Shifting Demographics & Social Change

Demographic and social change is foundational, impacting all other trends. People’s relationship to society, community and government evolves at different rates and in different ways around the globe, but common trends still emerge. Cities continue to attract a larger percentage of the global population. “Work” is taking new forms and requiring new skill sets. The foundation is shifting.

How can we prepare ourselves?

Shifting demographics - FACTS
  • In 2018, for the first time in history, people age 65 or older outnumbered children under age 5.
     
  • Nearly 50% of workers and retirees surveyed across 15 countries in an Aegon survey believe that future generations of retirees will be worse off than those currently in retirement, compared with 18% who believe they will be better off.
     
  • By 2030, consumers in large cities, who comprise 50% of the world population, will generate 81% of global consumption and 91% of global consumption growth12
     

Uneven global demographic trajectories

  • 1927 World population reaches 2B
  • 1950 Life expectancy is 48 years
  • 1960 First oral contraceptive pill is introduced
  • 1965-1970 Population growth rate is 2.1%
  • 1974 World population reaches 4B
  • 1979 China enacts one-child policy
  • 2011 World population reaches 7B
  • 2016 China’s one-child policy ends
  • 2018 People 65+ outnumber children under 5
  • 2019 Life expectancy reaches 72.6 years

 

Current events

Declining global birthrates. As the world approaches a population of 8 billion, global population is at its slowest pace since 1950.167 Contributing factors such as increased access to education and contraception, delayed marriage, increased women’s participation in the workforce, and urbanization have helped drive birthrates down to the lowest in human history. Even where population growth rates remain relatively high – such as in sub-Saharan Africa – growth has gradually slowed.

Aging populations. Nearly every country is experiencing growth in the number and proportion of older persons in its population, due to increased global life expectancy. In 2018, for the first time in history, people age 65 or older outnumbered children under age 5.167 However, these shifts are especially pronounced in countries in North America, Europe and parts of Asia.

Youth booms. Despite slowing global population growth, a quarter of all people on the planet are under age 14, and most of the world’s youth live in developing countries.168 The largest youth population in human history is coming of age; societies in the Middle East, Africa, Latin America and South Asia have youth booms.169 The median age in Nigeria is 19 years, and in Niger, 50% of the population is under 14 years old.

New population centers. Life expectancy improved and fertility decreased during the years that the one-child policy was in effect in China. China’s population is expected to peak around 2025 and then begin a steady decline. India, with its younger population and growth rate above 1%, will surpass China as the world’s most populous country by 2027.167 With its current growth rate of 2.5%, Nigeria is projected by many to have a population of 400 million by 2050 and to overtake the United States as the world's third most-populous country.2

Migrant and displaced workers. Natural disasters, climate change, instability and violence are displacing tens of millions of people. How countries and companies absorb, train and develop this population will shape labor markets in the coming decade.

Future expectations

These demographic trajectories show no sign of changing course. The world's population will continue to grow, with much of the growth coming from the world's least-developed countries, many of which are projected to double in population. More than half of the projected increase in global population will concentrate in just nine countries: India, Nigeria, Pakistan, the Democratic Republic of Congo, Ethiopia, Tanzania, Indonesia, Egypt and the United States.3 Sub-Saharan Africa will account for much of the population growth over the coming decades, and by 2050, more than a quarter of the world's population will live in Africa.

In regions with fast-growing working-age populations, there is an opportunity for "demographic dividend" — accelerated economic growth fueled by favorable demographic conditions4 — but some developing nations will still struggle with unemployment and disaffection, straining already struggling economies and decreasing stability. Companies looking to develop or relocate facilities to collect this dividend must carefully analyze state stability and transparency. Alternatively, these countries will likely be net exporters of skilled and unskilled labor to other countries through formal migrant workers and immigration schemes as well as absorption of displaced and refugee populations.5

Societies with aging populations and declining birth rates, some of the largest societies today, are expected to continue the trend, leading to an aging global population. Global life expectancy is projected to reach 77.1 years by 2050, up from 72.6 years in 2019. By 2050, there will be more than twice as many people above age 65 as children under 5 years old.6 Aging populations are likely to strain government social safety nets and health care systems. They will also change labor markets. In these countries, slower population growth and longer life expectancy are limiting growth in the current working-age population. Governments will continue raising retirement pension qualification ages, both to increase labor resources and reduce the burden on pension systems.

Aging economies will depend on productivity gains, importing labor from abroad, and public policies incentivizing older adults to work past traditional retirement age to drive economic growth. An aging population is a common demographic challenge in developed countries, which have had decades to gradually adjust as their populations aged longer due to advances in health care and education as well as increased income.

For China, which for decades reaped the benefits of a young workforce in its manufacturing sector, this more accelerated demographic shift caused by the one-child policy presents several challenges. By 2050, more than 300 million Chinese will be over age 65, testing the country’s social welfare and health systems. In manufacturing, the labor surplus pool will begin to dwindle, manufacturing wages will increase, and the sector’s profitability could be impacted.Some have argued that these changes, combined with the U.S.-China trade war and fallout from the COVID-19 crisis, could lead to a shift in manufacturing jobs from China to other countries with larger working-age populations and lower wages.8 The counterpoint to such predictions is that the availability of cheap labor will no longer be the most important factor when considering a manufacturing process, particularly as companies increasingly incorporate automation and Industry 4.0 technology, reducing labor from the production process. Other factors, such as reduced time to market and flexibility to respond to customer needs, will push companies toward a more flexible, regional approach to supply chain and manufacturing management.9