We do not yet measure the extent of this background blade, which will upset our societies and our economies in a few decades. By the end of the century, some countries will see their population contracting 20 to 50 %. The weakness of the birth rate in most regions of the world will recompose international balances. Consumption, labor market, establishment of business production sites, social model, etc. The McKinsey Global Institute research office recently published a report sweeping the repercussions of this global demographic decline. Clarisse Magnin, Managing Director of the McKinsey strategy consulting firm in France, deciphers the major observations for L’Express.
L’Express: What figures have marked you the most in this report?
Clarisse Magnin: Two -thirds of human beings live in countries where the fertility rate is lower than the replacement threshold of 2.1 children per woman. This phenomenon is all the more striking since it is not confined to developed countries, it is universal. Even France, the birth rate of which has long been dynamic, is far from this threshold today. Latin America is at 1.8, India at 2 … These are data that is not necessarily aware. In Korea and Singapore, the situation is more known, but note that the rate is particularly low, lower than 1. In total, by the horizon 2100, certain countries, like China of Japan or the Italy will experience a fall in their population of 20 to 50 %, which is considerable.
What impacts will these demographic upheavals have on our savings?
They will be quite jostled. However, global consumption will not be reduced because the world is gaining age, quite the contrary. In 2050, it will more than double, from 84,000 billion to 179,000 billion dollars. On the other hand, it will be distributed on the planet very differently. For example, the share of Western Europe in global consumption increased from 24 % in 1997, to 14 % in 2023 and should further drop to 9 % in 2050. Orient and North Africa. In 25 years, the main households in world consumption will be North America with a share of 17 %, despite a declining population, India (16 %) and emerging Asia (15 %). Sub -Saharan Africa will represent a particular case, with a share in consumption which will go from 4 % currently to 5 % by 2050 while, at the same time, its population will go from 16 % to 23 % of humanity.
With what consequences on the labor market?
The aging of the population will have repercussions on the availability of labor. This trend therefore militates for an increase in the intensity of work, which covers both working time, as the number of years of work or the activity rate, young people and seniors. Japan has long bet on the extension of lifelong working hours, with an activity rate of 50-65 year olds of 85 %, a world record, and 26 % among more than 65 years ! This model is not necessarily replicable to other societies, but it is an illustration of the possible responses of a weak birth rate over a long period, in a country which has not resorted to immigration.
Are there other levers to activate to thwart the effects of demographic decline on the economy?
Productivity gains, which make it possible to produce more with constant or decrease resources – in this case the number of assets. However, the growth of productivity gains of the last 25 years has proven moderate, despite the arrival of technology. The big question is whether artificial intelligence and new technologies will allow the movement to be resettled. France in particular, in the last decade, has recorded productivity gains of 0.3 % per year. To compensate for your low birth rate, they should be brought to 1 % per year. You might think that such a tripling is out of reach. In reality, this is the rhythm that we observed between 1997 and 2012, during which productivity increased by 1.1 % per year. Achieve it supposes Effective adoption of technology combined with an adaptation of skills. What is certain is that passivity will not allow us to preserve our social model or the creation of wealth in France.
Do some countries try to relaunch the birth rate? With what result?
For the time being, none of the attempts to leave the birth rate has been successful, the causes of the denatality are multifactorial. They are economic, cultural, linked to the aspirations of young people as much as to their financial situation. Of course, efforts in terms of early childhood can help. But let’s look at the example of Hungary, which has devoted 6 % of its GDP to it for several years and absolutely fails to stop the decline of fertility … in Japan and Korea, the results are absolutely not convincing either.
What measures should the States take to prepare for these developments?
The contraction of populations seems inevitable. It remains to be seen how quickly and in what proportion. We must work attenuation and adaptation mechanisms to preserve a social model hitherto built on the basis of a pyramid company. If it evolves towards a form of obelisk, intergenerational solidarity is upset. This mutation also affects the creation of wealth: with the reduction of the population, GDP per capita declines. But these effects are felt in a horizon of several decades. For a state, it is difficult to project yourself and adopt the measures that are necessary now. In Europe as in the United States, immigration reduces the phenomenon, which could differ the triggering of corrective actions.
And in companies?
In the same way, they usually have a projection horizon from 3 to 5 years old and not 25 or 50 years, except perhaps those which fall under family capitalism, the mutualist model or for social economy activities . The approach is all the more complex since it supposes to take into account in each geography both the demographic elements but also the share of these populations in world consumption.
What levers can activate to adapt?
Companies must build vocational training, develop employee mobility, adapt working times and revive productivity gains, in particular by investment in technology. They will be forced to redeploy their activities according to these developments, in terms of demand and human capital. Succeeding in attracting and retaining your employees will be decisive. We can expect a real reflection of redeployment and security. We speak in English of “workforce planning”: an international talent planning strategy which takes into account both the homes of demand and the ability to find more or less qualified workforce, according to the industry, worldwide.
In 2050, a quarter of consumers will be over 65 years old, a proportion doubled compared to 1997. Will this evolution of demand penalize businesses?
The increase in the share of seniors in the population does not result in a compression of consumption, it is even sometimes the opposite. There will also be a lot of markets to serve, in what is called “Silver Economy”, with specific goods and services, for example in terms of health or even equipment and maintenance of housing.
Should we expect a modification of the balance of power between the economic powers of this world?
In the end, the weight Nations in terms of population and wealth will rebalance. We are almost incredulous to read these figures: in 2100, China will barely weigh Europe, with 633 million inhabitants against 608 million. From 21 % of humanity in 1997, it would increase to 6 % in 75 years. More generally, the block made up of all industrialized countries and China will see its weight reduced quite significantly. My conviction is that, therefore, cooperation will have to increase. Today, we are in a world trade where the cards are rebatted, with more customs barriers and a region in the world, Europe, which remains extremely open to imports. At the time of the World Economic Forum, we published the barometer of international cooperation: it reflects a slight contraction of international exchanges for the first time in a decade. But in a world where wealth and the population are distributed more, with smaller internal markets, we will have to exchange between more exploded blocks.
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