The future of ageing is really a story of demographics. The story will play out differently in different parts of the world, but in Australia it will play out in a way which will challenge our existing social contract between the individual and the state.
There are some fundamental truths that will drive substantial disruption to the economy. First, can be best summarised by the following graph which shows the ratio of people aged 15-64 vs. those 65+:
The number of people of traditional working age vs. the number of people who are not working decreases to less than half what it was from the turn of the century. This means a working-age person’s taxes will be required to support a greater number of people over the age 65.
Between 2021 and 2031 there will be an 8.8% increase in population of working age but a massive 29.7% increase in population of retirement aged people. As the population ages in this structure, it will continue to pressure the national budget, challenging existing government policies towards aged care and spending in healthcare in general.
This, of course, is all in play with other mega-trends which have not factored heavily in long term planning by most governments – increases in defence spending and dealing with climate change. Governments around the world face an incredible challenge to navigate these mega-trends in ways which foster economic growth that will continue to pay for the services their constituent's demand.
The conclusion is that most people will not receive the same benefits that are available today. It is likely that means-testing will mean the use of superannuation and downsizing the family home will become necessary to self-fund care for people as they age. This also means that care providers will need to transform from being quasi-governmental to truly becoming customer focused, so that they can attract the self-funded population. And it also means there are further opportunities for government and business to explore innovative solutions that help meet our care objectives for less.
So, the focus of this issue of More Evenly Distributed is ageing and how policies, technologies and approaches are being taken worldwide to maintain our social responsibility to care for our elders.
Trend Spotting
We’re trying a different format for sharing trends that more clearly provides the source information, but also contextualised the impact of each trend to businesses in Australia.
Ageing in place leans heavily on robotics
Trend Summary:
The use of humanoid robots (HRs) in the care of older persons has been reviewed, showing that they are capable of performing a wide variety of tasks, but technical issues and cost may be a barrier to their adoption. The distribution of robot companions, such as ElliQ, to address social isolation among older adults is being planned in New York State, but concerns around privacy and the replacement of human care with robots have been raised. Robots can aid elderly people in small tasks, mobility and transport, reducing loneliness and social interaction, providing robotic therapy pets, assisting with feeding, developing futuristic baths, lifting and carrying, promoting independence, and cleaning. Gerontechnology, or "silver tech", is being used to aid independent living and predict physical and cognitive decline in older people, and the market for such devices and apps is projected to be worth $915bn by 2025. The use of elder care robots is a controversial topic with possible benefits including combatting loneliness and dementia, promoting safety and security, providing digital health benefits, and improving quality of life.
References:
- https://www.tandfonline.com/doi/full/10.1080/10400435.2021.1880493
- https://pursuit.unimelb.edu.au/articles/can-robots-really-be-companions-for-older-adults
- https://lottie.org/carecollective/ways-robots-could-help-elderly-people/
- https://www.irishtimes.com/business/innovation/the-irish-robot-helping-older-people-live-independently-1.4628719
- https://srcarecenter.com/health/elder-care-robots-to-care-for-the-elderly/
Impacts:
The use of gerontechnology and elder care robots could create opportunities for Australian businesses that offer services and products in these areas. These businesses may benefit from partnerships with technology companies or government agencies. However, there may also be challenges in addressing concerns around privacy, cost, and the displacement of human caregivers. Additionally, businesses in the aged care sector may need to adapt to the changing landscape of care, which may involve incorporating technology and robotics into their services.
Building Advanced Technologies for Older People
Trend Summary:
The ageing population is growing, and technology innovations can improve their quality of life. The innovations include:
- digital platforms
- wearable devices
- smart homes
- telemedicine
- social robots
- virtual assistants
- digital therapeutics, and
- assistive technology.
AI technologies such as autonomous robots, self-driving cars, AI-enabled health apps and wearables, voice-activated devices, and intelligent homes can also support the needs of the ageing population. However, they should be designed with intention and consideration for privacy, consent, safety, and the risks of over-reliance on AI.
References:
- https://www.weforum.org/agenda/2021/11/8-tech-innovations-that-support-a-healthy-ageing-population/
- https://www.weforum.org/reports/designing-artificial-intelligence-technologies-for-older-adults/
Impacts:
Businesses in Australia can benefit from these trends by developing and marketing technology innovations that support the needs of the ageing population. The demand for such technologies is likely to increase as the elderly population continues to grow. Additionally, businesses that develop AI technologies for older adults should consider the responsible development of these technologies, including privacy, consent, safety, and the risks of over-reliance on AI. This presents opportunities for companies that prioritise responsible development to gain a competitive advantage in the market.
