ECONOMY | 05.10.2020
Latin America is heading rapidly toward an aging population
The challenges for public policy resulting from the change in the demographic composition of Latin America in the coming decades are considerable.
Demographers define demographic transition as the process by which a society evolves from having high and uncontrolled levels of birth and mortality to low and controlled levels. This transition is considered to be a result of the technological progress and modernization that accompany the global process of industrialization and urbanization of societies.
But this transition can occur at different speeds. In the United Kingdom—and other countries that led the industrial revolution in the 18th century—it took several centuries. Other economies, where industrialization occurred later, are experiencing a much faster demographic transition. This is the case in Latin America, as highlighted in the latest report (in Spanish) by MAPFRE Economics on the insurance market in the region.
MAPFRE Economics reviews market developments each year, on this occasion including a section on the demographic evolution of the region. Life expectancy at birth in the region rose from 51 years in 1950 to 75 years in 2020, representing an increase of 24 years over the period. The projections estimate that life expectancy in the region could grow around two years per decade to reach over 81 years by 2050, and could be around 87 by the end of the century. Projections of fertility rates, however, have shown a sustained drastic decline, falling from an average of 6 births per woman to 1.7 at the end of the century.
These factors, explained in the report, predict “a progressive aging of the region’s population throughout this century, giving rise to constrictive population pyramids (with aging members of the population in high proportion), which are then set to converge toward stationary pyramids toward the end of this century.
The challenges for public policy to result from this change in the demographic composition of Latin America in the coming decades are considerable. Not only in terms of governments reallocating resources, but also as a result of rethinking the role of older people in society. Health and social security systems must also adapt to this irreversible phenomenon, which will affect the entire region by the middle of this century.
Although the region, like the rest of the world, is currently focused on trying to stop the spread of COVID-19, demographic studies confirm that longevity rates are rising on a global scale and that people are living longer and healthier lives. The challenge facing policymakers in these countries is to ensure that appropriate measures are put in place now to ensure that these additional years are lived with economic dignity but without exerting disproportionately excessive pressure on public spending. It is clear that a mixed pension system, combing public and private schemes, must be at the heart of these measures.