BOOKS

2045 – GLOBAL DEMOGRAPHIC TRENDS

Revealing the growing demographic crises

A systematic analysis of the demographic and socio-economic profiles and trends evident today to provide insights into what the global demographic and socio-economic profile will be like in 2045

Now Available on

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in epub (US$9.90) or Print (US$15.90).

Chapters

Twenty Forty-Five

CHAPTER PROFILE
Chapter 1
Introduction
This Chapter explains how demographics (age, gender, household formation, education) and socioeconomics (employment, income, consumption) follow stable trends. The shape of today’s socio-demographics significantly determines tomorrow’s shape. Therefore, we can get a reasonably reliable view of the future world and how much it will have changed from the current scenario. As demonstrated throughout the subsequent Chapters, the degree of change is significant.
Chapter 2
Segmentation of Countries by Age and Affluence
This book uses data from 117 countries, so it is necessary to develop a structure for identifying emerging trends without descending into an incomprehensible level of detail. The purpose of this Chapter is to explain how using median age and average GDP per capita, the world can be segmented into four meaningful groups of countries, which provide the basis for much of the subsequent analysis and discussion.
Chapter 3
Births, Deaths and Migration

Births, Deaths, and migration, together with the age-by-gender profile of the existing population, basically determine the population’s future size and age profile. This chapter examines the trends in these variables and their implications for the future number of births, deaths, and overall age profile of the population of each country. The differences in outcomes are considerable – from countries whose total population is expected to reduce in absolute size to others where the population will nearly double by 2045.

It might be noted that China did not achieve a ‘One Child Policy’. For the last 20 years the average number of births per woman aged 15 to 49 years has been 1.4. Under the policy a very high proportion of the population could have a second child if the first was female.

Chapter 4
The Changing Consumer

The changing number of persons in the different age/life stage profiles of the population (consumers) is a crucial determinant of trends in lifestyles, social and individual needs and ultimately, the shape of society. For example, a rapidly growing child population creates an ongoing demand for school places. Conversely, the more persons over 40 years of age, the greater the demand for health services. This chapter highlights the significant changes projected to happen to the age profile of populations and the movement of countries to a ‘Square’ rather than a ‘Pyramid’ population shape. It also highlights a critical change in the relationship between the number of persons in the key consumer age range (15 to 64 years) in the affluent regions, which account for 63% of global consumption, and the trend in the number of persons looking to be employed.

In the next decade, the number of key consumption decision makers (persons aged 15 to 64 years) in the Affluent countries shows no further growth from 715 million in 2019 to 2030 and then declines to 683 million by 2045. These people account for 63% of global consumption expenditure in 2019.

Chapter 5
Education

The existing age profile and trends in birth rates, death rates, and migration ‘size’ of society, whereas education ‘shapes’ it. Education significantly influences birth rates, employability, individual affluence, and lifestyle. The difference between countries is considerable, and more worrying is the difference in the importance of improving it. Some countries treat it as a low priority, which is unfortunate for their citizens. Others place a high value on it and benefit from increased employment and productivity. The big concern with education is that it takes time to be effective – a child is not educated overnight. As such, the countries not performing well in education now will not achieve improvement (typically away from poverty) for some time.

It is estimated that in 2020 about 36 million persons turn 15 years of age but with limited education and theoretically enter working age and are looking for work. This increases to 52 million persons per annum in 2045.

Chapter 6
Employment
Employed persons are, of course, the ‘engine’ of the economy. The more significant the proportion of the population working, the more robust the economy. This Chapter highlights the two different stories regarding employment across the countries covered in this analysis. In the older countries (and generally more affluent), the total labour force is not projected to grow relative to the population and, in some cases, decline. However, due to the ‘working age’ extending to age 74, it does not decline significantly.
However, in the ‘younger’ world, the growth in the number of people of working age (15 to 64 years) is considerable, from 2.8 billion in 2019 to 3.9 billion by 2045. To maintain employment rates, there need to be 625 million more jobs available, even more, if female participation in the labour force were to increase. The historical record in leveraging this ‘demographic dividend’ is not good.

