The Sunday Negocios (Business) insert in the Spanish daily newspaper El País of 20 August included an article written by Antonio Huertas. MAPFRE Chairman and CEO analyzes the reality of population aging which, in his opinion, “if managed in the right way, can give rise to as many opportunities as the digital revolution.
“Healthy aging should make us proud as a society”, said the Chairman and CEO, referring to the concept of agingnomics (economics of aging), a topic on which certain MAPFRE executives discussed in a recent session of Deusto Business School’s TEDx talks, in which they took a holistic view of aging.
In the following article, Antonio Huertas regretted the general connotation given to aging and concluded with a recommendation to seek out and take advantage of new job niches in tourism, leisure or health, while calling for in-depth debate on the new paradigm in order to design a comprehensive strategy.
* The following content is non-official from an in-house translation of the original version published by El País
The economics of aging
We’ve been talking about digitalization for nearly a decade now. There are reports, predictions, analyses and all kinds of opinions on the impact of digitalization on society, the economy and even on people. Alongside this new connected world, there is another global reality about which little positive is being said, but which managed in the right way, can give rise to as many opportunities as the digital revolution. I’m talking about the aging of the population. Eight of every 100 people in the world are over 65 years old and this number is predicted to reach nearly 20 by 2050. Aging, which is heavily concentrated in the world’s most developed areas, is particularly intense in Europe, where one out of every five is over 65. In some countries, such as Spain, aging is combined with a low birth rate.
Healthy aging should make us proud as a society. Some reports claim that people born in the coming decades will live to be 120 years old. But are we prepared for this reality? Several MAPFRE executives took part recently in the TEDx talk organized by Deusto Business School, in which they took a holistic view of aging under a new concept coined by the two institutions: ‘agingnomics’ or the economics of aging. Its impact is a challenge that coincides over time with technological development, whereby if we add “connected world” to “aged world”, we have the perfect storm scenario for change. We barely pay any positive attention to aged world. We just moan about what’s coming.
Previously, I have pointed out the problems of sustaining the public pension system, which are exacerbated by the aging population as more pensioners joining the system upon reaching the age of retirement with more rights, and with people living longer, means they will be collecting longer since these are lifetime pensions. The latest institution to alert about this is the Independent Authority for Fiscal Responsibility (AIReF), which warns that, given the system’s sustainability mechanisms, pensioners will have lost 7 percent of their purchasing power by 2022. As in other neighboring countries, all the organizations analyzing this issue recommend increasing individual retirement savings to make up for the diminishing capacity of public pension revenue.
Those who stand to lose from the decisions being made today are current workers, who will reach retirement with increasingly smaller pensions. People over 45 now will retire with smaller pensions, and unless they have other income sources, their pensions will not be enough to maintain their quality of life. In 2031, which is just around the corner, one of every four Spaniards will be over 65 and 62.5 percent of the population will be either under 16 or over 65; i.e. not part of the working-age population. When only four out of 10 are able to work, or perhaps slightly more when the retirement age is pushed back to 67, who will feed the economy?
We are committed to facing the population aging challenge realistically, but also to seizing the opportunities it brings. The economics of aging not only takes into account that certain costs will rise, but that we will have to seek out and take advantage of new job niches in tourism, leisure or health. Moreover, we must be able to adapt our current employment model to the reality of “young” people over 65 and capable of working for many more years, who may find their place in new jobs that could crop up in the new industry related to agingnomics. This new reality must be debated at length so that an initial strategy can be drawn up so we can “ride the wave.” Otherwise, if we procrastinate the wave will swallow us up.