|DESA News Vol. 11, No. 4||April 2007|
Older persons are more likely to be poor than working- age adults so social protection systems need to be deepened to ensure old age security in developing countries
The graying of industrialized countries resulting from declining birth rates and increased life expectancy has been making headlines for quite some time. Yet eyebrows were raised when DESA’s Population Division announced recently that nearly eighty percent of people aged sixty years or over are predicted to be living in developing nations by the year 2050. The developing world is indeed ageing more rapidly than the more advanced regions, and this shift is set to test the viability of long-term development strategies.
According to the newly released 2006 report on World Population Prospects, for the first time in history the number of older persons in the world is set to surpass the number of children by 2045. This demographic crossover is the product of a long-term decline in mortality and, especially, fertility rates globally, which in turn have led to a steady ageing of the world’s population. Europe, whose inhabitants are the oldest in the world, already found itself home to more elderly persons than children ten years ago, and the trend shows no signs of abating. Elderly persons in Asia, Latin America and the Caribbean, North America and Oceania are expected to account for a quarter of the population by 2050, while thirty-five percent of the population in Europe will be aged sixty or over. In Africa, the proportion of aged persons is expected to double by 2050, to ten percent.
Although the case of Europe stands out, “the biggest change will occur in the developing world, and developing countries will have to cope with a much more aged population,” says Hania Zlotnik, Director of the DESA Population Division. Due to significant reductions in fertility, the median age in Asia will rise from twenty-eight to forty years by mid-century, while in Latin America it will increase from twenty-six to forty years. In China alone, about one third of the population or roughly 430 million people will consist of retirees by 2050. Even Africa with its large youth population can expect to see an increase in median age from nineteen years today to twenty-eight years.
Demographic shifts of this magnitude will trigger changes in the labour market and the world economy, and force a review of health care and social protection systems, but not all countries are equally ready to face these challenges. As Sergei Zelenev, Chief of the Social Integration Branch in the Division for Social Policy and Development puts it, “Developed countries have become aged when they are affluent, and have ammunition to tackle a growing older population.” Less advanced countries must “face ageing problems when are still relatively poor, and have to solve them simultaneously with many other development-related issues.”
A potential shortage of workers is viewed as one of the main problems. The proportion of the population of working age is expected to decline between 2005 and 2050 in every major area of the world except Africa. By 2050, Europe is expected to have fourteen workers for every ten dependants, most commonly children and persons aged sixty-five or over. In other areas, the ratio is likely to range from sixteen to ten in North America, to nineteen to ten in Africa.
It has almost become a mantra that a shrinking number of workers will have to support a growing number of elderly people to maintain public pension systems as we know them. Many developed countries have started to adjust pension and health-care programmes to make them sustainable for future generations. In his report on major developments since the Second World Assembly on Ageing, the Secretary-General points out that early retirement is increasingly discouraged, and that providing incentives to motivate older persons to stay in the work force longer appears an effective and realistic response to the income security problem.
In the developing world, few older persons can afford retirement as pension systems are scarce. This is especially true in the least developed countries. Older persons are also more likely to be poor than persons of working age, stresses the Secretary-General in his report on world population monitoring, focusing on the changing age structures of populations and their implications for development. In Bangladesh, China and India, efforts are underway to curb poverty in old age by granting older workers better access to credit for small business development, especially for workers in rural communities. Given the mass migration of rural youth to cities in recent years, such policies provide a development windfall by offering income opportunities for older workers while at the same time closing the rural-urban gap.
The sense of alarm over pensions that prevails in the developed world does not generally arise in developing countries simply because the majority of individuals lack access to formal pension plans, says Mr. Zelenev. For many, formal pension are an unattainable luxury which perpetuates, and sometimes exacerbates, inequality. He cites the example of India, where ninety percent of workers lack any form of labour market social protection. Moreover, the scale of the informal economy can make it difficult to set up contributory pension plans.
A few developing countries have, however, introduced social pensions or non-contributory pensions that guarantee a subsistence income to low-income older persons whether or not they have worked in the formal economy. Social pensions are important tools for providing a minimal level of protection to older people who have spent most of their lives in the informal sector, or who have never been employed. Recent studies by the International Labour Organization challenge the widely-held view that universal social protection is unaffordable for the poorest countries. According to the ILO, social pensions and health care can be delivered at low per capita costs.
