Impact of demographics on human resource and global economy


A reputed global financial firm, UBS in a report said that in Asia the developing and a leading economy China is rapidly becoming a middle-aged and middle market economy, and there is a meaningful threat to its high growth may not be for a few years but after that. In contrast India has much more youthful features the report added and will be able to beat China at least in one respect. India has favorable demographics that could see its high growth rate not only be sustained, but probably improved upon.

Demographics are changing the Global Economy and it appears that young India will definitely edge out ageing China the study revealed. In assessing the impact of demographics on economic performance and characteristics, India can easily sustain a GDP growth of more than 7% over the next 25 years, and an outcome close to 8% is feasible and cannot be ruled out.

A favorable demographic outlook is likely to support claims about India’s capacity to remain one of the biggest recipients of IT out sourcing from leading countries of the world.
A major demographic transition around the globe has already begun, which is evident from slowing population growth, a significant change in age structure, stagnation or contraction in size of labor force in developed economies and China. The same demographic transition is also possible in developing and emerging economies after 2020-25. This will have a major impact on availability of human resources and skilled talent.

In turn the impact of human resources due to demographics have many more implications on Global economies.The patterns of consumption that will define rich, emerging and poorer societies depend upon tomorrow’s successful companies, the kind of economic and social infrastructure they will be building. The core businesses of financial services firms, and the level and structure of real interest rates, will depend on the outcome of demand, and more importantly, demographic shifts.

Elaborating on the ageing world, the report says in the developed world, the share of over-65 in relation to the 15-64 year old group ranges between 20-30%, with higher rates in Japan and continental Europe. These rates will creep up in the next five years, but after 2010 there will be a substantial rate of increase such that by 2020, the range of older people among the countries will be 25-45%.

In the cases of Japan and Italy By 2030, the range of older people will be 30-50% and by 2050, it will range between 35% to about 70%. This ‘youth depopulation’, will have far reaching implications for the economy, consumers product companies, providers of educational and child care service, the housing sector and a part of the core (real estate lending) business of financial services institutions, according to the experts who have made the study of global demographics and its impact on economy.

Taking a look at emerging markets , it will take until 2050 before these countries have old age dependency rates as high as those in developed countries in 2020, except for Korea, which will age rapidly after 2020. The same applies to Russia and China while India, Brazil and Turkey have among the most favorable demographic profiles.

Our inference is the changing age structures make an impact on the working age population, which is perhaps the most significant. In developing countries, S. Africa and China are already exhibiting exceptionally slow labor force growth. China’s labor force, according to United Nations data, is entering a protracted period of stagnation and will decline after about 2015. India, Malaysia and Turkey all have much better demographic profiles, even though the growth in their working age populations will slow to a trickle in the long-term.