People are living longer and birth rates are falling. The reshaping of the age pyramid – the Age Shift – is a global phenomenon, affecting all developed nations and an increasing number of developing countries. By planning now, we can position ourselves to exploit the opportunities and meet the challenges. We can anticipate changes and adapt our behaviour to avoid potential problems.

Modern civilization has brought about higher standards of living and longer life expectancy for the citizens of the world. By early next century, the numbers and proportions of the elderly will have risen substantially in developed, transition, and most developing countries. The ageing of the population has important labour market implications. The dependency ratio will continue to rise as the number of economically inactive people increases relative to those who are economically active.

The consequences of ageing are multiple, and include both economic and social aspects. The social results affect family structures, living arrangements, behaviour and attitudes, relations between generations, health and other areas of life. The economic consequences of ageing are associated with the higher cost to society of supporting the elderly population. Longer life will also mean higher health costs as well as the costs of caring for those who are no longer able to look after themselves. The very elderly are more likely to suffer from handicap or illness. Pensions and health care will soon become the largest budget items for governments in most industrialized countries as workers are either choosing, or are being forced to retire earlier while they are living longer. If these trends persist, and unless countermeasures are taken, the social burden of the growing number of pensioners could cripple economies which cannot cope with the soaring costs of supporting non-workers.

Many existing systems of social security are based on the so-called solidarity principle according to which gainfully employed workers contribute to the system, aspiring to receive pension benefits when they retire themselves. Recently, however, the situation has started looking like the mathematical problem of a pool with two pipes. Outflow started exceeding intake in financial terms. The increased drain on public expenditure has made it necessary to plan for adjustments in social security systems.

“Ageist policies are placing a huge burden on the nation as a whole because of the number of older employees they are excluding from the workforce. Society must pay these costs, whether in taxes, benefits or pension provisions.” The aim of pension schemes is to provide income support to workers too old to continue working. Whatever the system adopted and whatever the method of financing, pensions can be viewed as a deduction levied on the working population. When the number of pensioners increases more rapidly than the number of people in employment, it is logical to expect some difficulty in financing the scheme, whatever the political or economic system and whatever the pensions machinery in force.

The socio-economic consequences of ageing have far-reaching implications for a country’s economic performance and can change a particular country’s position in the world economy in multiple ways. Ignoring these problems and avoiding their reform for the future could impede the economic dynamics that give rise to economic growth and productivity. Thus, dealing with ageing-related problems becomes a game of excellence.