Social pensions have proven to be very effective in reducing poverty among elderly people. Botswana, Mauritius and Nepal have all established universal social pension plans. Even Lesotho, one of the world’s poorest countries, has gone down this path. Bangladesh and Thailand are implementing similar old-age allowances.
In the face of globalization and growing competition, the State should not withdraw from social protection systems nor lose sight of vulnerable people, stresses Mr Zelenev. The ratio of workers to retired people in densely populated countries such as China does complicate matters and caution is certainly advised, but says Mr. Zelenev of the current debate on reform of social protection systems, “We have to face reality” and take appropriate action to address demographic and social imbalances. “Very hast steps, such as drastic privatization measures, could have nasty consequences.” Raising the retirement age, if controversial, seems to be a preferred option.
It is a popular perception that migration is a useful means of offsetting the impact of population ageing on labour shortage and a guarantee of sustainable pension systems. That perception is wrong. According to the 2006 revision of World Population Prospects, up to 103 million migrants will move to the more developed regions between now and 2050. Yet far from a replacement effect, migration will have a moderate impact on the age structures of those economies. “We do not expect that migration is going to drive population growth at the levels that fertility has driven them in the past,” foresees Ms. Zlotnik. “At best, it is going to keep the population constant or palliate the decline.”
For example, the DESA Population Division has estimated that the number of immigrants admitted to Europe annually would need to be twice as high between 2000 and 2050 as it was between 1995 and 2000 to counter population decline. The volume of immigration needed to offset projected drops in the working-age population would have to be even larger.
Similarly, developing countries with ageing populations are not likely to be able to “import” enough migrants to keep their economies growing, according to the Population Division forecast. Though countries with fertility rates – mainly in sub-Saharan Africa and South and Central Asia – will not have a problem with a lack of labour supply in the next decades, workers will still have to support an ever increasing population of older persons.
The spread of elderly people in societies with low fertility rates will also trigger new patterns of consumption. Codrina Rada, Associate Economic Officer in the Development Policy and Analysis Division in DESA, points to an increase in demand for services. In the current context of global integration, a significant demand for services in developed countries could spill over to the economies of the developing world and the global economy as a whole. Two scenarios are envisaged. More demand for services could lead to lower demand of tradable goods from developing countries. “This could have major implications for export-led growth in developing countries,” forecasts Ms. Rada. On the other hand, “Since labour supply in developed countries is expected to decline, many services could be outsourced – a scenario that would spur faster growth in developing countries.”
A huge demand for caregivers in ageing societies could, however, result in movement of human capital in the opposite direction. Migrants from developing countries may move to developed countries and to ageing developing countries to meet the demand. Although migration would not have a major impact on the host countries, as Ms Zlotnik points out, it may affect the developing economies from which migrants come. There is already a strong demand for such caregivers in many developed nations. The upside for developing countries is a boost in foreign remittances. On the downside, the brain drain, or loss of workers during their most productive years, can wreck havoc on the economic and social fabric of developing countries.
The WHO World Health Report 2006 has referred to a “current crisis in the global health workforce,” revealing an estimated shortage of almost 4.3 million doctors, midwives, nurses and support workers worldwide, a shortage that is certainly most severe in the poorest countries, especially in sub-Saharan Africa where health workers are most needed. Dire as it may sound, the problem can be tackled over the next ten years provided we start now. The WHO offers ambitious proposals to that end.
At the same time, ageing populations will necessitate a shift in labour from low to higher productivity jobs to make up for potential lower growth in declining working-age populations. Moreover, the presence of a rampant, low-productivity informal sector in many developing regions emerges as a clear impediment to a balanced ratio of workers to retired. All the same, there is a window of opportunity in areas such as Asia and Latin America and the Caribbean. The Secretary-General indicates in his report on World population monitoring, focusing on the changing age structures of populations and their implications for development, that those regions still have a couple of decades to translate an expanded working age population into high productivity economies with improved living standards capable of financing old age security – provided jobs can be generated for an increasing number of workers.
Despite the challenges brought about by an ageing society, the elderly need not be a drain on the economy. “Older persons are not simply dependants who are taking from the system, but full participants,” underlines Mr Zelenev. “They make contributions as consumers and can keep on being productive by enhancing their skills and through continuous education.”
Five years ago, more than 150 countries adopted the Madrid International Plan of Action on Ageing and recognized that ageing is both an achievement of society and a challenge. The Plan of Action lays the groundwork for ensuring that older persons are empowered and full participants in society and for advancing health and well-being in old age. It also calls for strengthening solidarity between generations. Care-giver responsibilities, for instance, often take on an intergenerational dimension with older persons looking after grandchildren and young adults who in turn provide long-term care for seniors.
