Who pays for whom, in a greying world

My father-in-law fell ill recently and although not life-threatening, it led my wife and I to consider for the first time that one day, our families might have to take priority over our careers.Shock of Gray, in which he explores what he calls the “most important issue facing the human race”.

Paul Gilfeather

gilfeather@mediacorp.com.sg

Mr Fishman is in town this week to deliver two lectures at the National University of Singapore’s Asia Research Institute.

He spoke to me before setting off from his home in Chicago and I asked him about the potential fall-out from economic migration in reverse as people drop out of the job market to care for elderly relatives.

He said: “The huge unseen cost of this whole thing is when people step out of their high-value job, serving maybe hundreds of thousands of people every day, to serve just one person in your family for a lower wage. It puts you in a completely different economy. And if you multiply this by what would need to happen in a society that is ageing overall, you are literally removing a huge chunk of the work force.”

He went on: “Human beings have lived for seven thousand generations.

For all but six of those we have lived for the same amount of time, which was pretty short. So now for the very first time we are dealing with this huge expansion of human life. It is the very first minute of unprecedented change.”

Mr Fishman points out that as humans we are “hardwired” not to tackle the question of how long we will live — which has resulted in a short supply of solutions.

“In the developed world we have added two-and-a-half years to the average longevity of a person every decade,” he said. “People have just not planned for it because they live in the current snapshot, which is the age our parents have gotten to when in fact, we are reaching far beyond that.

“My grandfather died in 1980 but, based on the average, I have another 10 years on that. That is very hard to compute in the public spirit when you are considering your own lifespan.”

ECONOMIC POWER WITHIN FAMILIES

In his book, Mr Fishman talks about Singapore’s changes to the law made in 1999 which allow parents to sue their children for financial support.

Here, we have one of the lowest fertility rates in the world — just 1.28 — and this, combined with population ageing and shrinking dependency ratios, have resulted in the problem being particularly pertinent.

“This issue puts a huge strain on families. In Asia you have this interesting split in the way economic power is controlled within families,” he said.

“If you look at the leading-edge economies which had the big boost and expansion before the others, like Japan, the older generation has the economic keys to the family.

They own the house, which is more than likely worth more than the lifetime earnings of the children.

They have the great pension plans.

And when you have a situation like that, when the older generations have the economic power, it changes the way their children act.

“Their children tend to postpone marriage, they tend to stay close to home and they tend to have fewer kids because they feel the need to stay close to their parents in order to have access to that economic store.

“But when you get to the more recent ascending economies, like China, the children have the power.

So what happens is the children are the leading-edge urban migrants, they move on, they put their flag in the rising economy and they benefit from it.

“But what happens is, you have millions of core parents that they have been left behind. The children send money home for a while, then it stops. Then the parents are the ones who have to ingratiate themselves with their offspring.

They work their way to the city, they offer themselves as unpaid child minders, they leave their friends and their social networks.

They give up 10 years of their lives as care-givers in the hope that their adult children will eventually take care of them, but it does not always happen.

“If you look around the world in middle-income and above countries, the transfer of money from parents to children is far greater than the public transfer of funds from young workers to retirees in the public sector.

“So you have these two flows of money. One is the private flow that happens in families from older to younger, then you have the public flow that goes from younger to older which goes to pay for national health services or pensions.

Overwhelmingly the money flow has favoured the private flow from older to younger but as people are adding 10 or 15 years to their lifetimes, they are going to be saving over their lives much differently.

“They may feel less generous to their children and then you have to start thinking: Does this change policy? It may have to result in some kind of official redistribution of income through public mechanisms to redress the balance.

“These are the kinds of questions that we have to face up to.”

Shock of Gray

How do we live longer?is insightful and thought-provoking, throwing some much-need light on the question:

Paul Gilfeather is the principal correspondent at Today.

Today File Photo

‘So you have these two flows of money. One is the private flow that happens in families from older to younger, then you have the public flow that goes from younger to older which goes to pay for national health services or pensions.’

Shock of Gray author Ted Fishman

With people living longer, Ted Fishman looks at hard questions for economies and Asian parent-child

It is an issue hundreds of thousands of professionals the world over are being faced with. And it is just one of several problems tied to the bigger question of how society will cope with the world’s rapidly ageing population.

The current global population of 6.7 billion is expected to hit 9.1 billion by 2050. By that time one billion people will be 65 of older and, for the first time, the number of people over 50 will be greater than those under 17.