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4102.0 - Australian Social Trends, 2006  
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Contents >> Population >> Pace of Aging: Australia and Japan

Pace of Aging: Australia and Japan

In 2005 Japan had the highest median age of all countries in the world, while Australia's population was only moderately aged. Some 50 years ago the demographic situation was quite different, with the median age of Australia's population being seven years older than Japan's.

The ageing of the population is a major issue for Australian policy makers, particularly in regard to the long-term implications for reduced economic growth and the increasing demand for Age Pensions, and health and aged care services.(EndNote 1),(EndNote 2) As the population ages, growth in the number of people of working age will slow, while the proportion of people of retirement age will increase.

Sustained population ageing also leads to slowing or negative population growth. While declining population growth in developed countries is welcomed by some environmentalist and social scientists, (EndNote 3) economists tend to agree that population decline brings gloomy economic prospects. In addition to the decrease in the labour supply, the demand side of the economy may be affected through shrinking markets for goods and services.

How quickly this occurs depends on the dynamics of fertility, mortality and overseas migration. While a moderate pace of demographic change allows for gradual adjustment of the economy and policies to the changing population demographics, rapid changes are more difficult to manage. As a result, governments and society as a whole may need to take actions to address these issues. But how severe is the ageing of Australia's population, relative to other countries?

One way of applying a degree of perspective to the ageing debate is to compare ageing in Australia with that of other countries. This article examines the population structures in Australia and Japan and the demographic forces that shape the respective populations, both historically and projections for the future.

In 2005 Japan's population was ranked the oldest in the world, with half the people aged over 42.9 years. In comparison, Australia's median age is not projected to reach this level until 2032. Japan's population is projected to decline by 21% between 2005 and 2050 (from 128 million to 101 million). Over the same period, Australia's population is projected to increase by 38% from 20 million to 28 million people.

Fifty years ago the demographic situation of these countries was the reverse, with Australia's median age (30.1 years) being almost 7 years older than that of Japan (23.7 years).


Measures of population age

Median age of a population is the age that divides the population into two groups of the same size, such that half the total population is younger than this age, and the other half older.

Age ratios are measures used to compare the size of particular age groups in the population and are a standard summary measure of the age structure of a population:
  • Young age ratio is the number of persons aged 0–14 years per 100 persons aged 15–64 years;
  • Older age ratio is the number of persons aged 65 years and over per 100 persons aged 15–64 years;

Age ratios can be used to indicate the relative size of the "working age" population to the "non-working age" population, sometimes referred to as the dependency ratio. However, age ratios oversimplify the implication of dependency, for example, many young adults are dependent on their parents during post-school study, many people aged 15–64 years are not part of the workforce, many people retire before 65 years of age, while others continue to work beyond age 65.

PACE OF POPULATION AGEING: PROJECTED CHANGES IN MEDIAN AGE AND POPULATION SIZE
GRAPH:PACE OF POPULATION AGEING: PROJECTED CHANGES IN MEDIAN AGE AND POPULATION SIZE



PACE OF POPULATION AGEING

Demographic modelling shows that a persistent decline in fertility rates accompanied by rising life expectancy leads, in its initial stage, to a shift in the age structure towards older ages – that is, ageing of the population. Once the population has relatively fewer young people relative to the number of older people, even increases in fertility rates will be of limited effect in adding to the population because of the reduced number of women in reproductive ages. In later phases (and in the absence of significant migration intake), population ageing is therefore accompanied by population decline as the number of deaths exceeds the number of births (negative natural increase).


Population projections

This article makes use of population projections produced by the ABS for Australia and by the National Institute of Population and Social Security Research for Japan. The projections should not be considered as predictions or forecasts, but as illustrations of the population change that would occur if certain assumptions about future fertility, mortality and overseas migration were to hold true over the projection period.

