050, the share is projected to reach just 17.4 percent, the lowest among OECD countries. Israel’s fertility rate is comparatively high − 3.05 children per woman from 2010 through 2015, nearly double the average of high-income countries.

Source: UN Population Division

Japan

Japan became the world’s first “super-aged” society in 2006. Today, one in four Japanese citizens is 65 or older, and their share of the population will continue to grow, holding onto the country’s position as the world’s most aged society through 2050. The country stands out most because the population is not only aging but also shrinking. A falling birth rate and nearly zero net immigration have been the major contributors to this decline. At the forefront of aging societies, Japan is also a leader in preparing the country to accommodate a healthier and more productive and engaged older population.

The Japanese government has made employment opportunities for older adults a key component of its national strategy to revitalize the economy. The government has made significant efforts to assist job placement and extend the retirement age, contributing to the high level of older-age labor force participation, although enormous potential exists to further tap this productive opportunity. The government also recognizes the demographic shift as an incentive to boost productivity through innovations like robots, not only to close the labor force gap but also to address healthcare and nursing needs of the senior population.

Japan has implemented one of the most generous long-term care systems in the world in terms of coverage and benefits available to create an environment where seniors can thrive and live autonomously. The national government and local authorities have also tapped into their existing infrastructures and institutions to tackle social isolation. Civil society organizations and senior citizens’ clubs play crucial roles in enabling active aging and community-based engagement.

Japan’s share of the population age 65 or older is projected to grow by one-third to 36 percent of the total population by 2050. From 2010 through 2015, Japan’s population shrank by almost one million people – the first time since the 1920s – and the decline is projected to continue.

Source: UN Population Division, OECD

Korea

Korea is among the most rapidly aging high-income countries, and it is projected to overtake Japan to become the most aged country in the world in 2060. The fast aging of the Korean population is partly a result of the country’s two baby booms, which emerged between 1955 and 1963 and between 1968 and 1974. The aging baby boomers tend to be better educated and wealthier than previous generations, representing an enormous economic and business opportunity for the country, particularly in terms of labor participation and technology adoption.

In light of this demographic transformation, the Korean government has increased its efforts to integrate aging-related policies into its broader economic and social-development agenda. While some of these efforts have been successful, others have caused notable controversy – particularly efforts to capitalize on productive potential in the older population. Policies aimed at extending older adults’ work life have intensified inter-generational tension as well as controversy over the net impact on older adults’ well-being.

To meet growing demand for healthcare by the aging population, the government took action to reform the long-term-care insurance system in 2016, with a focus on improving administrative efficiency and service coverage of the system. It is also seeking to take advantage of the country’s advanced IT infrastructure to develop digital healthcare services and, so far, has received a positive response, particularly from large companies.

In 2017, Korea is expected to become an “aged” society, having crossed the UN threshold of 14 percent of its population over age 65. It will have taken only 18 years to complete the transition from an “aging” society, less time than any current “aged society.”

Source: UN Population Division

Mexico

Mexico is on the verge of a demographic sea change. Today, it remains a relatively young country with the second lowest percentage of people age 65 or older among countries covered in this study. However, the size of this group is projected to more than triple by 2050, largely driven by the country’s declining fertility rate. However, because older people remain a small share of the population today, the Mexican government has yet to prepare for the demographic shift and has not invested in the necessary infrastructure to support a healthy aging process.

Older Mexican adults have among the highest poverty and labor force-participation rates in the OECD, partly due to the country’s massive informal economy. Reducing labor informality has been a priority of President Peña Nieto’s administration. However, the government is not currently focused on implementing policies that would improve productive opportunity among the older-age labor force. Recognizing that aging is a looming issue, the government has begun to establish community-support infrastructure for older adults through its National Institute of Older Persons as well as long-term care infrastructure through the recently established National Institute of Geriatrics. However, the development of these initiatives is proceeding slowly, due to their low level of priority on the government’s policy agenda and a lack of resources afforded to the individual institutions.

Mexico’s population age 65 and older is projected to grow by 277 percent from 8.2 million in 2015 to over 30 million by 2050. This rate of growth can be compared with the growth rate of 194 percent for upper-middle-income countries and just 71 percent for high-income countries.

Source: UN Population Division

South Africa

With just 5 percent of its population currently age 65 and older, South Africa is the youngest of the countries included in this study and has yet to start aging. Thanks to a consistently high fertility rate, the share of the older population is growing at a much slower pace than other upper-middle-income countries. This lack of demographic pressure has given the government little incentive to prioritize aging-related issues on its policy agenda. Instead, it is focused on broader societal challenges – including poverty, crime and racial disparity – to which older people are particularly vulnerable.

With a focus on the alleviation of old-age poverty, enabling the development of productive skills for older adults has not been a priority of the South African government. Virtually no steps have been taken to increase their labor force participation rate or to provide training programs beyond literacy. There are also very few efforts specifically targeting seniors to help them obtain the knowledge to utilize basic forms of technology. However, in 2016 the government introduced a long-term strategy to improve accessibility to basic technologies for those who historically have been unable to acquire it, including older adults. Accessibility has also been an issue for older South Africans seeking both medical and long-term care. The government is attempting to address the health-related issues experienced by the older population through a comprehensive, large-scale reform of the whole system set for implementation by 2030, which will include prioritizing older adults at the primary care level.

