Celine Herweijer: Demographics is all really about how people change and there’s three core dynamics to that. First of all, there is going to be more of us, second of all, we’re living longer and third of all, we’re having fewer children. So, just some statistics to bring that into picture. In terms of there being more of us, by 2025 there is going to be one billion more people on the planet. One-third will be the over 65 bracket. So, we’re going to be getting older.
How that actually plays out really does vary though at a country and regional level. It’s in Africa where we’ll actually see the quickest pace of change.
In Nigeria, for example, the median age will be 21 by 2050. Somewhere like Japan, at the other end of the extreme, we’re talking about an age of 53. So, clearly, a big shift.
It’s not the case that we can wait 10 or 20 years to think about these challenges. Actually, these issues are already impacting us today.
Jon Andrews: There are quite a few reasons that organisations should care about demographics as a megatrend. One of them, for example, is that their customer base is going to change, so the demographics impact their customers as much as they do their employees.
So when organisations look at demographic challenges they need to look at four different areas. One of them is gender diversity. One of them is the impact of the aging workforce and the fact that people are going to be around a lot longer. One of them is around the different ways of working of the new millennial generation and how they need to adapt to that. The fourth one is the importance of global mobility, where the changing and shifting epicentres of the economic power base is going to mean they need to be clear on where they get their talent from, which countries.
It’s fantastic that we’re going to create a huge amount more diversity within the working environment and all that can do is fuel innovation across all of our economies, fuel innovation within organisations. If we can tap into the different thinking, if we can tap into a larger spectrum of age within the workforce, if we can get the melting pot to work together effectively and there is a big if in there, then all I can see is a huge amount more advanced technology coming out of it, a huge amount more efficiency in working practices and a greater collective brain from the global perspective to deal with the bigger challenges that we’ve got.
Celine Herweijer: One of the most fascinating collisions between demographics and another megatrend is that between demographics and climate change and resource scarcity. What we’re seeing here are the regions where we’re seeing the largest population increase in the emerging economies and especially in places like Sub-Saharan Africa are actually the places where climate change is going to have the biggest impact in terms of the risks that it will pose to those economies, in terms of the negative impacts it might have in terms of extreme weather event and changes in climate conditions that will make issues like health and food security and access to water increasingly difficult in the future. So, here we’re seeing a collision between growing population and increasing demand for resources and a physical change in the climate that is going to make it increasingly difficult to supply those resources.
So, therefore, what our clients need to be thinking about, both governments and businesses, who are working in these developing and emerging countries is the resilience of their investments going forward in time and how they can best work with their partners in developing and emerging economies to build resilient economies, operations and practices.
Jon Andrews: The PwC CEO survey has shown that two-thirds of CEOs are really struggling with finding talent at the moment and 93% of them are absolutely aware of the challenges of the changes in demographics and you bring those two things together and you create a real issue for the business. To me, the most telling fact is that only a third of CEOs are actually doing anything actively to address those two issues.
I think what is going to happen anyway as a fact is we’re going to have an older workforce. What is going to happen anyway as a fact is we’re going to have greater ethnic diversity in our workforces. We’re going to work in many more geographic locations. What is also going to happen as a fact is there will be a trend and an understanding that women will be more successful.
Now, we can either allow that to happen at a pace driven by the facts or we can embrace it earlier and identify how we can improve the way in which we tap into the value that is generated by it more quickly. And the organisations that do that and the economies that do that will be the ones that are more successful in the future.
The pace of this change will vary immensely across different regions. Africa’s population is expected to double by 2050, while Europe’s should shrink. The average age in Japan in 2050 is expected to be 54 – and just 21 in Nigeria.
All countries will need to implement bold policies to cope with these demographic changes. In Europe, Asia and Latin America, higher labour force participation from women and the elderly alongside higher levels of immigration will be needed to sustain an ageing population. Africa will experience a strong demographic dividend but it will need to develop the right policy conditions to maximise returns from its younger population.
Emerging economies will need to face up to their demographic challenges over a much shorter period of time. It took France a century to double the share of the over 60’s in the labour force (from 7% to 14%) – China, India and Brazil are expected to do it in less than thirty years.
But because demographic trends are often presented as problems, the opportunities can be overlooked. We see two core sources of growth that our clients can tap into:
Women already control two thirds of the household budget in G7 countries, and as the wage gap with men continues to narrow, their purchasing power should continue to rise. Aging baby boomers will spur the demand for health care services. Nigeria’s population is expected to exceed America’s by 2045. There is an underlying theme that connects the demographic trends we’re seeing – the world is becoming a more diverse place.
A growing body of evidence connects workplace diversity to improvements in businesses and economies’ performance. The most innovative companies are already adapting to tap into the growing diversity of their workforce in terms of gender, geography and age - as well as feelings and values.