For both countries, medium variant projections are used with the following assumptions:
  • For Australia, the total fertility rate (TFR) to decline to 1.70 babies per women by 2018 (from 1.77 in 2005) and remain constant thereafter. The TFR is a hypothetical measure of the total number of babies a women would have in her lifetime based on the age-specific birth rates of that year. The Japanese projections assume a decrease in the TFR to 1.31 in 2007 and a gradual upward change thereafter, reaching 1.39 by 2049;
  • In Australia life expectancy at birth to reach 84.9 years for males and 88.0 years for females by 2050–51 and remain constant thereafter. In Japan, the assumption is for life expectancy at birth to rise to 81.0 years for males and 89.2 years for females by 2050;
  • Australian annual net overseas migration gain to be constant at 110,000 people per year throughout the projection period. Japan's migration assumption is based on annual averages of Japanese population migration between 1995 and 2000, and a projection of international migration from 1970 to 2000.
Source: ABS Population Projections, Australia, 2004 to 2101 (ABS cat. no. 3222.0); National Institute for Population and Social Security Research 2002. (EndNote 4)


...CHANGES IN THE AGE STRUCTURE

Measured by world standards, the pace of ageing in Australia is moderate. While Japan's median age increased by 19.2 years (to 42.9 years) over the last five decades to 2005, in Australia it rose by a third of that amount (6.6 years) to be 36.7 years in 2005. Although ageing is projected to accelerate in Australia in the future, the speed of change will be slower than in most other developed countries, and much slower than in Japan. By 2050 Japan's median age is projected to increase by 10.5 years, to 53.4 years, while Australia's is projected to rise by 8.5 years, to 45.2 years.

The rapid increase in the median age of the Japanese population is reflected in changes in other measures of the age structure: very fast growth of the population aged 65 years and over, a decrease in the proportion of dependent children (aged 0–14 years), and a gradual decline in the proportion of people in the age group 15–64 years, which covers the years when labour force participation tends to be strongest. In Japan, the proportion of the population aged 65 years and over increased almost fourfold between 1955 and 2005, compared with a 57% increase in Australia. At the same time, the proportion of children decreased 58% in Japan and 33% in Australia. These trends are projected to accelerate in the future.

MEASURES OF AGEING, Australia and Japan

Australia
Japan


Measure
Units
1955
1980
2005
2025
2050
1955
1980
2005
2025
2050

Population
'000
9 200
14 695
20 329
24 679
28 081
89 276
117 060
127 708
121 136
100 593
Aged 0–14 years
%
29.0
25.3
19.6
16.5
15.1
33.0
23.5
13.9
11.6
10.8
Aged 15–64 years
%
62.6
65.1
67.3
63.1
59.2
61.3
67.4
66.2
59.7
53.6
Aged 65 years
and over
%
8.4
9.6
13.1
20.3
25.7
5.3
9.1
19.9
28.7
35.7
Age ratio
Young age(a)
no.
46.4
38.8
29.1
26.2
25.5
54.4
34.9
21.0
19.5
20.1
Older age(b)
no.
13.4
14.8
19.5
32.2
43.5
8.7
13.5
30.0
48.0
66.5
Total young and older age(c)
no.
59.8
53.5
48.6
58.4
69.0
63.1
48.4
51.0
67.5
86.7
Median age
years
30.1
29.4
36.7
41.6
45.2
23.7
32.7
42.9
49.8
53.4

(a) Number of people aged 0–14 years per 100 population aged 15–64 years.
(b) Number of people aged 65 years and over per 100 population aged 15–64 years.
(c) Total number of people aged 0–14 years and 65 years and over per 100 population aged 15–64 years.

Source: Australian Historical Population Statistics, 2006 (ABS cat. no. 3105.0.65.001); Population Projections, Australia, 2004 to 2101 (ABS cat. no. 3222.0); Statistics Bureau, Ministry of Internal Affairs and Communications: http://www.stat.go.jp/english/data/jinsui/2.htm (accessed 1 February 2006); National Institute for Population and Social Security Research 2002.(EndNote 4)


...CHANGES IN POPULATION SIZE AND GROWTH

The changes in the age structures of the Australian and Japanese populations described above will result in changes in their respective sizes and growth rates. Between 2005 and 2050 the population of Japan is projected to decline by 21%, or a loss of 27.1 million people. Over the same period Australia's population is projected to grow 38%, or 7.8 million people to be 28.1 million people in 2050.

