Defusing the demographic time-bomb: Tackling the jobs-and-care crisis

World Bank President Ajay Banga says, “The best way to put a nail in the coffin of poverty is to give a person a job.” He says a time bomb is ticking in the world. In the next 12 to 15 years, 1.2 billion people in emerging markets (the largest number in India) will be looking for a job, but only around 400 million will be available. “The gap of 800 million jobs is not a demographic dividend. If you are worried about illegal migration and military coups, just wait,” he warned the US Council on Foreign Relations this month. 

 

Global demographics have changed. Not only are many young people looking for jobs, but many more older persons must also be cared for. Life expectancy has been increasing and with it the number of years after the “retirement” age. Life expectancy in China increased from 42 in 1950 to 78 in 2024; in India, from 37 in 1950 to 70.6 in 2024. In the OECD (Organisation for Economic Co-operation and Development), men and women were already living eight years longer after their official retirement ages in 2020 than in 1970.  

Older persons past their productive age are considered burdens on economies. Governments cannot provide sufficient pension and medical care without taxing younger people who are earning and compelling them to save for their own future needs. With insufficient jobs, many governments have run out of resources to care for older citizens.  

Riots broke out in France in 2023 when the government tried to raise the retirement age from 62 to 64. There were also protests in China when the government recently proposed raising the retirement age for the first time since 1950: From 50 to 55 for female blue-collar workers, and from 60 to 63 for male workers. A post went viral on Chinese social media: “Capitalist exploitation has reached the common people. Brilliant!” 

Milton Friedman and Ronald Reagan’s economic paradigm has no solution for the demographic crisis. “Government is not the solution, it is the problem,” Reagan had said. Reduce the size of government and its budget. Leave everything, including health care, education, and social infrastructure, to the private sector. 

Many more young people will need work in the next 20 years, and more older persons will need care. NITI Aayog’s report, “Reforming the Senior Care Paradigm,” estimates that India’s ageing society represents a $7 billion opportunity to grow a private senior care industry. However, the private sector cannot be the solution. Though it may be more efficient, it is designed to produce equity of the stock market kind, not social equity. Business institutions are not designed for providing health care for those who cannot pay. Their customers must pay for the services, directly or through insurance. Those who cannot afford to pay insurance premiums are shut out of health care. The US’ privatised health industry provides the most expensive health care in the world, and with poorer outcomes than countries with public health services.  

The only work considered valuable in an economy is work that earns money. A woman caring for her child at home is not considered an economically productive human being. When she leaves her child to work for wages in a factory, she becomes a productive worker. Money is the currency for transactions in the economy. Exchanges in social organisations, such as families and communities, are not paid in the currency of money. People provide care to each other because they want to, not because they are paid to. Monetary valuations should not be used to evaluate the worthiness of human beings. Older persons are not burdens on society, which they appear from an economic lens. They are societal assets, sadly neglected in modern societies.   

Reform the economy to create a better society 

The time has come to reimagine a “caring society” and the forms of enterprises it needs. The quality of a society should not be harmed to increase the size of the economy. Rather, the economy must be redesigned to improve the quality of society.  

“Community-form” solutions are required rather than “industry-form” solutions. Industrial economies are organised for the efficiency and growth of economically productive enterprises. Traditional social organisations, such as families and communities—considered “informal” organisations by economists—are being broken to plug workers into “jobs” fitted into “formal” organisations, designed for efficient production, where they are paid in the currency of money. With the “formalisation” of the economy, social values are replaced by economic values.  

Top-down solutions by global experts divided into knowledge silos are failing to solve complex global environment and societal problems. A new paradigm of systemic action is required —one that relies on more “community form” (and less “factory form”) enterprises to solve complex problems on scale, with more local, community-based solutions, of the people, by the people, for the people.  

 

The author’s book, Reimagining India’s Economy: The Road to a More Equitable Society, was published by Speaking Tiger Books and released in June