0:04

the demographic time bomb some of the world's biggest economies italy germany
japan and china are ageing
0:13
they're running out of workers with potentially disastrous economic and social
consequences
0:19
how can nations deal with volatile demographic pressures and will these pressures
transform the
0:25
global balance of power for decades to come [Music]
0:37
[Music]
0:42
demographics rule the world the exact combination of young and old
0:49
workers and retirees can determine a country's economic future [Music]
0:56
every country has a demographic sweet spot where the majority of your population is of
working age so they're
1:02
both producing and they're consuming great for the economy well demographics are
very important
1:09
put bluntly for advanced economies the more people there are the larger the economy is
likely to be and the more
1:14
power and influence they're like to wield on the global stage and that's why the u.s is a
global leader and it's why
1:20
european countries club together to influence policy on a global level
1:26
population of the planet doubled twice in the 20th century meaning the world was able
to create more wealth
1:33
so in 1965 there were about 3.3 billion people on the planet now it's about 7.3
1:38
that's just just 50 years later so that's obviously had an enormous effect on the
productive capacity of the economy in total
1:45
but as well as growing the world's population is aging the average age of all the people
on
1:51
earth at the start of this decade was 32 by the end of this century it will be
1:56
42. [Music] by 2035 1.1 billion people will be over
2:03
the age of 65. this graying of the planet has potentially profound economic
2:09
implications as the population ages it means there are more people consuming goods
and
2:15
services and fewer people producing them so simply there's just a bit less to go around
and overall that means that economy with
2:21
an aging population is going to be growing slower than otherwise would as aging
2:26
happens people are going to save less they're going to spend more and that's
2:31
potentially going to push up interest rates quite significantly over the next few decades
and if you look at analysis
2:37
from former bank of england economist charlie bean he says that's about to happen
roughly right now we're just at that
2:43
inflection point where demographics start to push up interest rates rather than push
down on
2:50
of the countries with the fastest growing working age populations are in africa or
southeast asia
2:56
these countries are about to enter a demographic window that is going to be very
3:01
supportive of producing economic growth india is in the early parts of a demographic
3:09
sweet spot where the majority of their population is now of working age this really helps
support growth
3:15
india right now in 2016 is projected to be one of if not
3:20
the fastest growing economy in the world the demographic factors are a big
3:25
tailwind to that growth but for more mature developed economies the demographics
are more complex and
3:32
potentially very worrying for some economies particularly in europe who are extremely
indebted the
3:38
slowing growth of the workforce or the shrinking of the workforce means that those
debts become less sustainable so
3:44
it actually adds to pressures that those economies are facing and in particular you've
got sort of
3:49
italy in that camp but actually extends to germany as well while that's not indebted the
the
3:54
demographic pressures facing germany are actually quite significant these
demographic currents can seem
4:01
invisible and slow moving but they affect many of the day-to-day decisions of our
governments
4:06
[Music] i think that decisions may need to be made do do we accept the fact that
4:13
we we do have aging demographics this will create headwinds to us producing growth
or do we accept the fact that
4:21
we we need to accept immigrants to rejuvenate to make the population younger
4:28
countries that are really old if they want to solve this problem has to ask themselves
4:33
how many immigrants do you let in before it actually is a cultural revolution
4:38
within your country the way of life that you're used to is going to change
4:44
demographic trends pose similarly dramatic problems for workers
4:49
as the population is aging it's also living longer and healthier lives so the
4:55
expectancy probably should be that people who are able to work will continue to work
for a bit longer
5:01
and i think to just simply to maintain the the continued growth of living standards for
material living standards
5:07
we've seen over the past 50 years or so people will have to work for london
5:13
stephen chan is an expert in international politics he thinks current trends in population
point to a very
5:19
different world to come a world where even powerful economies like japan and china
face potentially
5:25
catastrophic demographic challenges over the next half century you are going
5:30
to see major demographic shifts there's going to be major expansions of population i
think we may well be
5:37
entering an era not so much of despair that may come but certainly an era to come
shortly of great frustration
5:45
because of demographic pressures [Music]
5:55
demographic trends are changing our world for stephen chan these offer a unique
6:02