POPULATION GROWTH RATE, Australia and Japan
GRAPH:POPULATION GROWTH RATE, Australia and Japan

Source: Australian Historical Population Statistics (ABS cat. no. 3105.0.65.001); Population Projections, Australia, 2004 to 2101 (ABS cat. no. 3222.0); Statistics Bureau, Ministry of Internal Affairs and Communications: http://www.stat.go.jp/english/data/jinsui/2.htm (accessed 01 February 2006); National Institute for Population and Social Security Research 2002. (EndNote 4)

DRIVERS OF POPULATION AGEING

The magnitude and speed of ageing results from the changes and dynamics of three demographic variables: fertility, mortality (longevity) and net overseas migration.

...FERTILITY

Fertility decline is the major driver of population ageing (see Australian Social Trends 2005, Recent fertility trends). Declines in fertility lead not only to fewer people in the present and short-term but also to fewer younger people in future decades, as low birthrates translate into smaller numbers of women in childbearing ages in two or three decades. For this reason even small changes in fertility can have significant implications for the current and future population size and age structure.

Fertility has been declining in both Japan and Australia, though large falls occurred considerably earlier in Japan. In the years following 1949, Japan's total fertility rate (TFR) decreased rapidly, falling from over 4 births per woman to below 2.1 (the so-called 'replacement level') in 1957, although it did recover slightly and hovered around the replacement level until the mid-1970s. Australia's TFR, on the other hand, remained above 3 babies per woman until the mid-1960s, and only fell below replacement level in 1976. Australia's longer baby boom produced a younger age structure as measured by the median age, which decreased slightly between 1955 and 1980.

In the future, the speed of ageing in Australia and Japan will depend greatly on the level and stability of each country's TFR. If the trend towards fertility decline accelerates, population ageing will dramatically speed up in both countries. Recent Australian fertility data suggest fertility rates have stabilised somewhat following the steep declines in TFR that have occurred since the 1970s.(EndNote 5) Japan's TFR on the other hand has continued to decline, and the 2004 level of 1.3 was amongst the lowest in the world.

Is it possible to keep the TFR stable? Some commentators say "no", claiming low effectiveness of pro-natalist policies, due to the fact that the most significant causes of fertility decline lie in the areas beyond the reach of the state, such as individual choices or partner relationships.(EndNote 6) Alternatively, many argue that there is a significant role for governments to play in creating more family friendly environments, enabling the reconciliation of paid work and child rearing/bearing responsibilities, increasing the availability of affordable childcare and education of children, and easing the tax burden of parents.(EndNote 7), (EndNote 8) Japanese fertility continued to fall throughout the 1990s, despite a number of Japanese government initiatives aimed at encouraging women to have more children.(EndNote 9) However, it is uncertain how steep the decline in fertility would have been had no government action been taken.

TOTAL FERTILITY RATE, Australia and Japan — 1948 to 2004
GRAPH:TOTAL FERTILITY RATE, Australia and Japan — 1948 to 2004



...LONGEVITY

Declines in mortality at older ages are considered to be the second most important driver of population ageing. Improvements in life expectancy, especially life expectancy at older ages, have an immediate impact in increasing the proportion of people in these age groups in the population.

Over the past 50 years both Australia and Japan have witnessed substantial improvements in life expectancy at birth. As a result of improved health care, and changes in lifestyle, the number of years a newborn baby (combined males and females) can expect to live increased by 9.1 years for Australia between 1970–1972 and 2002–2004, and by 10.1 years for Japan between 1970 and 2004. In both countries the majority of improvements taking place over this period can be attributed to mortality reductions at older ages. These changes have directly resulted in higher numbers and proportions of people in older age groups and also contributed to increases in overall costs of health and aged care.(EndNote 1),(EndNote 2) This situation will escalate in the future if, as projected, life expectancies in Australia and Japan continue to increase. To alleviate anticipated fiscal and labour market pressures, both Australian and Japanese governments have taken actions to encourage higher labour force participation of older workers, such as privately funded superannuation in Australia and, in Japan, to shift the cost of elderly care back to families.(EndNote 1),(EndNote 10)

The difference between the numbers of births and deaths within a country is its natural increase. Natural increase has been falling in both Australia and Japan, although Japan's has been falling at a faster rate. In 2006, Japan's natural increase is projected to become negative and then continue to decline, while Australia is projected to maintain positive natural increase until 2044.