An Economic Opportunity
Trend Summary:
The ageing population is a looming crisis and a booming opportunity that presents both challenges and opportunities for economies. The World Economic Forum is monitoring this trend and encouraging innovation in the care economy to create jobs and improve health outcomes. Technology can play a crucial role in improving the quality of life for the elderly, such as assistive technologies and telemedicine. Furthermore, the economic value of targeting ageing, rather than individual diseases, is being recognised. Treatments that delay ageing in ways that improve both health and life expectancy are especially valuable. Finally, the aging population can lead to slower economic growth and increased fiscal pressures on governments. However, technology can help mitigate these effects by boosting productivity and reducing healthcare costs.
References:
- https://www.weforum.org/agenda/2021/03/ageing-looming-crisis-or-booming-opportunity/
- https://cepr.org/voxeu/columns/alls-well-ages-well-economic-value-targeting-ageing
- https://www.jstor.org/stable/resrep24987
- https://www.jstor.org/stable/resrep42141
Impacts:
The ageing population presents both challenges and opportunities for Australian businesses. On one hand, there will be an increased demand for elderly care services, which could create job opportunities in the care economy. On the other hand, the aging population may lead to slower economic growth and increased fiscal pressures on the government, which could impact businesses. Furthermore, policies to support productivity and the removal of barriers to labour force participation of older workers could benefit businesses. Technology can also play a significant role in mitigating the negative economic consequences of an aging population, and businesses that invest in technology and innovation could benefit from increased productivity and efficiency, reduced healthcare costs, and the ability to help older workers remain in the workforce.
Healthy Ageing Saves Money
Trend Summary:
The ageing population is a global challenge that requires preparations to promote healthy ageing. Policy preparedness, labour market reforms, health system and behavioural adaptations, infrastructure investments, and technological innovations are essential for promoting healthy ageing. The use of interventions in housing, community, and technology environments can create ageing-friendly communities that can bring beneficial outcomes for healthy ageing and ageing in place in both the short-term and long-term. Supportive social and community environments for older adults, including community-based programs and intergenerational initiatives, are important to reduce social isolation among older adults.
References:
- https://www.weforum.org/agenda/2021/10/healthy-ageing-older-people/
- https://cepr.org/voxeu/columns/healthy-ageing-healthy-economy
- https://www.frontiersin.org/articles/10.3389/fpubh.2021.737955/full
Impacts:
Businesses in Australia may need to adapt to the ageing population's changing needs and preferences. Companies that provide healthcare, medical technology, and home care services may see increased demand. Older workers may require job accommodations, such as flexible work arrangements and age-friendly workplaces, to extend their working lives. Businesses may also need to invest in infrastructure and technology to create ageing-friendly communities and support healthy ageing. Finally, companies may need to consider the economic contribution of healthier older people to society and economies, including non-market activities such as caring for grandchildren and volunteering.
Old expectations preventing innovation
Trend Summary:
A study by Wharton finance professor Gideon Bornstein suggests that an increase in consumer inertia leads to higher profits for incumbent firms and discourages entry for newer firms. This trend contributes to the decline in new business formation and allows big firms to charge high markups. The study found that consumer inertia is hurting new business formation and the share of young firms in the US, while older firms are taking home bigger profits. States with a larger increase in consumer inertia had a larger decline in the share of young firms.
References:
https://knowledge.wharton.upenn.edu/article/how-aging-america-is-driving-consumer-inertia/
Impacts:
The trend of increasing consumer inertia and declining new business formation can also impact Australian businesses. Established firms with a strong market position may have an advantage in retaining customers and charging higher prices, making it harder for new entrants to compete. This could lead to reduced competition and innovation in the market. Additionally, an aging population in Australia could lead to a similar rise in consumer inertia, making it more difficult for new businesses to gain traction. Australian firms will need to consider the impact of these trends and adapt their strategies accordingly to remain competitive.
Old adults should start preparing their homes to age in place.
Trend Summary:
Australians prefer home care as they age, with 68% of older adults wanting to age in place. Although the majority of elderly Australians who need care are still using residential services, there is evidence that demand for home care is increasing. To meet future needs, new systems that allow providers to offer more home care for lower cost will be essential. Furthermore, older adults should start preparing their homes for aging in place by investing in home improvements and installing safety devices and technologies.
References:
- https://www.thecareside.com.au/post/australians-want-to-age-in-place/
- https://www.consumeraffairs.com/news/most-older-adults-want-to-grow-old-in-their-current-homes-study-finds-041822.html
Impacts:
The trend towards home care for aging Australians presents a significant opportunity for businesses in the healthcare sector to develop innovative solutions that can offer more affordable and accessible home care services. Providers of home care services, safety devices, and technologies that promote healthy aging can expect to see an increase in demand as more Australians seek to age in place. There is also an opportunity for businesses in the home improvement industry to develop products and services that cater to the needs of older adults who want to prepare their homes for aging in place, which will put strain on an already challenged sector.
