Tuesday, April 10, 2018

The economy needs newcomers

The International Monetary Fund has said advanced economies such as Britain, the US and Japan risk being overwhelmed by their ageing populations, and calls on them to throw open their borders to more migrant workers in response.

Within the next few decades, working-age adults will need to support double the number of elderly people than they do now, putting immense pressure on welfare systems and wiping out as much as 3% of potential economic output by 2050, the IMF said in its latest World Economic Outlook report.

The IMF said: “Dramatic shifts in demographic structure projected in advanced economies could overwhelm the ability of policies to offset the forces of ageing. This underscores the need to rethink migration policies to boost labor supply in advanced economies.” The IMF said the current labour force participation rate, which estimates the number of people eligible for work who are in employment, could fall by as much as 5.5% on average across advanced economies over the next 30 years. It said, however, that more women and older workers alone may not be enough for economies to solve the problem. It said labour market participation would still eventually decline even if gender gaps are fully closed, and that it was also likely to remain below current levels even if more older people stay in work for longer.
The Resolution Foundation thinktank estimates the public purse will be out of pocket by about £160bn by the mid-2060s as the number of people over 65 grows by almost a third, while the working age population is expected to only increase by about 2%.

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