insight into global economics and politics professor chan has taught in north
6:07
america europe africa and asia and has served as a diplomat and advisor to the
6:12
uk foreign office and u.s state department and his fascination with how movements of
people can affect movements
6:19
in international affairs stems from his own upbringing my parents were refugees during
world
6:25
war ii somehow they found their way to new zealand and they were told by the
6:30
ship captain you guys better get out there's nothing south of here but penguins so
6:35
the appreciation of the need for people to keep moving around the world that's always
been with me
6:42
what i find surprising is how people seem to imagine that you can live in a
6:47
world without demographic shifts
6:52
in our globalized world demographics matter some countries will have too many people
6:59
leading to internal pressures and migration others will have too few leading to a
7:04
shrinking working age population there are going to be immense demographic changes
increasingly
7:12
disturbing age profiles in many of these countries and of course demographic
7:17
shifts as populations spill over from one country to another the migrant or refugee crisis
for instance is a case in
7:24
point and of course there are very very difficult concerns to do with aging workforces for
instance not enough young
7:32
people coming on stream onto the market not enough people educated to the extent
7:38
that would be required to fulfill the technocratic requirements of the future world
7:45
[Music] china the world's most populous country has grappled with demographic crises
for
7:53
much of the last 50 years since the days of chairman mao its governments have
employed differing
7:59
strategies to handle the nation's changing demographic trends
8:05
german mao was not the world's greatest technocratic planner he would have sudden
whims and almost swings of mood
8:13
but i think that there was an initial very traditional chinese impulse to become powerful
by having a very great
8:21
number of people this is something which has a cultural ancestry now in fact it
8:27
was never viable to grow beyond a certain point even during the early
8:32
years of the communist revolution there were vast food shortages
8:40
the more people you have the more the state must provide for the people within
8:45
so it's actually a burden to the state to have too many people that's why china
8:51
decided to review the policy of growing a population
8:57
and of course went completely to the other extreme to try to restrict the growth of the
population
9:04
the one child policy reversed mao's plans with dramatic results
9:10
china's fertility rate the number of births per woman per lifetime was 5.9 in
9:16
the early 1970s today it has fallen below 1.6
9:23
demographers estimate a country needs a fertility rate of 2.1 to maintain a stable
population
9:30
[Music] china is now on the edge of a demographic cliff with potentially huge
9:36
social consequences i think when we look at china today we're going to be looking at a
9:42
leadership that realizes that continuing a one-child policy is going to lead to
9:47
nothing but long-term difficulties particularly when you have an aging population with no
one to look
9:54
after them because there's only one child you don't have as it were a mass of children or
an extended family
10:01
with masses of children who can do the looking after and then this aging population
becomes a weight
10:09
on the aspirations of the younger ones but the biggest problem is only now
10:15
becoming apparent china's working age population started to fall in 2012.
10:22
the world's second largest economy is losing workers
10:28
by 2025 there will be 316 million chinese over the age of 60.
10:35
that's almost equivalent to the entire population of the united states today
10:41
in 2015 china abandoned the one child policy i think china does have major concerns
10:49
for the immediate future and the medium term future you're going to have this interval
which
10:54
could be as long as 20 years before these children grow up and are educated
11:00
and are able to participate in a more competitive workforce so until that
11:05
happens there's going to be a drain not only in terms of having to invest in the education
of these young people
11:11
but whether or not the state can support the older people who are retiring before the
younger generation comes to
11:18
economic maturity it can help look after them
11:28
[Music] stephen believes china's demographics need not be fatal though growth may be
11:34
slowing for some time the chinese economy continues to grow
11:39
perhaps not at breakneck speed but it has to continue to grow in such a way
11:44
that it continues to provide employment to people in terms of the chinese impact
11:50
on the rest of the world provided the chinese still have enough foreign exchange to keep
buying our
11:56
manufacturers well i don't think we're going to have a problem and certainly we're going
to continue to buy chinese manufacturers
12:03
you can't walk down a high street in europe these days without having no choice but to
buy clothes made in china
12:12
china's government is now expecting the nation's population to peak in 2020 before
starting to fall
12:21
in japan the fall has already started between 2010 and 2015 its population
12:28
shrank by 947 345.
