…and the Old filled the earth
By Maria Klemetz
Imagine a town where the population consists of mainly old people. Distances are short and walkable, people have lots of time to do what they want and leisure time is what is important. Short distances and density make local services possible. But there are very few traditional workers -everyone is old. Up to now, the group making society run, have been the prime age workers (added with child workers): they built roads, moved paper in the offices, took care of other people´s children and elders. And their paid and unpaid work and taxes financed society. The setting was manageable, because there were only a few old people to care for. But now they are all old, and they had few children to become prime age workers. This reality is at the door in some of Finland´s municipalities already now, and soon, in the larger world.
The greying society has implications not only on health care, but also on economics. There is a lot of talk about the dependency ratio, i.e. the number of children and seniors in relation to working age adults. This number of people outside the work force by age is growing rapidly due to the demographic change. The world has reached “Peak Child” as data guru Hans Rosling has put it -the number of children in the world has stopped growing. In many parts of Europe and in Asian cities, the fertility rate is soon only half of 2,1 (which is unchanged population). The German fertility rate is 1,36, and the number is going down worldwide. So unless the country has immigration, the work force is shrinking. This trend of working age Shrinkage is rapidly taking over the world, including with some delay, to many westerner´s surprise, also developing countries. In India, the fertility rate is now only 2,59. Pakistan´s much talked about high fertility rate has halved in only 10 years, shrinking fast. From an ecological point of view we can be quite happy about this, because the carrying capacity of the world is going in the right direction, but this also causes a dilemma. How to take care of the big amount of elders, with a shrinking work force?
Even if the amount of children is not growing, the amount of adults and seniors is still growing in such a manner that estimates say the world will reach 10 Billion People at its peak.
Graph 1. The projected dependency ratio for years 1970-2060 of below 20-, and above 65-year olds per adult worker in Finland. The easy years are over.
The dependency ratio describes the amount of people of non-working age, in relation to adults (so far labeled “prime tax payers”). A ratio of 1 (100%), means there are as many working age adults, as there are people in an age outside the work force (children and seniors). The ages used normally in charts are below 16-, and over 60-years, but these are adjusted to Finnish conditions, so here we have below 20 year olds (in school and studying) and over 65 year olds. I like big pictures, so lets look at the same thing from a 200-year perspective:
Graph 2 and 3. shows the bigger picture (years 1865 -2060) the same easy years gap of the last decades is seen here, too. But if I do not make a history adjustment, the first graph will have children in the wrong group: in the 1800-1900, children were part of the work force. Finland was a world leader in child labour. There was no public education. Adjusting the graph for past time´s child labour, and the introduction dates for compulsory education in Finland, would bring the last century dependency ratio down as the second, adjusted graph shows. The whole truth is always complex web of different subjects put together, and graphs seldom tell the whole truth, but they can raise thoughts.
As we have had some main educational advances in the past, I used the two most significant changes: basic education “kansakoulu” for all children below 13 years in year 1921, and “peruskoulu” for all children below 16, in 1970´s. Both of these represent peaks in dependency, when children are moved from labourers to the ones being taken care of. There is also a gradual increase of higher education inserted in the second graph 1980-2000, so that by year 2000, people below 20 years, being students, are here counted in as dependent. Before these educational changes, children were part of the work force. Many died young, so families had many children. (Public education was not easily achieved: within industry, some wanted to keep its cheap work force, while other industry patrons on the contrary saw gain in an educated work force. To some extent this use of children in western industry has only globally moved: garment factories like the collapsed one in Bangladesh, a producer factory for Calvin Klein, Gap and Disney, are now producers.
A pension age of 75 in year 2014 -retroactively?
Today and in the future, the growing need for care is in the senior population. The amount of children will not grow much according to estimates. The number of elders (75+) to take care of in relation to the taxable income based on population Finland will roughly double in the coming decades (taken into account that seniors and teens pay roughly half of the taxes of a worker). In other words the demgraphic tax euros per elderly will be halved. Without a change to the elderly care system, this would mean double amount of needed tax resources (€) for elderlycare. So we probably need system change, but what kind of change would this “system change” be, becomes the burning question. Some kind of change will be here anyway, unless there is big immigration into Finland to solve the worker deficit. The amount of immigrants we would need to be on the same level as in the 1980´s demographically, would be an addition of 1 Million working age immigrants in year 2030.
Do we want a pension age of 75?
