Effects of an Ageing Population - Essay Example

Population Ageing YourFirst YourLast Introduction Today, the of population ageing has received much attention all over the world. An ageing population is slowly altering the economic arrangement of many nations, both developing and the developed countries. Although the most effects are felt in the labour force, subsequent effects on the level of productivity and economic growth are substantial. Variations in the dependency ratios, level of the governments spending, savings levels leads to stunted economic growth, and reduced output levels if not rectified by economic and fiscal policies (Harper & Leeson, 2008). Nonetheless, such issues cannot be remedied by the governments conventional macroeconomic strategies only. There is a need to engage the social reform policies and procedures, microeconomic approaches and long-term fiscal, economic plans to achieve the required balance. Population Changes Population variations in Wales can be accredited to two principle elements: the growing average life expectancy and the reduction in the average birth rate (Holroyd, 1983). With these elements in play, the demographics average age structure swells at the baby boomers but shrinks with later generations. The age structure has therefore produced an unsuitable state of affairs in the long term as the population becomes unbalanced with a growing dependency ratio. Numbers for the baby boom generation are significant and therefore they need to be reinforced by the smaller younger group of later years. This situation causes fundamental effects on the Welsh economy. Effects of an Ageing Population Effects on Healthcare One of the main worries that a bulging number of the aging population has on the economy is the significant amount of pressure it puts on the provision of medical and health services. Healthcare services are significantly affected by the changing demographical structure, and especially the increasing dependents of the baby boom era. According to Pharmacoeconomics & Outcomes News (2006), the more the numbers of, the older people there are, the more the resources that will be committed to providing public health care services. Furthermore, it is the impact of amplified life expectancy on individual per capita health expenses that complicate the matter further, increasing the entire medical expenses over time. This constrains the government-spending budget further. In addition, the burgeoning numbers of pensioners signify a need to equip the medical industry with special equipment for the elderly, as most of them tend to have terminal diseases at the age of retirement. Additional spending on healthcare for the Welsh government means that other sectors will have to make do with little budgetary allocation, curtailing growth to a bare minimum. Effects on Productivity An ageing population reduces the average productivity of a country. However, analysts say that the reduction in productivity is relatively insignificant, offset by technological advancements and educational gains that are made in an economy (Skirbekk, 2007). Productivity is the level of output per unit input. There is a direct relationship between an ageing population and the numbers of the working population. An increase in the number of retirees decreases the numbers of the working individuals. This therefore implies that the government will collect fewer taxes, as most pensioners are exempt from filing tax returns. In fact, most retirees in Wales are eligible for the collection of pension from the government, an element that reduces the governments disposable income for spending on other developmental projects. Whereas it is accurate that an elderly population brings to the table a wealth of experience and subsequent increases in the level of production, there reaches a time when the physical and psychological impacts of getting old counterbalance the gains of experience. The level of production increases as the population gradually becomes of age, but at the stage where the effects of an elderly population start to impact on most workers, the level of production will decrease, when all things are held at a constant (Guest, 2014). Consequently, there is unavoidable reduction in total production that can be offset by advancements in technology and expertise. Effects on Capital Growth and Investment An elderly populace reduces the current supply of capital and, therefore, restricts investments and economic growth. As more and more individuals continue to give up work and move into retirement, they draw down on all their lifes bank reserves and savings. Consequently, government spending on the retirees increases and that reduces the level of public savings, and the level of taxation goes down as well, as most are exempted from paying direct taxes. The combined forces that reduce capital negatively affect the countrys economic investment (Domeij & Flodén, 2004). Reductions in the level of capital for investment spending have ripple effects on the economy. First, the country will be unable to increase its capital intensity per worker, and, therefore affecting the level of productivity. Moreover, business enterprises become incapable of obtaining domestic funding for expanding. The overall effect in the economy is a reduction in the level of growth and unit per capita output of the gross domestic product as time worn technology is employed in the production lines. Inadequate access to capital limits investments directed towards research and development areas of the economy. Business companies have an option of borrowing abroad to invest their businesses, but this strategy leads to an increase in the level of foreign debt (Herrmann, 2011). Wales low savings ratio adds to the level of foreign debt as retired individuals seek more money to finance their livelihood after retirement. Whereas the government has insisted on individuals engaging in self-funded retirement, minimal levels of local savings within the country signify a lengthy continued reliance on foreign lending to finance consumption. A significant debt leads to issues in loan repayments and may create a vicious cycle of the burden of debt, in addition to external imbalances with a burgeoning current economic deficit. Effects on Economic Growth An increasing number of the elderly acts as a sedative to economic growth. A workers withdrawal from the labour market with little support to capital deepening results in a decline in the level of economic production. In addition, the level of consumption reduces, as the elderly tend to reduce their spending on luxury and other consumer products. When consumption decreases, the producers respond to the market signals by reducing their levels of production, with increased