12:33
by the end of this century the un expects the country's population to fall from
12:38
127.1 million to just 83 million other estimates suggest the population
12:45
could more than half to just 52 million compounding the demographic crisis
12:51
is culture japan has got a whole gathering a whole collaboration almost
12:58
of problems to do with demographic shifts to do with an aging population certainly but
to do with all kinds of
13:05
social trends and social habits which no government in japan wishes to address
13:10
the culture of seniority in japan denies flexibility for younger workers they're
13:17
very very strict as it were social customs that inhibit the full participation of women in
the workforce
13:24
further restricts their flexibility and then the very very strict rules on when
13:29
you can begin taking out your pension means that people are stuck unproductively in
work they no longer
13:36
want to do they don't want to learn new ways of doing things and they become as much
a drain at work as they would be to
13:43
the state if they left work and into retirement japan has so far resisted turning to one
13:49
of the great consequences of and possible solutions to recent demographic trends
13:55
migration i think one of our problems is that we always thought that globalization would
14:00
be on our terms but now there's a multi-faceted globalization where there are pressures
14:06
from many many global players in different parts of the world i don't think that we're
now going to be able to
14:13
put the genie back into the bottle in terms of greater transit from the middle east and
north africa
14:20
to europe that is a phenomenon which i think is going to remain with us in one way or
14:26
another but numbers will grow numbers will increase coming
14:31
from those parts of the world to europe
14:38
several eu countries have their own demographic problems the german government
expects one-third
14:44
of the population to be over the age of 65 by 2060. europe's largest economy needs to
find
14:52
more workers [Music] and those already in work should be
14:58
prepared to work longer and retire later the extension of the working age is
15:03
always going to be one of these big political hot potatoes but it's not just a case of
making people stay in
15:09
employment it has to be a certain sort of employment how can you create the kinds of
jobs that will not only give
15:15
people employment but keep them employed in a highly productive fashion and i
15:21
mean highly productive in terms of the expectations of the middle part of the 21st
century
15:28
three of the four biggest economies in the world china japan and germany are facing
major demographic challenges
15:36
the choices they make increasing fertility accepting large-scale immigration or delaying
their workers
15:42
retirement will determine whether they remain among the most powerful nations in the
world in the decades to come
15:51
[Music]
15:59
demographic trends are rippling across europe the continent's biggest economy
16:04
is facing a population crisis germany has the most over 65s in the eu
16:11
the economy is already experiencing skilled shortages in some areas at automaker
daimler over 100 retired
16:19
workers like emil canil have been rehired to plug the gaps [Music]
16:26
personally a benefit outside in the middle
16:33
and then
16:48
the program acknowledges that older workers have valuable skills
17:00
underneath
17:13
[Music] [Applause] for more physical tasks daimler has modified some of its production
lines to
17:19
make them more sympathetic to aging limbs [Music]
17:27
the uber cup stool has started
18:06
daimler expects half its staff to be over 50 by 2024.
18:40
foreign [Music] whilst german businesses prepare for an older workforce elsewhere in
europe
18:48
immigration offers another way to defuse the demographic time bomb
18:54
this is satriano in italy a town at the heart of europe's demographic crisis
19:08
o.g [Music]
19:17
[Music]
19:25
italy's birth rate has been falling for 50 years and is at the lowest level since unification
in 1861.