The Madrid Plan of Action provides practical tools to cope with the development challenges of ageing such as the need for long-term health care, income security, and social protection. It also calls for mainstreaming ageing issues in the UN development agenda with the struggle against poverty among older persons a pivotal goal. Of course, each country must decide what it is in its own best interest, but the Madrid Plan is a good point of departure. As Secretary-General Ban Ki-moon has said, “We should implement its vision.”
DESA’s World Economic and Social Survey 2007 will be devoted to development in an ageing world. The publication is expected to be released in July during the high-level segment of the Economic and Social Council session in Geneva.
The 2006 revision of the World Population Prospects can be found at http://www.un.org/esa/population/publications/wpp2006/wpp2006.htm.
More information on the Madrid International Plan of Action on Ageing and the UN programme on ageing is available at: http://www.un.org/esa/socdev/ageing/ .
Ms. Hania Zlotnik, Director of the DESA Population Division, presents the 2006 revision of World Population Prospects on 13 March. A recording of the event is available at http://webcast.un.org/ramgen/pressconference/pc070313am1.rm.
New instrument on managing the world’s forests on track for adoption this month
While forests cover about 30 percent of the world’s land area, they are shrinking at an alarming rate with areas the size of Panama or Sierra Leone disappearing year after year. About 1.6 billion people rely on forests for their livelihoods and, as world leaders highlighted in the Millennium Declaration, forests play an important part in poverty eradication and environmental sustainability. Creating awareness of the need to protect and ensure that the world’s forests are managed sustainably requires a global effort. This month governments at the United Nations Forum on Forests are expected to join forces to adopt a landmark agreement that will serve as a practical guide for implementation of forest-policy objectives at all levels.
“The value added of this instrument is that puts everyone on the same page by providing a clearly articulated and practical framework for sustainable forest management,” says Pekka Patosaari, director of the Forum secretariat. Consensus for the adoption of a non-legally binding instrument on all types of forests represents, he adds, a “giant leap forward for international forest policy.” The agreement will be a springboard to closer cooperation among forest-related international agreements and processes, and bolster efforts towards sustainable development and poverty reduction.
Consensus on the new instrument on forests has not achieved overnight, but is the result of a decade or more of intergovernmental discussions. Although forests have been a priority issue since the 1992 Earth Summit held in Rio de Janeiro, it was not until last year that unanimous political commitment to sustainable forest management was attained. The instrument is expected to be a key mechanism for translating policies devised by the UN Forum on Forests into action, as envisaged by the Secretary-General in his report on the Forum’s multi-year programme of work.
At its session last year, the Forum agreed on four shared global objectives on forests, which will also guide application of the new instrument. These goals address the need to curb deforestation, the role of forests in the achievement of internationally agreed development goals and, in general, the principle of sustainability in forest management. Sustainable forest management – as a broad policy term and framework – aims to ensure that goods and services derived from forests meet today’s needs, while securing their availability and contribution to long-term development.
One of the global goals stresses the importance of reversing the loss of forest cover worldwide, including through protection, restoration, afforestation and reforestation, while increasing efforts to prevent forest degradation. Other goals relate to enhancing forest-based economic, social and environmental benefits, increasing the amount of forest area under sustainable management, and reversing the decline of official development assistance for these purposes.
Reversing the loss of forest cover is consistent with the Kyoto Protocol, which in article 3.3 calls for the maintenance of forests by afforestation and reforestation, and by controlling deforestation. Deforestation is currently occurring at about the rate of 13 million hectares per year. The net decrease in forest area over the period 2000-2005 is about 7.3 million hectares per year, down from 8.9 million hectares per year from 1990 to 2000. This is according to DESA’s Millennium Development Goals Report 2006, which also indicates that the current net loss is equivalent to about 200 square kilometres per day.
“Loss of forest cover occurs largely as a result of human activities,” says Mr. Patosaari, and “the drivers of deforestation are both within and outside the forest sector.” Conversion of land for farming or livestock, unsustainable harvesting of timber, unsound land management practices, and the creation of human settlements are some of its most common causes. Converting forestlands to other uses in turn fuels climate change, UNEP reminds us, as it gives off carbon dioxide emissions to the atmosphere.
