In many developed countries, large parts of the population are over 65, with Japan having the highest proportion of elderly – 28 per cent of its population. People in this age group tend not to be productive, making them a significant economic burden on countries. Two major consequences of an ageing population are a reduction of revenue from income taxes and an increase in spending on the older segment of the population.
In the UK, for example, an estimated £138 billion (US$175 billion) is forecast to be spent on pensioner benefits in 2023-24, £125 billion of which will go on state pensions. The British experience is in line with other developed countries which are experiencing rising healthcare spending as their populations age.
07:02
China tackles challenges posed by its ageing population
China tackles challenges posed by its ageing population
Based on the current economic predictions and assessments, population ageing represents a major challenge to the health of the global economy. But is that actually the case?
In fact, population ageing does not represent a major challenge because automation and artificial intelligence (AI) are making human labour not only unnecessary and obsolete but also undesirable. IMF managing director Kristalina Georgieva has predicted that AI will affect 40 per cent of jobs worldwide. This could have a colossal economic impact.
Less conservative predictions by experts sound even more dramatic. AI researcher Ben Goertzel says he believes AI could replace 80 per cent of human jobs in the next few years. Lee Kai-fu, who used to develop AI for Google and Microsoft, says AI will “displace about 40 per cent of the jobs in the world” in 15 years.
More importantly, new industries will be built from the ground up with automation and AI in mind, virtually eliminating the need for human employees while increasing productivity, economic output and profits. That humans are rapidly being displaced is reflected in the fact that some professions are increasingly relying on automation and AI to remain competitive while unemployment rates among skilled young people are rising.
11:11
The reasons behind China’s high youth unemployment rate
The reasons behind China’s high youth unemployment rate
As a consequence of the implementation of automation and AI, the need for human labour will be reduced to a minimum in the near future. Economies and productivity will continue to grow while their dependence on human labour continues to shrink.
The overall wealth of societies is not decreasing as a result of population ageing and a reduction of human workers. On the contrary, the combination of rising productivity and declining production costs is resulting in unprecedented profits.
Population ageing is not the problem – wealth redistribution is. This is because, by replacing human labour through automation and AI, the portion of growing profits that ends up being distributed among the general population is decreasing, resulting in a small minority amassing ever-greater wealth.
This new generation of powerful elite are able to increase their wealth to unprecedented levels thanks to the use of automation and AI while practically eliminating the cost of human labour. This is not only leading to a widening wealth gap but also to a society where most people are not able to make a decent living through their own labour.
This phenomenon is an existential problem for societies. To address it, Georgieva urges governments and companies to “establish comprehensive social safety nets and offer retraining programmes for vulnerable workers” to make the AI transition more inclusive.
At the current rate of change, it is likely that all but a few professions will fall prey to automation and AI. Hence, more needs to be done. Most of the wealth the productive and profitable economies are producing must be redistributed to ensure everyone has a decent life, regardless of whether they are productive.
How to achieve this is the real challenge facing governments and industries alike. Automation and AI are making human contributions to the global economy unnecessary and obsolete. The unprecedented wealth that implementation of this technology is generating is being amassed by the new elite.
Hence, one of the most significant challenges facing governments and societies in the 21st century is not ageing populations but, rather, the growing difficulty that many people face in trying to make a living. New socioeconomic paradigms must be developed to redistribute this growing wealth to ensure everyone – young or old, productive or not – can enjoy a decent life.
Patrik K. Meyer is currently a visiting professor at Halic University in Istanbul and a research associate at the Centre on Conflict, Development and Peacebuilding at the Geneva Graduate Institute
