One of the problems from ageing populations is a financial pressure on governments. This problem affects the economy through an increase in government expenditure on healthcare, pensions and social benefit programs for elderly people. It means governments need more money to inject in healthcare and welfare systems for them. A main source of money for governments is from tax payers who are working-age but as ageing populations increase there are more aged people or retirees who do not pay tax. As a result, a responsibility to source the money lands on governments and this creates an imbalance in government income and expenses. In this case governments have to take some money from other development areas such as education or infrastructure or urban development to invest in healthcare and welfare systems. Apart from the basic financial issue connected to this, there is also an additional problem of a potential reduction in high quality education as time goes on. For example, a government has to reduce state money for education development in order to inject money in the healthcare and welfare system for the elderly. A side effect from reducing state budget on education may have less effective workforce in industries in the future, because younger generation might get a less quality of education where they can acquire necessary knowledge and skills prior to enter work. A result of unqualified workers can be a drawback for economic growth. If the economy of the country is not growing, it also creates pressure on a government because one of the main revenue streams of the government comes from economic growth.
An increasing life expectancy along with declining birth rates is another issue linked to ageing populations. This means as the dependency ratio increases more working age groups have to support and take care of higher numbers of non-workers or elderly people. It can be seen that the higher the dependency ratio, the greater the dependency load on society and in particular the greater pressure is on younger generation to take care of the ageing population. For example, in Japan there is a 1: 4 dependency ratio of ageing population aged 65 and above. It means that for every working adult there are 4 elderly people who have to be taken care of, in addition to looking after other dependent members such as spouses or children. If these workers are unable to provide good care for their elders, there is a chance that those elderly people have to rely on the state money and health care services. When they rely more on the government again it becomes a pressure on governments to source more money to invest in healthcare service and social benefits for ageing population, which brings us back to the issue of financial pressure.
One of the problems from
ageing
populations
is a financial
pressure
on
governments
. This problem affects the economy through an increase in
government
expenditure on healthcare, pensions and social benefit programs for
elderly
people
. It means
governments
need more
money
to inject in healthcare and welfare systems for them. A main source of
money
for
governments
is from tax payers who are working-age
but
as
ageing
populations
increase there are more aged
people
or retirees who do not pay tax.
As a result
, a responsibility to source the
money
lands on
governments
and this creates an imbalance in
government
income and expenses.
In this case
governments
have to
take
some
money
from other development areas such as
education
or infrastructure or urban development to invest in healthcare and welfare systems. Apart from the basic financial issue connected to this, there is
also
an additional problem of a potential reduction in high quality
education
as time goes on.
For example
, a
government
has to
reduce
state
money
for
education
development in order to inject
money
in the healthcare and welfare system for the
elderly
. A side effect from reducing state budget on
education
may have less effective workforce in industries in the future,
because
younger generation might
get
a less quality of
education
where they can acquire necessary knowledge and
skills
prior to enter work. A result of unqualified workers can be a drawback for economic growth. If the economy of the country is not growing, it
also
creates
pressure
on a
government
because
one of the main revenue streams of the
government
comes
from economic growth.
An increasing life expectancy along with declining birth rates is another issue linked to
ageing
populations
. This means as the dependency ratio increases more working age groups
have to
support and take
care
of higher numbers of non-workers or
elderly
people
. It can be
seen
that the higher the dependency ratio, the greater the dependency load on society and
in particular
the greater
pressure
is on younger generation to take
care
of the
ageing
population
.
For example
, in Japan there is a 1: 4 dependency ratio of
ageing
population
aged 65 and above. It means that for every working adult there are 4
elderly
people
who
have to
be taken
care
of,
in addition
to looking after other dependent members such as spouses or children. If these workers are unable to provide
good
care
for their elders, there is a chance that those
elderly
people
have to
rely on the state
money
and health
care
services. When they rely more on the
government
again it becomes a
pressure
on
governments
to source more
money
to invest in healthcare service and social benefits for
ageing
population
, which brings us back to the issue of financial
pressure
.