Working age in the older and affluent countries is no longer 15 to 64 years. It now extends to 74. Already in the USA 24% of males aged 70 to 74 years are in full time employment. The same in Japan. Age 65 to 74 is typically the fastest growing age group, so these countries are not running out of workers.

Chapter 7
Household Incomes
Household incomes are challenging to measure on a comparable basis, so we have used our method for estimating what a household has to spend per annum given constraints including GDP per worker, number of workers per household, salary as a per cent of GDP per worker and Private Consumption Expenditure per Household. While not infallible, it is more defensible than averages of the Household Income and Expenditure Surveys.
The difference between the affluent and the poor countries is considerable, and within the poor countries, the inequality of distribution is extreme. Generally, the expectation is that average household incomes will increase. This will help drive ongoing consumption expenditure and, hence, future demand for workers.

While claims of a growing middle class are made about the Young Poor Countries, this hides an unfortunate truth – the lowest income segment is also growing. Globally, the lowest income segment (under US$7,500 pa) increased by 100 million households in the last decade.

Chapter 8
Household Expenditure

The world has just gone through a consumption boom, and projections indicate that it will continue for the next decade. However, after 2030, the absolute number of affluent consumers will start to decline rapidly, and a significant proportion are moving into the age band where fixed income is more common and, with that, more careful spending. These factors combined mean that the annual growth rate of expenditure by the ‘Older Affluent’ Country Segment, which accounts for 62% of all consumer spending in 2019, will fall to almost zero by 2045. However, there is projected to be rapid growth in the total expenditure of households (and hence consumers) in the world’s younger and less affluent regions. This would suggest a significant shift in the types of products and services with growing demand in future.

Over the next quarter century to 2045 total household expenditure is projected to grow at 1.8% per annum. The fastest growth will be in the Young Poor countries and they will account for 14% of total growth even though they are 3.3% of all expenditure in 2019

Chapter 9
Health
Combining the trends in incidence/prevalence data by age and gender for the most prevalent health conditions with the trends in the age/gender profile of the population identifies just where demand for health services will grow and by how much. While the probability of developing a need for treatment increases rapidly after age 40, older countries do not face the most considerable growth in demand – they are already middle-aged populations. Instead, it is the younger countries where demand increases most rapidly – over 4% per annum in cases – as they move into middle age.

For the past decade, health expenditure has tended to peak at 15% of GDP, and most countries can afford to increase spending per case by 1% per annum and stay under that hurdle. The poorer but faster-growing (economically) countries can afford a 2% annual increase. The biggest issue is who pays. Ironically, in the more affluent countries, the government typically accounts for 67% of health expenditure. In the poor countries, it contributes 27%, which means most health expenditure has to be funded by the individual household – who with low incomes cannot afford anything but basic care.

The increase in demand for health services will be greatest in the young poor countries. In those countries chronic conditions will increase by 138% compared with 26% in the older affluent countries. As the health systems in the young poor countries are already underfunded the stress will be considerable in future.

Chapter 10
China

With a population of 1.4 billion in 2019, trends in China’s demographic and socio-economic profile (and India – next Chapter) are potentially significant globally. This Chapter describes the changing age structure of the urban and rural populations over the next 25 years, considering historic and projected rural-to-urban migration, birth trends, and the impact of improving education, productivity and income. Changes in the birth regulations will not increase total births as the number of women of childbearing age is in steep decline due to earlier reduced births. Total Births are projected to decline from 15 million in 2019 to 11 million by 2030. As a result, China’s total population peaks in 2024. This chapter shows how rural-to-urban migration has and will significantly skew the age profile of the urban population, which has implications for ongoing consumer spending.

The Rural-Urban migration means that while China’s total labour force will decline in future, the urban labour force continues to grow. Urban is four times as productive as the rural labour force.