Older people in rural areas face higher technology barriers
Trend Summary:
Two studies on digital health consultations among elderly individuals in Sweden and rural senior citizens in China were conducted. The Swedish study found that lack of trust in private companies, lack of knowledge about available services, and perceived lack of usefulness were the main reasons for non-use. The Chinese study found that rural seniors face greater challenges in digital practice than urban seniors due to disparities in economic status, literacy level, social relationships, and life background. The lack of knowledge and resources in later life prevents older people from fully utilising smartphones, and access to and use of smartphones are influenced by economic and cultural capital. Both studies highlight the need for personalised digital health services that meet the specific needs of elderly people living in rural areas.
References:
- https://www.frontiersin.org/articles/10.3389/fpubh.2021.588583/full
- https://www.frontiersin.org/articles/10.3389/fpubh.2022.974998/full
Impacts:
These trends have several impacts on businesses in Australia. With an aging population, businesses in the healthcare industry need to consider the specific needs of elderly individuals living in rural areas when developing digital health services. This includes personalised services that address issues such as lack of trust, knowledge, and usefulness. Additionally, businesses that provide technology products and services need to consider the digital inclusion of elderly individuals, particularly those in rural areas who may face greater challenges in digital practice due to economic and social disparities. Finally, businesses that operate in China or have partnerships with Chinese companies need to be aware of the Chinese government's focus on digital villages and smart cities, as well as the potential for intergenerational conflict and family disputes caused by the digital generation gap.
Older people still face digital inclusion challenges
Trend Summary:
Older adults face challenges in learning new digital skills due to age-related differences in cognitive abilities, and individualised technology training is important. Guided learning with personal explanations in a one-to-one setting is the most preferred learning format for older adults. Smartphones have both positive and negative impacts on older people's experience of ageing. Older people face challenges in learning to use smartphones, but there are apps and specialist smartphones designed for them.
The Australian Digital Inclusion Index highlights the need to address digital ability gaps for a more equitable post-COVID-19 digital economy. Digital ability declines with age and improves as education and income levels rise.
Digital health systems can improve access to healthcare for vulnerable populations, but challenges in achieving equitable access exist. Telemedicine technologies have the potential to reduce healthcare costs, but barriers to adoption may limit economic benefits.
References:
- https://www.digitalinclusionindex.org.au/case-study-taking-a-deep-dive-into-digital-ability/
- https://www.itu.int/hub/2022/03/digital-healthcare-support-equal-access-gss/
- https://www.frontiersin.org/articles/10.3389/fneur.2021.761965/full
- https://www.frontiersin.org/articles/10.3389/fcomp.2021.803740/full
- https://www.jstor.org/stable/j.ctv1b0fvh1.15
Impacts:
Businesses in the healthcare sector should consider investing in digital health systems to improve access to healthcare for vulnerable populations. They may also need to address barriers to adoption of telemedicine technologies to maximise economic benefits. They should also consider designing products that are more accessible to older people, with features that address the challenges they face in learning to use smartphones. They could also consider the power dynamics involved in intergenerational relations when it comes to smartphone use.
Businesses that provide technology training and support to older adults could benefit from the demand for individualised technology training and could provide part time options for technologically savvy retirees.
Mandatory early retirement has hidden costs
Trend Summary:
Mandating retirement has been found to lead to a decrease in productivity. Whatever short term gains that may be achieved are quickly undone by an increase in mortality which in turn increases cost to the healthcare system. This is particularly true for low-skilled workers in physically and psychosocially demanding jobs.
Also, the risk of automation is likely to have a significant impact on the probability of individuals aged 50 or above leaving employment, and governments need to address policies that create incentives for early retirement and work towards labour market reforms that remove disincentives for older workers to continue working.
Therefore, governments and organisations should develop policies allowing for more flexibility for workers nearing retirement that can positively impact productivity and the retention of experienced workers.
References:
- https://cepr.org/voxeu/columns/effect-removing-early-retirement-mortality
- https://cepr.org/voxeu/columns/what-retirement-policy-us-state-courts-tells-us-about-ageing-and-productivity-teams
- https://blogs.lse.ac.uk/businessreview/2022/01/11/promoting-longer-working-lives-in-the-digital-era/
Impacts:
Australian businesses may need to consider implementing flexible retirement policies to retain experienced workers and mitigate the adverse effects of delayed retirement on mortality. They may also need to be mindful of mandating retirement, as it can lead to decreased productivity. With the risk of automation looming, businesses will need to work with their employees to create workplace arrangements that support longer working lives and address policies that incentivize early retirement. Additionally, businesses may need to consider implementing labour market reforms that remove disincentives for older workers to continue working, such as creating pathways to flexible retirement.
