World Economic Forum special report: Contents
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Gabriel Stein Director and chief international economist Lombard Street Research |
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Labour forces, and soon populations, are starting to shrink in most advanced economies, for the first time since the 1930s. In some – notably Korea, Japan, Germany and Italy – this is well under way. Imminent retirement of the baby-boomers – the 1946-64 generation – is the proximate cause. Of course, only the first cohort is 60-plus, close to the retirement age of 65. But many retire before age 65, sometimes even before 60. In that sense, the baby boomers have already begun to retire. From 2011 onwards, there will be no holding back the flood. A sharp reduction of labour supply is being accompanied by an increased supply of capital: late-career saving to boost pensions and lesser construction investment as the need for buildings of all types eases. These are points more for Europe and Japan than the US, where immigration somewhat offsets ageing and caution over future income has been thrown to the winds. The Eurasian savings glut has this population cycle as one of its roots – first (in the 1990s) in Japan and now in Europe.