Chapter 11
India
India is transitioning from young to middle age. This Chapter shows how the expected impact of the ‘demographic dividend’ is weakening as the growth of the working-age population slows. It also raises concerns about whether India can maintain employment levels given its poor education profile. It hasn’t been for the last decade. Can things improve? However, productivity per worker has improved, and with ongoing improvements to education, the projections indicate increased economic growth.
The Chapter also shows that while birth rates are going down steeply (with education and affluence), births do not decline significantly for some years due to an increasing number of women of childbearing age. As a result, the population continues to grow and is projected to reach 1.52 billion by 2045. This means that there continues to be an increasing demand for education (more children), which hampers the ability to lift quality rather than quantity.

India’s biggest issue is how long before the improvements in availability of education result in meaningful movement of (better educated) workers from rural to urban employment and lift overall productivity. Urbanisation is only now starting to increase as a proportion of the population.

Appendices
A: GDP Forecasts
This lists the GDP forecasts used for this analysis. Global Demographics Ltd generates its GDP forecasts based on the trends in the number of persons of working age, the propensity to be employed, the education profile of the adult population, and in the accumulated Fixed Capital Investment per worker. These factors combined give the number of workers, the productivity per worker and hence the total GDP (workers multiplied by productivity per worker). They tend to align with forecasts produced by the IMF but are not identical.
B: Definitions
This briefly defines the different variables referred to in this research.
C: Methodology
The forecasts produced in this book have been developed using Global Demographics Ltd.’s proprietary population model. It is essentially an econometric model applied to demographic data. The model has been designed and improved over 25 years and applied to 117 countries, which means it can handle many relationships. While no model is infallible, it does have the advantage that demographic variables are relatively consistent in trends. As such, population forecasts are within plus or minus 5% over 5 years. It is less reliable in terms of GDP forecasts and, by implication, estimates of household incomes (Mean and distribution) and expenditure patterns. The model tends to be on the conservative side in terms of GDP forecasts and, hence, household income. This appendix shows the form of analysis and order of analysis.
D: Data Sources
This provides a listing of the data sources used for the modelling process. Please note that all forecasts are the product of Global Demographics Ltd.’s population model.

Table of contents

The Big Issues 3

  • Introduction 3
  • Total population 3
  • Global Age Profile 4
  • Population Dynamics (Births, Deaths, and Migration) 5
  • Education 7
  • Employment 8
  • The Distribution of income 12
  • Consumption Expenditure 14
  • Health 15

Table of Contents 16

Chapter 1 Introduction 30

  • Gaining a Perspective 30
    • Chapter Two – Segmentation and a Global Perspective 35
      • Median age 35
      • Gross Domestic Product per Capita 36
      • The Country Segments 37
    • Chapter Three – Births Deaths and Migration 40
    • Chapter Four. The Global Age Profile 44
    • Chapter Five – Education 47
    • Chapter Six – Employment 50
    • Chapter Seven – Household Incomes 53
    • Chapter Eight – Consumption Expenditure 55
    • Chapter Nine – Health 57
    • Chapter Ten – China 61
    • Chapter Eleven – India 65
  • To Conclude 67

Chapter 2 The World at a Glance 70

  • Introduction 70
    • The Age Dimension 71
    • The Affluence Dimension 72
  • Global Age/Affluence Segments 73
    • The Older Affluent Segment 75
    • The Older Less Affluent Segment 81
    • The Family Stage Low Income Segment 87
      • India 89
      • The other Countries in this Segment 91
      • The Young Poor Countries 94
  • In Summary 99
  • Summary Profile – Diversity of the World’s Base Demographics 103

Chapter 3

  • Births, Deaths and Migration 104
  • Introduction 104
  • Births 106
    • Education Index: 108
    • The Young Poor Country Segment 109
      • Kenya – A Specific Example 114
      • The Economic Implications of Slowing the Birth Rate 116
    • The Older Affluent Country Segment 122
    • The Older Lower Income Country Segment 124
      • China – a Brief description 125
    • The Family Stage Low Income Segment 128
  • Deaths 130
  • Migration 132
    • The Greek Dilemma 135
  • The relative Trends by Country Segment and Individual Countries 138
    • Older Affluent 138
    • The Older Less Affluent Country Segment 140
    • Family Stage Low Income Country Segment 141
    • The Young Poor Country Segment 142
  • What does it all mean? 144
  • Summary Profile – Population Change 149