inventories. This reduces the principle measure of economic output GDP, which eventually slows economic growth (Gómez & de Cos, 2008). In spite of the undesirable economic effects, some sectors of the economy will profit from an ageing population. The insurance industry develops substantially especially in medical insurance purchases, as many individuals become part of the insurance schemes to access the medical cover. This benefits the medical insurance firms, especially the privately owned firms (Zweifel, Felder & Werblow, 2004). Demand for specialized care for the elderly will increase, as the baby boom group enters retirement age. Wales Government Policy Changes According to Walford and Kurek (2008), Waless elderly populace is growing. In the year 2008, approximately 17% of the population in Wales was above the age of 65 years; by the year 2035, the numbers are expected to shoot to almost 27%. Similar to other developed nations in the world, bigger individual income per capita and better living standards have enabled the Welsh people to enjoy a lengthy retirement period (Holden, 2002). Consecutive Welsh governments have adopted an open-minded and comprehensive strategy to ageing policies since the adoption of a devolved system of governance. The nomination of an Elderly peoples commissioner in the year 2008 highlighted a landmark appointment for such a post in the UK. That nomination overlapped with the second period of the Welsh governments elderly individuals plans that concentrate on aligning the elderlys apprehensions through all policy sections. UKs very first welfare monitor for older individuals later followed the nomination. Wales "Ageing in Place" Policy Similar to other developed countries, consecutive Welsh governments have adopted a procedure of allowing the elderly to keep their freedom and remain within their homes for the longest time possible, a strategy known as the "Ageing in Place" strategy (Young, n.d.). However, there have been concerns whether the governments policy is sustainable for the long term. Maintenance and adaptation drives can manage to deliver added benefits to the society, and, in addition, bring medium to long-term added savings to the country. However, it remains to be seen if increased demand in the future will render them reasonably priced in the face of public expenditure reductions. Some substitutes to bigger public spending have been established, including a governmental transfer from grants to loans, and supporting the seven out of ten elderly individuals who possess their own home to have access to finances for upkeep through finances release arrangements. The facilitation of sustenance, adaptations and maintenances has permitted many elderly individuals to remain in their homes. Nevertheless, the transfer to support systems in protected housing has infuriated some tenants. Many neighbourhood warden services have been substituted by floating support. Broader use is similarly being made of new technology to help with providing care by way of Telecare services, implying that a caregiver does not constantly have to be physically there. Social Care As more individuals continue to depend on others for help, the burden on social services is snowballing and local governments, the individuals tasked with the responsibility of public care provision, are floating eligibility capacities to cope with increased demand (Hand, 2011). Local governments and institutions have long been capable of charging for care amenities. Whereas the procedures for domestic care costs apply across Wales, costs for home care service provision differ, with every local government putting its standards. The outcome for the elderly individuals has been, at best, misunderstanding and at worst hatred at having to finance their upkeep, at times by disposing of off their family homes. A Welsh Methodology Even though Scotland has eliminated rates for personal care for the elderly, Wales has hesitated at the latent cost of such a structure and has in its place sought after limiting the financial liability of persons getting care at the comfort of their homes. In the long run, nevertheless, a bargain is required on how the liability of financing for care is to be distributed between the state and the people. Sometime in the year 2010, a Welsh Government Green Paper defined particular alternatives; however, the last outcome is relatively reliant on changes in England. For instance, the outgoing UK Government made allowances and welfare restructuring essentially to its programs for government and it influenced policy changes in Wales (Aday, 2013). Relatives or friends provide most care informally. The private industry is the principal provider of formal care amenities with most elderly individuals organizing their care with separate providers. The local governments are more inclined in focusing on supervising and care administration, organizing services for those individuals that do not organize their care individually. The earlier Welsh Government set out strategies to develop the steadiness of service provision across Wales in addition to introducing regional commissioning that has helped to improve the allocation and use of scarce resources. Nonetheless, independent providers will keenly feel the swelling burden on local government budgets as they are requested to stretch their service provision for less compensation. Conclusion Efforts directed towards the specialization of medical and health services in England have been adopted more gradually in Wales where individuals have had some suspicion of entrepreneurial approaches to care provision. Nonetheless, outlooks around the value and elasticity of care services will go up as the baby boomer group approaches old age. With increases in cases of Dementia, the necessity for expert services at the interface of social caregiving and healthcare provision is on the increase (Yip, Brayne & Mathews, 2006). Compounded by an era of substantial pressure on public service spending and social caregiving could lastly surface from NHS shadows and become a subject of national significance. References Aday, R. (2013). Book Review: Doing Harder Time? The Experiences of an Ageing Male Prison Population in England and Wales. International Criminal Justice Review, 23(2), 202-203. doi:10.1177/1057567713479609 Ageing population likely to impact on healthcare spending. (2006). Pharmacoeconomics & Outcomes News, &NA;(498), 11. doi:10.2165/00151234-200604980-00031 Domeij, D., & Flodén, M. (2004). Population ageing and international capital flows. London: Centre for Economic Policy Research. Guest, R. (2014). Population ageing and productivity: A survey with implications for New Zealand. 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