19:33
the italian government is now paying villages like satriano to take in migrants from
around the world
19:39
the hope is that new blood will stem satriano's and italy's demographic decline
19:45
[Music]
19:50
is [Music]
20:03
the journey is made by many of the new arrivals like adnan a testament to the
demographic flows sweeping the globe
20:40
[Music] foreign
20:46
[Music]
21:14
you it's too early to say if this kind of
21:20
managed migration will reverse italy's demographic fortunes but it has made
21:25
satriano a livelier place and serves as a reminder that demographic trends have touched
every
21:31
community in the world at some time in the past
21:48
[Music]
21:56
foreign demographic shifts are occurring all the time in every country
22:02
being able to anticipate them early enough is the key to a nation's future prosperity
22:09
you can boil it down this way when you have citizens there's two ways
22:14
they could add to the economy they could produce and they can consume
22:20
when you have too many people above a certain age and they leave the labor force
suddenly you have people in your economy
22:27
who are consuming but are no longer producing this makes it much harder for a country
22:33
to grow governments that don't have a long-term wise policy
22:38
will face demographic consequences or rather their successes will face demographic
consequences i think that
22:45
those countries that have got policies that are able to cater for their
22:50
demographic changes are the ones are going to be successful in the future
22:55
[Music]
23:03
our world is a divided and unequal place a competitive economy you'll always have
23:09
some inequality and obviously you'll have those who are very successful and some who
are less so but the issue is
23:15
the extreme one percent of the wealthiest population holds more than half of the
world's
23:22
wealth 62 wealthiest people hold
23:27
the same kind of wealth as the lowest 50 of the world population
23:33
it's a very striking statistic indeed if you look at ceo pay you know it's gone from about
50
23:40
times the average worker 30 years ago to 300 times now potentially not only does
23:46
it issue for investors it's also an issue for for workers [Music]
23:53
inequality has become the hot button economic issue of the 21st century but
23:58
worrying about inequality is not new if we look way back into u.s history we
24:05
saw dramatic income inequality in for instance the gilded age the 1880s and the 1890s
24:11
and it went so far and then it collapsed and policies were put in place by a number of
presidents
24:17
and administrations to sort of uh equalize the playing field uh labor laws
24:23
were put in place tax laws were changed and that prevailed through the course of world
war ii and into the 1960s
24:31
but then by the 1980s tax laws were changed and the economy had changed
24:37
and so from the early 1980s to present we've seen income inequality
24:43
on the rise it matters because income inequality eventually contributes uh to wealth
24:49
inequality with wealth comes power in terms of politics and
24:55
corporate leadership and lots of different facets of the economy and so when
25:00
much wealth is held by a very few individuals within an economy or within
25:06
a country then those individuals tend to have an outsized degree of control over
economic
25:13
and political policy making and therefore they are able to incorporate policies that will
even
25:19
further increase their levels of wealth
25:24
inequality is about more than fairness economists worry extreme levels of
25:29
inequality can have dramatic effects on the finances of corporations and governments
25:36
it really affects the pace at which will the world economy is growing so
25:44
uh to give you an example the wealthiest as they get more money they tend to
25:49
spend less of a marginal dollar so this way you get less consumption and
25:54
consequently less growth in the economy so that's one uh kind of a consequence
26:01
another thing is that lower and medium income families tend to borrow more to
26:07
support their consumption and it creates risks
26:13
some of the most dramatic levels of inequality can be seen in the developing world here
inequality appears to have a
26:19
corrosive effect on the whole economy something else that we've seen in
26:25
emerging markets is a correlation between inequality and corruption levels
26:30
where government is not effective you aren't necessarily getting education in place and
the rules to to allow everyone
26:36
to succeed if you look at the arab spring in north africa and the middle east you know at
root cause was you know
26:43
economic opportunity and so if you have this extreme inequality if you have a lack of
economic opportunity you know
26:51
you could potentially have a political unrest if you're at the top of the pile it's
26:57
tempting to think inequality does not affect you but this may be dangerously
complacent
27:05
clearly inequality is very bad for the people at the bottom especially if the bottom is very
low i think at the top um
27:12
there's a potential risk to you know what what could extreme inequality breed
27:18
could it lead to political unrest um could it lead to new rules
27:23
new taxation so i think you know in the short term even if you're at the the top of the
economic permit you may be very
27:30
happy with your position but long term i think there's potential for for change
27:36
which may be destabilizing if you think about it in a broader sense and think
27:41
about economic growth and future generations it's a bad thing because that actually
could impact economic
27:49
growth uh in in the world so i would say that it's a it's a
27:54
problem for everybody one global economist is convinced inequality is dramatically
affecting
28:00