Graph 4. With so many elderly, to reach a dependency ratio of the 1980´s, we would have to make the pension age 75. In the 2030´s, would need to be even higher. The years to come would in this case be the Era of the Working Elderly.
As the average pension age in Finland in 2013 was around 61 years, maybe raising the pension age to 75 years today, is not to our liking. There are other options, too, some more bitter than others.
Do we want to:
1. Make the pension age right now retroactively 75, and maybe 85, in year 2030?
2. Raise taxes, so we can care for twice as many elders as before? (Economist Sixten Korkman has said: who, how, and what age group will be taxed for this, is a choice.)
3. Can we increase overall productivity, so that one adult worker can finance double the amount of elders that before? Can the worker run faster, or can industry invent better machines? Looks difficult, since the growth trend is going in the opposite direction. This might have to do with manufacturing production being replaced by service production. Productivity gain in services is not as easily obtained as in manufacturing, they say at the departments of Industrial Engineering and Management.
4. Or do we want to change the system of elderly care, so that with the same work force, we can take care of the double amount of elders? This last option of wiser services is the concept I am working on.
Leaving our elders without care under the bridges is socially unacceptable, so brutal budget cuts done without changing to another way of providing the care, are excluded. Also simple cuts tend to only move the cost into another place in the system. Productivity growth is often said to solve the dependency ratio, but it has not proven itself. The productivity trend has been declining the last 20 years.
Also instead of raising taxes, or lifting the pension age, to pay for the double amount of elders, we could make the production of service for the ones in need, smarter organized. We want at least the same outcome as the services of today (or better), but to only use half the resources of today. This needs an understanding of the whole organization and all its problem points, since they are dependent on each other. If badly done, taking out service, only moves the need into another place and no gain is achieved.
Not only a Western issue
The greying of society is not merely a western issue, even if it hits Europe and part of Asia first.
Graph 5. Old age dependency ratio in different countries. In 2050, China, Mexico, Sweden and the US have a similar situation. Graph World Economic Forum WEF.
Graph 6. Work force Shrinkage. Graph WEF.
No comparison is complete without the Finland-Sweden neighbour battle. When one compares the situation in these neighbouring countries, one can see, that the homebound work force is slightly shrinking in both, but overall work force is +/- 0 in Finland, +9% in Sweden. Finland, in comparison to Sweden, being a closed system for immigration, faces the effects of the growing amount of elders earlier. Sweden has postponed The Era of the Elderly. This is due to immigration and a slightly higher fertility rate. Sweden first faces a similar situation as Finland faces in 2030, thirty years later in 2060, and only for a for a short period, then recovering for another 30 years. The welcoming take on foreigners (Sweden has had even higher immigration-% than the USA), postpones the labour force shrinkage with 60 years. But as immigrants also age, and quickly adapt to the same amount of few children as the Swedes, the Era of the Elderly will inevitably come to Sweden, too. For example the big group of Finnish immigrant into Sweden in the 60-70´s that, while causing some incidents under the Slussen bridge, also helped Swedish economy grow – now they have now grown old and many are placed in nursing homes, financed by the later arrived groups of immigrants.
As competing economic zones face this same demography of greying societies, postponing it in relation to competitors, might have been a smart economic move from the Swedes. From a demographic point of view, being kind has paid off.
Graph 7. The work force shrinkage per dependent child and elderly in Finland (Suomi) and Sweden (Ruotsi). Year 2013=1. Sources: Tilastokeskus and Statistics Sweden 2013.
The geography of it all
As the countries with highest median age, all through 1950´s -1980´s were located in Western Europe and Japan, and displayed a constant median age of around 35 years, today, in 2013, the countries with the highest median ages are moving, now taking in Eastern Europe and China. Median age is now around 43 years. In the 2050´s, the oldest population will shift to the Middle East-Asia-Cuba (median age up to around 53). Asia will continue the domination of oldest countries in the world in to the 2100´s: Singapore-China-Korea, and the Middle East in the lead (with median age around 52). We are approaching a worldwide Era of the Elderly. Africa as a continent has interesting possibilities ahead, with a delayed Era of the Elderly.
Graph 8. Today the countries with many elderly (around 50% in relation to working adults) are in Europe, but quite soon they will be in the Middle East, China and Asia (60-90% in relation to workers) and in 2100 we are close to more elderly, than workers in a majority of today´s leading economies. How fascinating!
