The world’s richest economies will have to at least double their rate of productivity growth to maintain historic improvements in living standards, in the context of a sharp decline in the birth rate, reports the Financial Times.
A McKinsey report, which analyzes the economic impact of this decline, shows that countries such as the UK, Germany, Japan and the US must register productivity growth twice as fast as in the last decade to maintain the pace of growth in the level of life observed since the 1990s, reports Ziarul Financiar.
According to the report, to match the growth in GDP per capita recorded between 1997 and 2023, France and Italy would have to triple their rate of productivity growth over the next three decades. In the case of Spain, productivity should increase fourfold by 2050.
Governments around the world are trying to cope with the demographic crisis
The report highlights the serious consequences of declining birth rates on prosperous economies, which become vulnerable due to the reduction in the proportion of the working-age population.
If action is not taken, “young people will inherit a slower-growing economy and bear the financial burden of more retirees, while the traditional flow of wealth between generations will diminish,” said Chris Bradley, director of the McKinsey Global Institute.
Governments around the world are trying to cope with a demographic crisis generated by rising housing and child care costs, but also by social factors such as the decrease in the number of young people involved in relationships.
Currently, two thirds of the world’s population live in countries with birth rates per woman below the “replacement rate” of 2.1. Populations are already in decline in several OECD member states, including Japan, Italy and Greece, as well as in China and many countries in Central and Eastern Europe.
“Our economic systems and social contracts were built during periods when the population, especially the working-age population, was growing, supporting economic expansion and providing support for people living longer,” Bradley explained. “This model no longer works.”
“This model no longer works”
Bradley, co-author of the report, emphasized that there is no “one-size-fits-all solution” to dealing with demographic challenges.
“It will be necessary to have a policy mix that includes attracting more young people into the workforce, extending active life and, ideally, increasing productivity,” he added.
The McKinsey report follows earlier warnings from the OECD, which last year pointed out that falling birthrates threaten the “prosperity of future generations” and urged governments to prepare for a “low-fertility future”.
Source: www.descopera.ro
