Europe's and Japan's Aging Populations Deterent To Participating in Coming Global Ecnomic Growth

Cisco Systems has released a report showing that, by the year 2020, a new global economic paradigm will emerge defined by the globalization of companies, the increased role of knowledge workers and the personalization of customer experiences as key factors to economic success, with the United States, China and India driving more than half of that growth, while economies of Europe and Japan due to aging workforces or relatively lower levels of productivity will be face challenges.

According to Foresight 2020 Economic, industry and corporate trends, prepared by the Economist Intelligence Unit, the consequences of aging population dynamics will exert a
profound influence on economic development patterns. Some countries will age faster than others. Take the old-age dependency ratios (the over-65s as a share of the population aged 15-64). Whereas the ratio in the EU25 will reach almost one-third in 2020 (it was 25% in 2005), in the US it will rise to only 25%, from 19% in 2005. Japan’s fertility rate, at 1.3 births per woman of child-bearing age, is among the lowest in the developed world. By 2020, the old-age dependency ratio will have risen to 46% (from 29% in 2005). Among the potential risks are slower economic growth, financial-market instability and difficulties in funding pension systems. Countries will have to offset the rising share of pensioners by getting the unemployed into jobs, by making people work longer and by encouraging immigration. More women will be drawn into the workforce, too.

Source: News Release Cisco Systems, Inc. (March 30, 2006)