In 2050 Germany and many Middle Eastern countries will be very close to having more over 60-year-olds, than working age people. In 2100 Singapore will be there. Looking at the population development in the world, we could see a race for needed immigration in the greying old countries, all around the world. Working age can be adjusted up a bit, if working conditions for elderly workers are developed. It is also possible flexibility will be achieved by employment fading and self-employment rising together with many web based platforms where you can sell your skill. But to this day still, human cell structure degeneration has a set course. Having 85 year olds at work is very possible, if the person in question wants it and has the health possibilities for it. Age disregarded, a decentralization of work seems to be on the door step. If it gives us freedom, or a “freedom” that is in fact 24/7 work, remains to be seen. The possibilities for both scenarios are there.
Every slightly gloomy article like this, should give at least a hint of a solution. Here comes one such fact.
As people live longer lives, the time to live independently, can be stretched. This needs apart from a rehabilitation system that measures results, an urban setting where elderly people can live independently and WANT to live independently. Forcing someone to live is very difficult. If we fail in giving old people motivation to live by the entire setting we put them in, we end up with people who need more care.
Our rival country Sweden has shown, that at its best, average death can be shortened to only one week, with the right kind of support. The system in Sweden is not perfect, but it focuses on result rehabilitation that also goes beyond medicine. The next step from the Swedish system, would be to make the system feed itself, and run by itself. The self-feeding system needs to be aided by a change in overall urban and architectural planning for the elderly, and system planning.
What we in Finland contrary to Sweden do, is stretch out the time to die. In comparison to Sweden, Finland provides a longer, costly months- or years-long death.
If Finland can change the rehabilitation and support pf old age in a way that elders are given the possibility to be more self sufficient, like for example in Sweden or the Netherlands, the need for expensive care can be made shorter. Knowledge of how to do this, is at the moment lacking in municipalities around the country, a few good examples apart.
Below is a graph showing the future prospect for the amount of 75+ elders and the amount of deaths in Finland in relation to workers (supporters). Age 75+ is agenerally used age for calculating the need of elderly services. We can see in the graph, that the amount of elders grows dramatically, but perhaps to out surprise, deaths do not. Making death prolongued, that is what is expensive. Old age itself, is not. The gap that houses the possibilities for the solution, is the difference inbetween old age and death. Death should be short, life long.
How to obtain this? I will write more on that subject, and other surprising facts in later blog posts.
Graph 9. While the amount of “dependent” elders aged 75+ (vanhuksia 75+) per worker grows more than 5 times bigger from the 1980´s to 2060, the amount of deaths (kuolemia) is not at all as steep of an increase. This is a sort of revelation. But we are pressed for time, and changing the system to a better one, needs to be done soon: from today in 2014 on, the amount of age 75+ will soon grow rapidly. The needed resources for our elderly care system will of course grow accordingly, unless changed. 1980=1.
Written by architect Maria Klemetz, PhD candidate at Aalto University.
You can share your thoughts by commenting on this article below or by email, opinions are greatly appreciated. If you are interested in the research for the Cities in the Era of the Elderly, or as a public institution want a closer analysis of the data, or want to discuss the possibilities of Elderly Friendly Urbanism in our municipality, you can contact our architecture office at firstname.lastname@example.org . We do planning and consultation in the subject.
At the moment in Finland, within the old system, the costs for “wrong” elderly care (=type of care that is against recommendations) make up around 1,3 Mrd (Billion) €/year extra in Finland. In 2060, with the increase in old people, to continue the same kind of care system would cost an extra of 3 Mrd/year. Unless we change the system of care to focus on making life possible, instead of serving a life, the costs will keep growing. This system dictates how we have built care facilities in the past, and how we will build in the future. The buildings and environments set the limits for how care is, or can be carried out.
The PhD research “Cities in the Era of the Elderly” aims to show how we can change the elderly care system, by bringing the elderly into society as participating people. By making it possible for the elderly to cope in daily life, the elders themselves, just by living, also create a more active economy. In the same time, Old Age is given the chance to be better than at the moment. The system savings for this are estimated to about one third to half of the current elderly care system costs. This estimate does not yet take into account the positive value of the added amount of people in the urban economy. This research will give guidelines for the creation of Elderly Friendly, walkable communities.
Since research of public system change does not appear to be popular with funders, the research is self funded. These funds are by now depleted. If you want to see this research ready and published soon, you can help by becoming a Research Funder. All Funders will get lots of love, and of course be invited to the party. To donate you can use the link button to PayPal, or other codes below. For an invitation leave your contacts in the message field.