Furthermore, according to the World Bank, every year $10 billion is lost due to illegal logging. The associated trade is more than five times the official development assistance to the forest sector alone. Mr. Patosaari, points out that illegally harvested forest products and associated trade cause not only loss of revenue, but also leads to ecosystem degradation, loss of biodiversity and further poverty, particularly in developing countries.
“Forest planting, landscape restoration and natural expansion of forests have significantly reduced the net loss of forest area,” indicates the Millennium Development Goals 2006 report. However, “these newly replanted lands do not have the ecological value of older, more biologically diverse forests, and do not provide the same benefits and livelihoods for local communities.”
Improving the livelihoods of people who are dependent on forests by strengthening forest-based economic, social and environmental benefits is another important target. According to FAO’s biennial report on the State of the World’s Forests 2007, many countries are shifting strategies to stress the role of the forest sector in poverty reduction. But this entails recognition of forest benefits that are systematically undervalued in almost all countries.
Forests open the way to poverty alleviation by facilitating food security and access to safe drinking water. Forests and poverty alleviation therefore, go hand in hand. As the report notes, the countries that face the most serious challenges in achieving sustainable forest management are largely poor or conflict-stricken countries. Africa, Latin America and the Caribbean are regions with the highest losses of wood-covered regions. In contrast, adds the report, most countries in Europe and North America have reversed centuries of deforestation through careful forest management and economic prosperity.
While raising the area of protected forests worldwide is important, the third global goal on forests calls for fostering trade in forest products from sustainably managed and legally harvested forests. The new instrument on forests, says Mr. Patosaari, will help provide a level playing field for the removal of trade barriers, open and non-discriminatory rules for trade and investment, and promoting market access for products from sustainably managed forests.
The substantial financial resources required for achieving sustainable forest management are often beyond the capacity of many developing countries. Reversing the decline in official development assistance in this area – as the Economic and Social Council called for in resolution 2006/49 – and mobilizing new financial resources is therefore of global significance. In this regard, the new instrument on forests will facilitate the mobilization of such resources from private, public, domestic and international sources.
Adequate financing for sustainable forest management is a necessity. In his 2003 report on the economic aspects of forests, the Secretary-General stated, however, that financing is hampered by inadequate revenue collection and perverse fiscal incentives that encourage unsustainable practices especially in developing countries. Management practices often do not pay for themselves and forestry does not always provide the same level of profit that other land uses do.
The main challenge, says the Secretary-General, is to channel existing financing from unsustainable practices to sustainable ones and to make sustainable forest management more profitable. In his 2003 report, he points out that explicit and implicit perverse subsidies in tropical and temperate forests amount to $14 billion per year. A recent estimate made by the UN Forum on Forests also suggests that the failure to collect taxes and royalties from legal forest operations amounts to a loss of $5 billion worldwide, or more than three times the official development assistance channeled to forestry.
A first step towards sustainable forest management is awareness. For this reason, the non-legally binding instrument on all types of forests will provide, in the words of Mr. Patosaari, “a platform for promoting awareness and public involvement in, and understanding of, the sustainable management and conservation of forests.”
The new agreement translates the growing awareness of the international community into political commitment. Even though the instrument is not legally binding, “in international law, the effectiveness of policy instruments is dependent on the political commitment associated with their implementation rather than their legal nature,” said Judge Francisco Rezek, a former member of the International Court of Justice.
Full documentation for the seventh session of the UN Forum on Forests to be held in New York from 16-27 April, including the revised composite draft text for developing a non-legally binding instrument, can be found online at http://www.un.org/esa/forests/session.html.
On 14 December 2006, Pekka Patosaari, Director of the Secretariat of the UN Forum on Forests, spoke to UN Radio about the non-binding instrument, and what is means for development. A podcast is available at http://radio.un.org/story.asp?NewsID=5889&KW_txt=forest
H.E. Mr. Gilberto Rincon Gallardo, President of the National Council to prevent discrimination in Mexico, addresses the signing ceremony of the new United Nations Convention on the Rights of Persons with Disabilities, which aims to secure the rights of some 650 million persons with disabilities around the world. Eighty-one countries and the European Community participated, the most for the opening of any treaty. The event, held in the UN General Assembly Hall, at UN Headquarters in New York on 30 March, was also attended by over 350 representatives of disability organizations from around the world, who were instrumental in the negotiation of the agreement. Jamaica acted quickly to ratify the Convention, the first to go beyond endorsement and adopt it as law. The pact needs nineteen more States Parties to enter into force.