human life in even the richest parts of the world and that if we want to maximize growth
28:06
and social cohesion it's an issue we can no longer ignore
28:12
absolute income inequality is where i think we have to have a real debate there are clear
knock-on effects and
28:18
whether there are an education access health care options but also political and life
28:24
expectancy challenges it's very much the case that income inequality is now a driver in
some of these other factors
28:34
[Music] inequality is one of the most hotly
28:41
debated issues in economics from new york to nairobi dambisa moyo is a global
economist
28:48
her work for the world bank and on wall street has seen her named one of the most
influential people in the world
28:55
she's fascinated by the biggest trends in economics from the politics of development in
africa
29:01
to the price of commodities in china now she's turning her attention to
29:07
inequality [Music] income inequality is particularly problematic inasmuch as it is a
29:15
defining factor in many societies for where a society's living standards are going
29:23
the date on income inequality has shown that it has gotten worse over the last several
decades
29:30
in fact over the past 30 years we have seen income inequality worsen across the united
states the united kingdom and
29:36
across much of europe in the same vein we've seen that
29:42
the average income of the top one percent in the united states today is 30
29:47
times the average income of the rest of the populations and the rest of the 99 percent
29:53
compare this with 30 years ago in 1978 when it was simply 10 times
29:59
higher for the top 1 [Music]
30:07
economists worry that inequality ushers in a range of social problems
30:12
recent studies in mexico suggest that neighborhoods with high levels of inequality may
suffer more violent crime
30:18
than those where inequality is less pronounced researchers in other nations have come
to similar conclusions
30:28
a problem with income inequality is the implications and impact that it has on a society
and the question being is it
30:35
possible for people of different income levels and without prospects of improving their
lives to live cheek by
30:41
zhao for example in the united states the bronx is the poorest congressional
30:46
district in the united states but it's also 20 minutes by train about five
30:51
stops to one of the richest enclaves in the world in the upper east side of manhattan
30:57
there are real questions around whether that sort of a living cheek by gel is actually
long-term sustainable given
31:04
risks of crime and also destitution there are knock-on effects for other
31:10
forms of inequality such as health or education and of course political inequality
31:16
in the united states approximately 158 families are responsible for approximately 50
percent of campaign
31:23
funding around the u.s election system and that really does pose the question
31:29
about where democracy stands and how that might play in to the political
representation
31:35
of the democratic process
31:40
americans have always prided themselves on levels of social mobility within their
country the ability of people to
31:47
get ahead whatever circumstances they were born into but some recent evidence
suggests this
31:54
is changing there is a more fundamental aspect to
32:00
dealing with the incoming inequality challenge which i would argue revolves around
social mobility and social
32:06
mobility really is about people's belief and people's access and opportunity to improving
their living standards and
32:12
their livelihoods over um a period of time i think that the cause of income inequality is
the breakdown of social
32:19
mobility particularly in western societies so just to give you a flavor for that
32:24
today in the united states if you are born into the bottom twenty percent of the income
level then you
32:32
have only five percent chance of ending up your life in the top 20 without the college
degree
32:39
clearly that suggests that income inequality is widening and i think also it shows that
there's a real issue
32:44
around social mobility and people's ability to actually transform their lives and to move
into higher levels of
32:50
income [Music] as well as hindering social mobility
32:56
extreme levels of income inequality may depress growth across whole economies
33:03
the reason that this is so important is that the oecd estimates that this is
33:08
costing those developed countries approximately eight and a half percent gdp points
um over this period so put
33:16
another way because of income inequality and the widening effects of the gap
33:21
between the richest and the poorest in the u.s and across europe we have seen gdp
growth slow by about 8.5
33:30
over the past 25 years today there are real concerns about how
33:36
this bodes for the longer term and for the future a lot of projections now show that
economic growth will be slowing and
33:43
obviously the knock-on effects of income inequality are likely to be worse
33:49
[Music] this means inequality is not just a
33:55
problem for those at the bottom of the economic pile chronic income inequality may
well
34:00
affect the social and economic health of everyone
34:08
if you are wealthy and living in a uh in an urban setting for example
34:14
the fact that you every day are dealing with people who have a lower income levels but
more importantly have fewer
34:21
prospects to improve their livelihoods has an absolute direct impact on your safety but
also on your own living
34:28
standards to the extent that society as a whole will not likely be growing and so it's not
just about
34:35
lower living standards for those that proportion of societies about lower living
standards for its entirety in the
34:41
society because the growth of a society is highly linked to how the average person
