A country's population is ageing quickly. Fewer young people are joining the workforce, while spending on pensions and healthcare rises. Compare three responses.
Raise the retirement age
- Labour force: More experienced workers stay in work.
- Government budget: More tax revenue and fewer years of pensions.
- Older workers: Some in physical jobs may find it hard to keep working.
A later retirement age supports the labour force and budget, but may be hard for some workers.
Allow more working-age immigrants
- Firms: Can fill vacancies.
- Economy: A larger labour force supports output and tax revenue.
- Society: Pressure on housing and transport, and possible social tension.
Immigration quickly adds workers but needs housing and integration.
Help firms automate
- Firms: Need fewer workers for the same output.
- Productivity: Output per worker rises.
- Some workers: Need retraining for new tasks.
Automation raises productivity so fewer workers can produce more, but needs investment and retraining.