Social Responsibility becomes a worldwide priority
Trend Summary:
The UN Decade of Healthy Ageing promotes healthy ageing, providing access to age-friendly environments, enhancing the social participation of older people, and implementing age-sensitive policies. This initiative highlights the economic benefits of improving the lives of older people and the importance of enhancing their social participation.
Thinking a bit more holistically and systematically, there are arguments that care for the Earth, and for other people, should be viewed as an essential set of relationships that allow us to grow and flourish as part of a larger planetary ecosystem. It emphasises the need to view care as an essential set of relationships and highlights the recent United Nations Climate Change Conference (COP26) and ongoing negotiations over US President Joe Biden's social infrastructure bill, known as the Build Back Better Act.
References:
https://www.weforum.org/agenda/2021/10/healthy-ageing-older-people/
https://www.project-syndicate.org/commentary/care-relationships-new-economic-age-by-anne-marie-slaughter-2021-11
Impacts:
The trend towards promoting healthy ageing and enhancing the social participation of older people may create opportunities for Australian businesses in the care sector. Additionally, implementing age-sensitive policies may require businesses to adapt their practices to meet the needs of older people. The trend towards viewing care as an essential set of relationships may also impact businesses, as consumers may increasingly seek out products and services that align with this value. Finally, the ongoing negotiations over the Build Back Better Act in the United States may have indirect impacts on Australian businesses, as it could influence global attitudes towards care and the environment.
Steps to becoming a multi-generational workplace
Trend Summary:
We know that age diversity in the workplace delivers financial and productivity benefits. Work is being done on better undersanding the steps organisations could take to increase age diversity in the workplace. For example, one approach is to take three steps:
- Define the Diversity You Have - compare representation data with external benchmarks
- Use behavioural science to achieve the Diversity You Want - different approaches and reduction of biases in hiring and retention processes can improve diversity
- Continuously monitor Inclusion - avoid making things a box-ticking exercise and embed inclusion into the culture to gain higher job satisfaction for all employees
Another approach is the Acknowledge-Grow-Embrace (AGE) model as a framework to move away from extrinsically motivated age-related practices to intrinsically motivated ones. Initiatives such as mixed-age mentoring and adopting a growth mindset can be employed to reduce ageist beliefs and improve cross-age respect and collaboration.
References:
- https://blogs.lse.ac.uk/businessreview/2022/12/01/age-diversity-three-steps-to-prepare-for-the-multigenerational-workplace-of-the-future/
- https://blogs.lse.ac.uk/businessreview/2022/02/03/ageism-in-the-workplace-the-privilege-of-being-the-right-age/
Impacts:
The impact of these trends on businesses in Australia is significant. Companies that embrace age diversity and create an inclusive workforce can improve their financial performance and increase their competitiveness. Ageism in the workplace can lead to discrimination, lower productivity, and reduced collaboration and innovation. However, initiatives such as mixed-age mentoring and adopting a growth mindset can reduce ageist beliefs and improve cross-age respect and collaboration. By implementing these trends, businesses in Australia can create a more diverse and inclusive workforce, leading to better financial performance and competitiveness.
Strategic Implications
The ageing population in Australia presents both challenges and opportunities for government and business. Significant changes to the healthcare system that prioritise healthy ageing and move from a reactive/transactional model to a more preventative model could help provide a more solid economic foundation. Each year of longevity added creates over $1 trillion in global GDP, so it is in the best interest of everyone to promote healthy ageing.
Technology will play a significant role in leveraging limited resources to address the needs of a growing population of older people requiring care. Governments and businesses should pursue more risky technology development that could potentially have greater payoffs.
Practical Actions
1. Develop and market technology innovations that support the needs of the ageing population, prioritising responsible development to gain a competitive advantage.
2. Invest in gerontechnology and elder care robots to offer innovative services and products in these sectors, addressing concerns around privacy, cost, and displacement of human caregivers.
3. Invest in digital health systems to improve access to virtual healthcare for low digital capability populations, addressing barriers to telemedicine adoption and designing accessible products for older individuals.
4. Offer technology training and support services to older adults, addressing digital inclusion and the specific needs of elderly individuals living in rural areas.
5. Implement policies that support productivity and remove barriers to labour force participation of older workers.
6. Implement flexible retirement policies to retain experienced workers and mitigate the adverse effects of delayed retirement on mortality.
7. Collaborate with employees to create workplace arrangements that support longer working lives and address policies incentivizing early retirement.
8. Encourage age diversity and inclusivity in the workforce, implementing initiatives such as mixed-age mentoring and adopting a growth mindset to reduce ageist beliefs and improve collaboration.
9. Monitor global developments to anticipate potential indirect impacts on Australian businesses and adapt strategies accordingly.
Photo by Anna Shvets: https://www.pexels.com/photo/aged-woman-using-laptop-at-small-table-5257550/