34:47
in society is performing [Music]
34:53
dambisa believes the key to tackling inequality lies in reactivating social mobility but to
do that citizens basic
35:01
needs in terms of health and education must be catered for first
35:06
i think that the thing that is a paramount an urgency is to ensure that
35:12
all citizens and particularly people who are at the lower levels of income are seeing
improvements in their living
35:17
standards over the long period of time the real underlying challenges of income
inequality in a broader sense which i
35:23
would argue really are hitched to the idea of social mobility and the challenges there
35:28
but social mobility is propelled by economic growth and without economic growth
inequality
35:35
will rise just to be absolutely clear on that we need to aim for at least seven percent
35:42
um gdp growth every year in order to double per capita incomes in one generation we
are far below that target
35:49
so it's really the case that we do have real issues around um what the long-term
prospects for economic growth are but
35:57
therefore what the long-term prospects for social mobility and our ability to reduce
income inequality are
36:02
[Music] if the problem of inequality is worrying
36:09
for the west then it's compounded in countries with fast growing young populations
36:15
if these economies are to have any chance of tackling inequality they must create
millions of jobs first
36:24
beyond just the developed countries of course there's a real concern around income
inequality widening particularly
36:31
in the faster growing largest emerging market economies such as brazil india and south
africa today there are
36:37
approximately 85 million young people mainly in the emerging markets between the
ages of 18 and 25 that are out of
36:44
work if we are going to try and solve the income inequality challenge we first have to
make sure we've got growth but
36:49
we also have to make sure that we are providing incomes that are growing
36:54
to this young population we also have to make sure that people have improved access
to education and to
37:01
health care so that they have the social infrastructure to improve their lives and
therefore support social mobility
37:07
without those factors there is a real risk that living standards of not just
37:12
the impoverished percentage of the population but society as a whole starts to
deteriorate
37:19
[Music] south africa is one of the most unequal
37:24
countries in the world here the consequences of inequality on the safety of society are
visible and
37:31
real but businesses are trying to restart social mobility and save the economy
37:45
[Music]
37:50
inequality is one of the defining challenges of our age in south africa the most unequal
country
37:57
on the continent its consequences can be seen in the continuing poverty of large
38:02
parts of the country and in the visceral fear of crime that defines the wealthiest suburbs
38:09
taking a look at the big picture and the the well-being of a country in the long
38:15
run it is very unhealthy to have this dramatic distribution of
38:21
of wealth and inequality it will not be a successful model to live in a world where the
haves are isolated into
38:28
communities uh with very high walls around those communities while the have-nots are
38:33
sitting at the gates begging for table scraps [Music]
38:38
in south africa there are more private security guards than police officers they patrol the
country's gated suburbs
38:45
under the most visible example of an unequal society crime is bad in your home out of
your
38:53
home basically all over i don't want it to sound like it's terrifying we live with
38:58
it and we have good lives here however trying to keep your family safe trying to keep
your
39:05
home safe has become more and more difficult and that is what we focus on css
tactical is a johannesburg based
39:12
private security firm employing 750 people so our approach is very much multiple
39:19
layers of security so you would have your armed response you would have your
proactive patrolling so the vehicle is not just sitting under a tree waiting to
39:26
be dispatched they're actually present in the area they're patrolling they're driving up and
down streets and we've
39:32
got very intelligent software that actually alerts on unusual behavior so if you're walking
down the streets five
39:38
o'clock in the afternoon going home from work that's normal but three o'clock in the
morning on that side of the street is abnormal so there's again a tension
39:44
on what is going on in the suburb as opposed to just sitting under a tree waiting for an
alarm to go
39:51
fear of crime is splitting johannesburg in two the city experienced over 21 000
39:58
burglaries last year johannesburg is the financial capital so
40:03
hence a greater concentration of i guess wealth and wealthy people and lots of stuff to
40:09
steal lots of stuff that can that you can see to steal there's a massive difference
between the haves and the
40:14
have-nots i mean unemployment is rife um and i think unfortunately people have not
seen that
40:21
you know crime is is a way to make a living
40:27
south africa is now more unequal than it was under apartheid but some businesses
across the country
40:34
are actively trying to address this and get social mobility moving again
40:40
so i was pregnant with my first daughter and i was at home we lived in a farm so i was
at home during the day and i would
40:47
chat to the ladies that worked in the fields next door and that sort of thing and they were
picking lettuces and
40:53
whatever but they really had you know they would they had so much inside of them but
they had no
40:59
opportunity to go anywhere there was no opportunity for training or to to get a bit further
or anything and also what i