Chapter 4 The Global Age Profile 150

  • Introduction 150
  • An Overview of Age Dynamics by Country Segment 153
    • Older Affluent Country Segment 154
      • No-immigration Countries. 156
      • Countries that Allow Immigration 157
      • Changing Age Profile by Country 159
      • Changing Household Size and Number of Households 160
      • The number of Workers per Household 162
      • Immigration compared to no immigration. 162
        • Japan 162
        • The United States of America 165
    • The Older Low Income Country Segment 167
      • China – there are two relevant populations. 167
      • Rural China 168
      • Urban China 170
    • The Rest of the Older Low-Income Country Segment 173
    • Changing Household Size and Number of Households 176
    • The Number of Workers per Household 178
  • Family Stage Low Income Country Segment 179
    • Changing Household Size and Number of Households 183
    • The Number of Workers per Household 185
  • The Young Poor Country Segment 185
    • Changing Household Size and Number of Households 188
    • The Number of Workers per Household 190
  • Summary Comment. 190

Chapter 5 : Education 193

  • Introduction – Why Education? 193
    • Education Index Explained 195
    • Accumulated Fixed Capital Investment per worker explained. 195
    • The Relationship Between Education, Accumulated Fixed Capital Investment and Productivity 196
    • Education and Prosperity 197
    • Education and the Propensity to have Children. 200
  • Propensity to spend on Education. 201
    • Countries Increasing their Advantage (top right segment in Fig 5- 205
    • Coasting (Top Left Segment in Figure 5-4) 207
    • Doing the Right Thing (Countries on the Lower Right of Fig 5-4) 209
    • The Losers (Countries on the lower left of Fig 5-4) 210
  • The Demand Side of the Equation 213
    • To Summarize 215
  • The Current Educational Profile of the Adult Population 217
  • In Summary 221
  • Summary Profile – Education 223

Chapter 6 Working Age and Employment 224

  • Why is employment important? 224
  • The Potential to be Employed. 228
  • Working Age and the Age Profile of Countries 229
    • The Older Affluent Countries 232
    • The Older Low-Income Countries 235
    • The Family Stage Low Income Segment 239
    • The Young Poor Segment 242
  • Summary of the Trend in Working Age Populations 245
  • Conversion of Working Age Persons into Employed Persons 246
    • Number of Employed in Older Countries 250
    • Number of Employed in Younger Countries 251
  • The Old Affluent 253
    • Japan: Out of Step or the New Way? 255
  • The Older Low-Income Countries 257
    • China – Two Scenarios in One Country 258
  • The Family Stage Low Income Segment 259
  • The Young Poor Segment of Countries 262
  • To Conclude 265
  • Summary Profile – Employment 267

Chapter 7

  • Incomes 268
  • What this Chapter is About 268
  • But First, The Issue of Measurement 270
  • How Different are Incomes? 275
    • Why is there such a difference in Household Incomes? 280
  • The Changing Distribution of Households by Income 283
    • The Old Affluent Countries 284
    • The Older Low-Income Segment 289
    • Excluding China 289
    • China. 292
  • The Family Stage Low Income Segment 295
    • India 295
    • Countries in the Young Family Low Income Segment other than India 297
  • The Young Poor 300
  • To Summarise 304
  • Summary Profile – Household Incomes 307

Chapter 8 Consumption – The Route to Employment 308

  • Introduction 308
  • Historic trend and Location of Consumption 310
    • Overall Trend 310
    • Where was the growth? 312
    • Propensity to spend. 314
    • and What is it Spent on? 316
  • Future Demand Trends 317
    • Which Country and Income Segments are Important? 323
      • The Older Affluent 323
      • The Older less Affluent Segment (Excluding China) 326
      • China – Urban 328
      • The Family Stage Low Income Segment – Excluding India 330
      • India 332
      • The Young Poor Country Segment 334
    • Implications for Future Demand and Employment 336
      • Total Consumption Expenditure 339
      • Efficiency of creating consumer goods and services. 340
      • Implication for number of workers required. 340
  • Summary 343
  • Summary Profile – Consumption Expenditure 346

