Demographic Shifts: Challenges, Opportunities in High-and Low-Income Countries

One-fifth of the population in high-income countries is over age 65, compared to only 3% in low-income countries. This demographic shift poses significant challenges related to healthcare, pension systems, and labour force dynamics. In 2020, 97.5% of persons above retirement age were receiving a pension in high-income countries, whereas the majority in low- and lower-middle-income countries were not, says the International Labour Organisation. 

LABOR FORCE PARTICIPATION AMONG OLDER ADULTS

Older persons in developed countries are staying in the labour market longer. In the last two decades, labour force participation rates for individuals aged 55-64 increased significantly in 49 out of the 53 high-income countries with available data, with an average increase of 20 percentage points. Participation rates for those aged 65 and above also rose, though to a lesser extent, in 41 of these countries.

YOUTH BULGE IN DEVELOPING COUNTRIES

Many developing countries have a high proportion of individuals under age 25, leading to a youth bulge. In low-income countries, persons under 25 represent 61% of the population, compared to 27% in high-income countries. This trend presents both opportunities and challenges. A large youth population can drive economic growth if young people are well-integrated into the labour market. However, it requires significant job creation, education, and training programs to avoid high levels of youth NEET (not in employment, education, or training). Unfortunately, more than a quarter of youth aged 15-24 are NEET in low-income countries, says the ILO.

URBANIZATION TRENDS

Urbanization is another major demographic trend, with more people living in cities than ever before. This shift influences employment patterns, particularly the rise of services and industries in urban areas compared to agriculture-based economies in rural regions. Urbanization can create new job opportunities and drive economic development, but it also requires policies to manage the transition and ensure that urban growth is inclusive and sustainable.

In the 1990s, both Africa and Asia and the Pacific had similarly low proportions of their populations residing in urban areas. Since then, these regions have undergone substantial urbanization. Asia and the Pacific, for instance, saw a remarkable rise of 25.7 percentage points in non-agricultural employment from 1991 to 2022.

DECLINE IN WORKING POVERTY

Amidst rapid urbanization, working poverty rates declined in both regions. In Asia and the Pacific, the share of working poor decreased by 48.8 percentage points from 1991 to 2023. In Africa, despite progress (-17.3 points), challenges such as political instability, conflicts, and limited infrastructure hindered more widespread poverty alleviation. Unfortunately, urbanization in Africa has often been accompanied by the proliferation of urban informal settlements (slums) and inadequate access to basic services.

INFORMALITY IN EMPLOYMENT

Even as people increasingly migrate from rural to urban areas and shift away from agriculture, informality remains a pressing issue in both Africa and Asia and the Pacific. Many individuals, including in urban areas, remain in informal employment, lacking stable incomes and legal protections.

GLOBAL MIGRATION TRENDS

Global migration trends, driven by contrasting economic opportunities, climate change, and humanitarian factors, significantly influence population dynamics and labour markets worldwide. In 45 out of 148 countries with available data, at least 10% of the labour force consists of foreign-born individuals or foreign citizens. International migrants are often drawn by better job opportunities, safety, security, and higher standards of living in destination countries. Consequently, high-income countries host over two-thirds of the 169 million international migrant workers globally.

ROLE OF INTERNATIONAL MIGRANT WORKERS

International migrant workers play a crucial role in many sectors, including healthcare, hospitality, construction, and manufacturing. In high-income countries, international migrants often dominate sectors requiring specialized skills or manual labour. In low-income countries, migrant labour is particularly crucial for seasonal agricultural production and is likely to be informal, mirroring conditions faced by native-born workers.

GENDER GAPS IN LABOR FORCE PARTICIPATION

Women constitute about half of the world’s population but have lower labour force participation rates than men. These gender gaps in participation widen significantly when considering the presence of young children in the household. Research shows that childcare responsibilities disproportionately fall upon women due to gender norms. Mothers of young children significantly reduce their labour force participation compared to women in households without young children. In contrast, men’s participation rates show much smaller changes when they become fathers.

MOTHERHOOD PAY GAP

These disparities contribute to staggering gender gaps in labour force participation, which reach 38 percentage points for couples with young children, compared to a 23-point gap for households without young children. Furthermore, studies indicate that the “motherhood pay gap,” which refers to the disparity in wages between mothers and non-mothers, is significant in certain countries. Motherhood often results in a wage penalty that can endure throughout a woman’s career, contrasting with fatherhood, which is consistently linked with a wage premium. Regardless of family situation, gender pay gaps persist across various industries and occupations.

IMPACT OF TRADITIONAL GENDER ROLES

Traditional gender roles not only affect childcare responsibilities but also influence women’s career choices, opportunities for leadership roles, and access to education and training. For example, women remain under-represented in managerial positions in most countries. Such little progress has been made globally over the past two decades that it will take almost two centuries before gender parity is achieved in managerial positions at the current rate of progress. Northern Africa particularly faces daunting challenges, with a mere 12.6% of managerial positions held by women, mirroring the systemic hurdles across Arab States and parts of Asia. Meanwhile, young women are twice as likely as young men not to be in employment, education, or training, with their global NEET rate reaching a worrying 30%.