Today, South Africa’s population age 65 and older is equivalent to just one-sixth of the population ages 0 through 14. The percentage of the older population is projected to just double to reach 10.2 percent of the total population by 2050 – a pace of change about one-third slower than other upper-middle-income countries.

Source: OECD, World Bank, UN Population Division

Turkey

Turkey’s 65 and older population will more than triple by 2050, aging at the second-fastest pace among OECD countries. While awareness of this demographic shift is gaining traction, it has yet to become a priority for the Turkish government, which has been grappling with other more immediate issues, including geopolitical and national security risks, economic slowdown, youth unemployment, and social stability.

The absence of aging among the government’s priorities is particularly evidenced in negligible efforts to tap productive opportunity among the older population. Although the ongoing gradual increases in pensionable age will help to boost economic participation among older adults, employment support for this group is limited. Similarly, older Turkish adults’ usage of the Internet is among the lowest in OECD, with a significant divide from the general population, and their access to training opportunities is limited.

Nevertheless, the Turkish government has acknowledged the social and economic impact of its aging population, and it is actively working to improve the social safety net and to increase community support for aging in place. Having achieved universal healthcare coverage over the past decade, the government is increasingly focused on the quality of care services. However, more work is warranted in order to accommodate a healthy aging population.

With a median age of just 29.8, the second lowest in the OECD, Turkey’s population is set to age rapidly. It is projected to become an “aged” society within two decades, when the population age 65 or older exceeds 14 percent of the total population.

Source: UN Population Division

United Kingdom

Like many European countries, the UK has been an aged society for several decades, but as baby boomers are growing older, the country will see the pace of aging accelerate over the next two decades. The population of older adults is projected to grow by nearly 45 percent from 2015 through 2035, growing by 278,000 each year, almost ten times the average annual increase in the working population (15 through 64 years old).

As a result, there will be tremendous economic potential found in older people, if it can be harnessed through continued employment or other productive activity. While the UK already has higher labor participation by older adults than other major European economies, the government has been seeking new avenues to increase productive opportunities. Major efforts include fostering a more age-friendly labor market in addition and generating incentives through the pension and benefit system reforms.

Public funding cuts in recent years represent a major challenge to the UK’s long-term care system and social service delivery. While the government has made minor adjustments to tax policy, caps on local revenue generation continue to constrain the ability to fund services. Devolution of funding and service delivery to local governments also creates challenges for older adult programs and service delivery. Varying government bureaucracies and strategic priorities across the UK, from England, Wales, Northern Ireland, and Scotland, also result in service fragmentation and uneven impacts of otherwise effective programs.

The UK’s older population is projected to grow by over a quarter of a million people each year through 2037, nearly 10 times the average annual increase in the working population.

Sources: UN Population Division, ILC-UK

United States

Every day in the U.S., 10,000 people turn 65, and the number of older adults will more than double over the next several decades to top 88 million people and represent over 20 percent of the population by 2050. The rapid pace of change creates an opportunity and an imperative for both the public and private sector to harness the potential of the growing segment of society and to ensure the welfare of older Americans.

Americans’ increased longevity, coupled with the need to finance a growing share of their own care, are major factors driving older adults to delay retirement and remain in the labor force. While the U.S. labor force is expected to grow at just 0.5 percent over the next decade, adults over age 65 represent the fastest-growing segment. Recognizing this productive potential and the need to retain skilled workers and transfer institutional knowledge, companies and other employers are beginning to introduce phased-retirement and part-time work opportunities.

High and increasing costs of healthcare present significant challenges to older Americans who are increasingly aging in place. While the Americans with Disability Act has made the U.S. a leader in accessibility, the rapid pace of aging is challenging the public, private, and non-profit sectors to effectively address the social services and care needs of older adults across urban and rural areas. As leaders in innovation, corporations and start-ups are developing technologies and age-focused apps that could significantly enhance the safety, security, and well-being of older Americans increasingly aging in place.

Every day in the United States, 10,000 people turn 65, and the number of older adults will more than double over the next several decades and represent over 20 percent of the population by 2050.

Source: UN Population Division

Brazil

Productive Opportunity

Brazil

Technological Engagement

Brazil

Brazil

Healthcare & Wellness

Canada

Healthcare & Wellness

Canada

Community Social Infrastructure

Canada

Technological Engagement

Canada

Productive Opportunity

China

Productive Opportunity

China

Healthcare & Wellness

China

Technological Engagement

China

Community Social Infrastructure

Germany

Community Social Infrastructure

Germany

Technological Engagement

Germany

Productive Opportunity

Germany

Healthcare & Wellness

Israel

Community Social Infrastructure

Israel

Productive Opportunity

Israel

Healthcare & Wellness

Israel

Technological Engagement

Japan

Technological Engagement

Japan

Community Social Infrastructure

Japan

Healthcare & Wellness

Japan

Productive Opportunity

Korea

Productive Opportunity

Korea

Healthcare & Wellness

Korea

Community Social Infrastructure

Korea

Technological Engagement

Mexico

Technological Engagement

Mexico

Community Social Infrastructure

Turkey

Healthcare & Wellness

Mexico

Productive Opportunity

South Africa

Productive Opportunity

South Africa

Healthcare & Wellness

South Africa

Community Social Infrastructure

South Africa

Technological Engagement

Turkey

Technological Engagement

Turkey

Community Social Infrastructure

Mexico

Healthcare & Wellness

Turkey

Productive Opportunity

United Kingdom