Chapter 9 The Health Tsunami 347

  • Introduction 347
  • The Methodology Used to Forecast Demand 348
  • The Likely Trend in Demand for HealthCare to 2045 349
    • The Changing Age Profile of Populations 349
    • Trends in Incidence and Prevalence of Common Health Conditions 354
      • Cancer Incidence Rates by Age 354
      • Projected Trend in the Number of Cancer Cases. 356
      • Projected trend in the ‘Prevalence of Chronic and Other Conditions’ 358
      • To Summarise Demand Forecasts 361
    • Market Value and Trend 362
      • Future Trends in Healthcare Expenditure 365
        • Older Affluent Country Segment 368
        • The Older Low Income 370
        • The Family Stage Low Income Country Segment 373
        • Young Poor Country Segment 375
    • Who Pays for Healthcare? 378
      • Older Affluent Countries 379
      • Older Low Income Country Segment 380
      • Family Stage Low Income Country Segment 382
      • Young Poor Country Segment 383
  • To Conclude. 384
  • Summary Profile – Health Expenditure and Demand 386

Chapter 10 The Future Demographics of China 387

  • Introduction 387
  • The One Child Policy 389
    • The Initial Concept 389
    • Recent Changes to the Policy 391
  • Education 396
  • Employment 398
    • Working Age Population 398
    • Employed Persons (The Labour Force) 401
  • The Broader Picture. 405
    • The Changing Age profile of Urban and Rural Populations 405
      • Urban Consumer Life Stage Segments 407
      • Rural Key Life Stage Segments 409
    • Domestic Migration 410
    • Wages and Productivity of the Worker 413
    • Household Incomes 415
    • Household Spending 418
    • The Gender Bias 420
  • To Conclude 422

Chapter 11 India – Will the Demographic Dividend be delivered? 424

  • Introduction 424
  • The Changing Size and Age Profile of the Population 425
    • The Working Age Population 428
    • The Ability to Find Employment. 430
    • The Education Dilemma 431
    • Education and Urbanisation 433
    • Implications for Productivity and GDP growth 434
  • The Household 436
    • Number of households 436
    • The distribution of Households by Income 436
    • The Future Consumer (Life Stages) 441
  • Summary 443

Chapter 12 Twenty Forty-Five 445

  • Introduction 445
  • The Young Poor Country Segment 448
  • The Family Low Income Segment 455
  • The Older Low Income Country Segment 461
  • The Older Affluent Country Segment 467
  • The Total Picture 472
  • Appendix A: Gross Domestic Product Forecasts 474
    • Older Affluent Segment 475
    • Family Stage Low Income Segment 479
  • Appendix B: Methodology 483
    • Model Overview 483
    • The Modelling Process 484
      • Births, Deaths and Migration 485
      • Households and Household Size 486
      • Employment 486
      • Worker Productivity and Wages 487
      • Household Incomes and Distribution Thereof 487
      • Household Expenditure Pattern 488
    • Modelling Structure 489
  • Appendix B: Data Sources 490
    • Four Key Sources 490
    • United Nations Datafiles Used 491
      • Overall population by 5-year age groups by gender. 491
      • Death Rates by age (5 yr.) by gender. 491
      • Birth data. 492
    • World Bank Database 492
      • World Bank Database – Education 493
      • World Bank Database – Employment 494
      • World Bank Database – Key Economic Indicators 494
        • Overall GDP 495
        • Private Consumption Expenditure 495
        • Fixed Capital Investment per annum 495
        • Total Government Expenditure 496
        • Exchange rate to US Dollars 496
        • Deflator 496
      • World Bank Database – Household Income and Distribution of Households by Income 497
      • Household Expenditure Data 498
        • Data Published by Individual Countries 498
        • Other Countries who do not publish such data. 499
      • World Bank Database – HealthCare Expenditure and Statistics 499
  • China 500