LIFE EXPECTANCY, Australia and Japan
GRAPH:LIFE EXPECTANCY, Australia and Japan



...OVERSEAS MIGRATION

Overseas migration contributes to changes in population size and, to a lesser extent, age structure. As the age profile of newly arriving migrants is, on average, younger than that of the resident population, overseas migration tends to make the age structure of a population younger than it would otherwise be. However, increases in fertility rates have a greater effect in reducing the age structure than migration has.

The impact of overseas migration for population growth and age structure varies according to the relative volume of migration received by a given country. In Australia, a moderate-level immigration country, overseas migration has significantly contributed to population growth, and to a lesser extent to reducing the overall age of the population. Had there been no overseas migration between 1945 and 2000, Australia would have had 7 million fewer people in 2000, with the proportion of the population aged 50 years and over increasing by just 1.3 percentage points (from 28.2% to 29.7%).(EndNote 11) In Japan, a country which has historically received very little overseas migration, population growth and changes in age structure have essentially been driven by natural increase (the excess of births over deaths). Overseas migration has played only a marginal role, and its contribution to population growth has been negligible.

More recently, migration has been increasingly viewed by the Japanese government as a useful tool in overcoming problems of ageing related labour force shortages. A number of amendments have been made to very strict immigration law, in order to allow for importing unskilled labour and health care workers from neighbouring Asian countries.(EndNote 12)

Overseas migration will also continue to be important in sustaining population growth in Australia. The medium variant population projections for Australia assume a long-term level of net overseas migration of 110,000 people per year, resulting in an extra 7.1 million people in Australia by 2051. In the absence of this level of overseas migration Australia's population is projected to begin to decline in 2033. As well as contributing to population growth, overseas migration, and in particular skilled migration, has also been acknowledged to be helpful in overcoming skill deficits and ageing related fiscal pressures in Australia.(EndNote 1)

NATURAL INCREASE AND NET MIGRATION RATES, Australia and Japan
GRAPH:NATURAL INCREASE AND NET MIGRATION RATES, Australia and Japan



ENDNOTES
1 Productivity Commission 2005, Economic Implications of an Ageing Australia, Research Report, Canberra.
2 Department of Treasury 2002, Budget Paper No. 5: Intergenerational Report 200203, Commonwealth of Australia, Canberra.
3 Eckersley R. 2004, Well & Good. Morality, meaning and happiness, Text Publishing, Melbourne.
4 National Institute for Population and Social Security Research 2002, Population Projections for Japan: 20012050. With Long-range Population Projections: 20512100, viewed 1 February 2006,<www.ipiss.go.jp/pp-newest/e/ppfj02/ppfj02.pdf>.
5 Australian Bureau of Statistics, 2005, Births, Australia, 2004, cat. no. 3301.0, ABS, Canberra.
6 Lutz W. 1999, Determinants of low fertility and ageing prospects for Europe, in Family issues between gender and generations, European Commission, Vienna pp. 50-69.
7 McDonald P. 2000, 'Gender Equity, Social Institution and the Future of Fertility,' Journal of Population Research, vol. 17, no.1, pp. 1–15.
8 Longman P. 2004, The Empty Cradle. How Falling Birthrates Threaten World Prosperity And What To Do About It, Basic Book, New York.
9 National Institute of Population and Social Security Research 2003, Child Related Polices in Japan, IPSS, Tokyo.
10 Ogawa N. and R.D. Retherford 1997, 'Shifting Costs of Caring for the Elderly Back to Families in Japan: Will it Work?', Population and Development Review, vol. 23, no. 1, pp. 703–741.
11 McDonald P. and R. Kippen 2000, 'Australia's Population in 2000: The Way We Are and The Way We Might Have Been', People and Place, vol. 8, no. 3, pp.10–17.
12 Ogawa N. 2000, Policy Options for Meeting the Challenge of an Ageing Society, in Japan Ageing Research Cente, Ageing in Japan 2000, JARC, Tokyo.


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