- OECD forecasts working-age numbers to drop 8% by 2060 across its 38 members.
- Italy, Japan, Poland, Spain and South Korea face over 75% retirement ratios.
- GDP per capita growth will slow to just 0.6% annually by 2060.
- United States and Ireland likely to maintain current per-person output growth.
- India’s youthful workforce yields a temporary demographic dividend advantage.
Ageing societies now confront profound economic headwinds. Wealthy nations will struggle to sustain past income gains. Lower fertility and longer longevity shrink labour pools sharply. By 2060, OECD members will lose 8% of their working-age ranks. A quarter of those nations will see declines exceeding 30%. As retirees outnumber workers, per-head output growth falters.
Italy’s retired aged ratio will exceed 75% by 2060. Japan will follow closely behind. Poland, Spain and South Korea all tip into deep retirement demographics. For these nations, fewer hands on deck mean slower income rises. Domestic savings and capital cannot fully offset missing workers. Public finances face mounting pension and healthcare demands.
“The impact of ageing populations threatens the very engine of economic growth,” warned Stefano Scarpetta, OECD director for employment. He noted that economies shift from job scarcity to widespread worker shortages. Advanced economies rely on youthful innovation and steady productivity. Ageing frays both, capping GDP gains per person.
Per capita GDP growth plunged from 1% annually before 2020 to 0.6% in projections to 2060. An annual pace of 0.6% yields far smaller real-term wage increments. Households lose purchasing power momentum. Governments find revenues constrained just as spending pressures mount. Social welfare and public sector pensions compete for scarce tax intake.
The United States and Ireland stand as exceptions. Their working-age shares have already contracted, tempering future drops. Both will sustain GDP per head growth near prior rates. Denmark, France and Portugal will register only modest slowdowns. They combine moderate retirement ratios with healthy female workforce joins.
OECD analysts stress that boosting female, older worker and migrant participation is vital. More women in paid work, extended careers and steady inflows of migrants could lift per-capita growth by about 0.2 percentage points in half of member states. Reduced migration targets risk undercutting this remedy.
Countries cannot simply await artificial intelligence to fill empty desks, the OECD remains sceptical. AI boosts productivity but is “no substitute or silver bullet for a lack of human workers”. Humans still drive innovation, complex judgement and many service economies. Policy focus must centre on labour supply improvements, not automation alone.
Meanwhile India enjoys a contrasting demographic window. Nearly 67% of its population sits in the 15–64 working-age bracket today. Fertility remains near replacement levels, avoiding the steep declines seen elsewhere. By 2050, India will add tens of millions more entry-level workers. This demographic dividend fuels potential income growth and consumer demand.
India’s median age hovers around 28, compared with over 48 in Japan. The United Nations projects India’s working-age share to peak near mid-century before ageing trends appear. That advantage must be harnessed through skill development, job creation and inclusive policies. Higher female labour participation could raise per-capita growth substantially.
However, India’s demographic dividend is not permanent. By 2070, its 65-plus population share will climb. India needs to plan now: expand pension systems, build health infrastructure and reform labour laws. Failure to do so risks replicating advanced economies’ income stagnation later.
Emerging markets beyond India face similar transitional phases. China’s working-age cohort already shrank in 2023. It confronts a sharp slowdown in output per person, with projections indicating a 2.7 percentage-point drop in growth by 2050 relative to the past decade. Latin American nations also grapple with ageing cohorts and lower fertility, albeit less severely than Europe.
Low-income countries still boast high fertility, but they will age faster than earlier cohorts. By 2050, one-third of global population will be over 60, with eight in ten residing in low or middle-income countries. Their health systems and pension networks remain nascent. Rapid ageing without safety nets could spur poverty among elderly and worsen intergenerational fairness.
The OECD highlights lessons for all nations. Simply raising birth rates will not alter outcomes within decades. Even optimal pro-natal policies yield larger working-age cohorts only after 20–25 years. Investment must focus on labour supply through participation, not birth-rate boosts alone.
Policy packages should blend flexible retirement ages, lifelong learning and better health to extend productive careers. Raising effective retirement age by aligning it with increasing life expectancy proves particularly powerful. Health improvements and skilling for over-50s could unlock 0.4 percentage points of growth annually globally between 2025 and 2050.
Meanwhile, timely migration policies can channel vital human resources. Regular labour migration contributed notably to US GDP per capita growth over recent decades. Aimed restrictions would shave 0.1 percentage point off US per-person growth each year to 2060. Other nations should weigh similar trade-offs between social debate and economic resilience.
Equity considerations also matter. Greater female participation reduces gender income gaps and reverses unfair tax burdens on younger workers. As OECD warns, without safe-guards, pension and healthcare financing may force rising taxes on prime-age cohorts. That risks penalising the very workers needed to sustain ageing societies.
History shows policy pays off. Scandinavia pioneered later retirement reforms, high female labour participation and generous family policies. They now sustain moderate demographic pressures and maintain robust per-capita incomes. Korea and Japan have since adapted targeted incentives for older workers, though much remains to be done.
Global fiscal outlook demands fresh thinking. Rich nations face daunting ratio rises of retirees per worker. Public debt pressures call for new mixes of taxes, labour reforms and spending adjustments. Any single tax instrument alone cannot cover rising pension costs without distortion risks.
For India and similar economies, timing is critical. Investing in education, digital infrastructure and healthcare today shapes tomorrow’s workforce quality. Unlocking rural youth and women through targeted skilling and microcredit can smooth labour transitions and amplify growth.
In the quieter suburbs of rural India, cooperative dairy schemes demonstrate intergenerational labour sharing. Elders mentor youth on livestock management, blending tradition with modern productivity. Such local innovations deserve national scale-up, linking agribusiness with ageing-aware communities.
In cities, corporate India has begun re-hiring retirees in consulting roles. Their tacit knowledge and networks cost far less than fresh hires and reduce turnover. Multinationals in Bengaluru pilot flexible hours for senior engineers, boosting retention and cutting knowledge-loss risks.
Beyond policy and patterns, ageing touches the human story. Societies that adapt can enable active, honourable older years. Workplaces must shift cultures to value experience as much as youthful dynamism. Intergenerational collaboration can drive innovation and social cohesion.
Ageing is neither curse nor tragedy. It poses complex questions but also offers opportunities for deeper human roles beyond mere labour. Policymakers should see older cohorts as assets, not liabilities. Healthy ageing, lifelong learning and inclusive labour frameworks can sustain economies and enrich lives.
As we look toward 2060, ageing nations must choose pathways wisely. The incentive to mobilise women, older people and migrants represents a profound shift in growth models. India’s demographic dividend can inspire other low-income nations if tapped well. The richer world’s experience offers both cautionary tales and hopeful blueprints.
Ultimately, prosperity hinges on human collaboration across ages. Societies can buffer demographic shocks through innovation, flexibility and shared purpose. In this era of ageing, human capital remains the prime driver of economic progress.
