EBRD warns of aging populations as challenge for GDP growth | Daily Sabah – Daily Sabah

EBRD Report: Demographic Shifts Challenge Sustainable Development Goals

Executive Summary: Economic Growth and Demographic Headwinds

A recent report from the European Bank for Reconstruction and Development (EBRD) highlights an urgent challenge to long-term economic prospects and the achievement of Sustainable Development Goal 8 (Decent Work and Economic Growth). The report warns that slowing population growth and aging populations are actively eroding economic growth, necessitating immediate policy action to ensure sustainable development.

Impact on SDG 8: Decent Work and Economic Growth

The report presents critical findings on how demographic trends are undermining economic stability and progress towards SDG 8.

• Reduced GDP Growth: In emerging Europe, the declining share of the working-age population is projected to reduce annual per capita GDP growth by an average of nearly 0.4 percentage points between 2024 and 2050.
• Premature Aging: Post-communist nations are described as “getting old before getting rich,” a trend that threatens progress on SDG 10 (Reduced Inequalities). The median age in these regions reached 37 when average GDP per capita was only $10,000, a quarter of the level in advanced economies when they reached the same median age.
• Demographic Dividend at Risk: For younger nations, such as Nigeria, the report stresses a limited window of opportunity to capitalize on their “demographic dividend.” Failure to enable job growth and private sector expansion jeopardizes their path to sustainable economic growth.

Socio-Economic Drivers and Related SDGs

The decline in birth rates is attributed to several factors that intersect with key social development goals.

• Gender Equality (SDG 5): A significant factor identified is the negative impact on women’s career earnings after having a child, highlighting a barrier to both economic participation and gender equality.
• Ineffective Incentives: Existing pro-natalist policies in EBRD nations have failed to produce sustained, meaningful change, indicating a need for more holistic approaches that align with broader sustainable development objectives.

Policy Responses and Governance Challenges

Current Policy Landscape

The report notes that politically viable solutions to counteract falling birth rates are scarce, posing a challenge to SDG 16 (Peace, Justice and Strong Institutions).

• Migration at the required scale is not considered politically palatable.
• Public sentiment is ambivalent towards leveraging Artificial Intelligence (AI) to boost productivity, a potential tool for advancing SDG 9 (Industry, Innovation, and Infrastructure).
• Aging leadership, particularly in autocratic nations, tends to favor policies such as restricting migration and protecting existing pension structures, which can exacerbate demographic pressures.

Recommended Policy Actions for Sustainable Futures

To mitigate the negative impacts and realign with the 2030 Agenda, the EBRD Chief Economist proposes a series of actions requiring significant political will and public engagement.

1. Extend Working Lives: The primary recommendation is to encourage people to work longer, which is essential for maintaining economic productivity and sustaining growth under SDG 8.
2. Invest in Reskilling and Adult Education: To facilitate longer working lives, comprehensive retraining and skills development programs are necessary, supporting the goal of full and productive employment.
3. Reform Pension Systems: Structural changes to pension schemes are required to ensure their long-term viability and prevent old-age poverty, directly supporting SDG 1 (No Poverty) and reducing intergenerational inequality (SDG 10).
4. Promote Public Dialogue: The report calls for an “adult conversation with the voters,” particularly younger generations who will bear the financial burden, to build consensus around necessary reforms and foster accountable institutions (SDG 16).

Analysis of Sustainable Development Goals in the Article

1. Which SDGs are addressed or connected to the issues highlighted in the article?

• SDG 8: Decent Work and Economic Growth

  The article’s primary focus is on the threat that slowing population growth and aging populations pose to “long-term economic prospects.” It explicitly states that these demographic shifts are projected to “reduce annual per capita gross domestic product (GDP) growth,” which is a core concern of SDG 8.

• SDG 10: Reduced Inequalities

  The article addresses inequality between different age groups. It highlights the future “burden of pay-as-you-go pension schemes” on “younger voters” due to aging populations. It also touches on the topic of migration as a potential solution, which is a key aspect of reducing global inequalities.

• SDG 5: Gender Equality

  The article connects falling birth rates to issues of gender equality by identifying “a reduction in women’s career earnings from having a baby” as a contributing factor. This points to the economic and professional penalties women face, which is a barrier to gender equality.

• SDG 4: Quality Education

  As a solution to the economic challenges of an aging population, the article suggests that “people working longer” would be necessary, which would “require some retraining.” This directly relates to the goal of promoting lifelong learning opportunities for all, a key component of SDG 4.

2. What specific targets under those SDGs can be identified based on the article’s content?

• Target 8.1: Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 7 per cent gross domestic product growth per annum in the least developed countries.

  The article is centered on the challenge of maintaining economic growth, specifically mentioning that the drop in the working-age population is “projected to reduce annual per capita gross domestic product (GDP) growth.”

• Target 10.2: By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

  The discussion about the need for an “adult conversation with the voters” about demographic trends, particularly the burden on “younger voters,” relates to ensuring intergenerational equity and the economic inclusion of all age groups.

• Target 5.4: Recognize and value unpaid care and domestic work through the provision of public services, infrastructure and social protection policies and the promotion of shared responsibility within the household and the family as nationally appropriate.

  The mention of “a reduction in women’s career earnings from having a baby” points directly to the economic consequences of caregiving responsibilities, which disproportionately fall on women. This target aims to mitigate such impacts.

• Target 4.4: By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship.

  The article’s proposal for “retraining” older workers so they can work longer aligns with this target’s goal of equipping adults with relevant skills for continued employment.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

• Indicator 8.1.1: Annual growth rate of real GDP per capita.

  This indicator is explicitly mentioned in the article. The report warns that demographic changes are “projected to reduce annual per capita gross domestic product (GDP) growth by an average of almost 0.4 percentage points a year.”

• Demographic Indicators (related to Target 10.2):

  The article heavily relies on demographic data to make its case. The “share of working-age people” and the “median age” are used as key indicators to illustrate the problem of aging populations and the subsequent economic and social pressures.

• Gender Economic Impact Indicators (related to Target 5.4):

  The article implies an indicator by referencing the “reduction in women’s career earnings from having a baby.” This points to measurements like the gender pay gap or the “motherhood penalty,” which quantify the economic disparity faced by women in the workforce after childbirth.

• Adult Education Participation Rate (related to Target 4.4):

  The suggestion that adapting to demographic change would “require some retraining” implies the need to measure the participation of adults, particularly older workers, in education and training programs. This would be an indicator of a country’s capacity to extend the working lives of its citizens.

SDGs, Targets and Indicators Summary

Source: dailysabah.com