Alfred Marcus and Mazhar Islam examine how demographic changes introduce new challenges for businesses.

The impacts on countries that have falling working-age populations – Japan, Germany, Russia, Taiwan, the US and China – are profound. First, a shortage of labour is leading to higher pay, which has resulted in an uptick in inflation. Second, economic growth, which arises from having more workers and their being more productive, has been slowing and it is likely to continue to slow. Countries with fewer workers have to increase their productivity rapidly, or else they face diminishing growth. At best, they can maintain the same level of economic activity. However, it will be hard for ageing countries to increase this level. Third, demand will fall.

These reflections about what will happen next are not speculations. Businesses must recognize that a decline in working-age adults means fewer taxpayers and, with fewer taxpayers, the stress on social security and welfare systems of countries that have fewer workers grows. As populations contract, the challenge for governments is to find sufficient revenue to fund programs that look after the elderly, while continuing to nourish the young. Governments must rely on their populations being replenished by immigration or their economies being transformed by technological advances. Without these, the decline in family size – families being neither large nor stable enough – presents a daunting challenge, one that no government has yet to master fully.

Already in the US the number of jobs is exceeding the number of job seekers, a development that makes perfect sense as the number of elderly rises and immigration is curtailed. Without increases in productivity, or delays in the age of retirement, businesses have to recognize that countries with fewer workers are not likely to grow rapidly. Were there to be another economic shock like the great recession of 2007–08 or some other unexpected event like the COVID-19 pandemic, it will be very difficult for countries with declining workforces to return to a normal level of growth.

The positive side of reduced growth in ageing countries is less negative environmental impact. Reduced growth boosts efforts to lower greenhouse gas emissions, but this reduction may be accompanied by declines in food, water, and energy consumption, and lower living standards. Therefore, technological innovation that is good for the planet and good for the corporate bottom line should be a high priority that is pursued vigorously by all companies. Companies also need to closely collaborate with government and policymakers in ageing countries so that the governments undertake policies that promote such technological innovation.

Immigration is the sensible way to replenish lagging working-age populations. Businesses should become major supporters of pro-immigration policies. However, until now, immigration at the scale needed to make a significant dent in the problem has been politically unfeasible in almost all countries. The rise of nationalist leaders around the world and their ascent to power is harming the ability of the world to adjust to the challenge of ageing. Businesses must do all they can to oppose these movements and to put a stop to the policies they represent. It is in the self-interest of business to do so.

The alternative, to persuade citizens to have more babies, or to incentivize them with monetary rewards, is a far slower and less certain way to approach the problem of ageing. Typically, most of the subsidies offered to people to have more children are absorbed by people who would have had such children without the subsidy. Experience in Europe with longer parental leaves as a way to encourage increased births suggests that such policies do not impact birth rates significantly. However, such benefits do lead to better parenting and positive societal benefits. Subsidized childcare does seem to help, though the effects are not sufficient for countries to move their fertility rates back to the replacement level which would guarantee population stability.

Therefore, businesses should support these subsidies. They should support them because they signal to women that they can have families and at the same time fully pursue their careers without impairing either quest to any great extent. Women need to feel that they can participate fully in the workforce. Their participation has never been needed as much as now, especially in ageing societies.

There are several other implications for management about how it should prepare for a situation in countries where the size of the working class is shrinking:

• Salaries and benefits might have to be increased to retain quality human capital which might
  be in great demand in these societies.
  
• Human resource practices must be implemented that attract employees who have traditionally
  remained outside the workforce.
  
• It must be recognized that demand patterns will be far different in ageing societies.
  Marketing and product development will change.

Management must devise strategies that take advantage of the world’s demographic diversity. It cannot rely solely on aging societies as their vitality will inevitably diminish to some degree. As well as making aggressive attempts to innovate technologically, businesses must never let up in their strong support for liberal immigration policies.

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Eric Nauenberg explores the changing dynamics of social capital and health across the lifecycle.

One of the major questions not asked with regard to the COVID-19 pandemic regards the impact of the pandemic on health owing to a potential sudden shock to an individual’s stock of social capital in terms of one’s network of friends and family. It is likely with social distancing and other isolation measures in place to contain the pandemic that many people have experienced a sudden depletion in this stock – an inventory which may or may not be fully recoverable in the future.

Just as the structure of the employment landscape may be permanently altered – so too may social interactions be permanently altered in ways that may not perfectly substitute for existing social structures established over time. The life-cycle model of general consumption – developed by Modigliani and Brumberg (1954, 1980) positing an inverted U-shaped pattern as one ages – is likely applicable to social capital as well in normal times, but these times are anything but normal and the patterns may have been permanently altered in some manner that is yet to be seen. 

In Chapter 5 of The Elgar Companion to Social Capital and Health dealing with social capital and health over the life cycle, I bring up the issue of virtual “social media” relationships beginning to dominate over in-person relationships and whether they serve as substitutes for the latter (Nauenberg, 2018). This pandemic has potentially further increased this dominance having ramifications for the level of support a person experiences in his/her daily life. My supposition is that the bonds that tie virtual relationships are likely to be much weaker than those that bond in-person relationships; therefore, the level of support that people may be experiencing may be substantially decreased during the pandemic and may never bounce back to baseline.

What is curious presently is that the virtual world of social relationships is now suddenly become the predominant form of relating in many areas of the working world through Zoom® and Microsoft Teams® and whatever support structures that may be present in the workforce may also emulate the patterns that are being experienced amongst one’s social circle. The same goes for school-age children particularly if on-line learning continues far into the current school year. There is a further curious trend in this pandemic that warrants some mention. It has been found that men are more at risk for worse outcomes than females across the age distribution. While both genders have the same prevalence, men have higher mortality (Jin, Bai, and He et al., 2020). In the chapter, I mention the worldwide phenomenon for men under the age of 65 to increasingly live alone. While more women live alone over the age of 65, this gap too has narrowed in recent years (United Nations Statistics Division, 2017). While there may be clinical reasons for this difference across genders in terms of differences in physical health and prevalence of pre-existing conditions, it is entirely plausible that lower levels of social capital amongst men than amongst women may potentially play a role as well. I will await the published literature to “weigh-in” on this issue.

Eric Nauenberg, Ph.D. is a Member of the Dalla Lana School of Public Health, University of Toronto, CA.

Also on ElgarBlog:

Why Trust is Good for your Health by Martin Ljunge. Read Martin Ljunge’s chapter Trust promotes health: addressing reverse causality by studying children of immigrants 

The Importance of being Social –Sherman Folland investigates the influential role social capital plays in mental health and physical wellbeing.

Religious Capital, Social Capital and Health Ephraim Shapiro and Chen Sharony explore the link between religion and health

Does Health Affect Social Capital Hope Corman, Kelly Noonan, and Nancy E. Reichman examine the relationship between health and social capital.

Social Capital in Epidemiology, Martin Lindströ mexplores the link between religion, social capital and health.

Social Capital and Aging Brain Health Nicole Anderson explores the relationship between social capital and the health of the brain as it ages.

Nicole Anderson explores the relationship between social capital and the health of the brain as it ages.

Disabling dementia, mostly from Alzheimers (60-80%) but also from other cases, is common enough so that most people have some acquaintance with it. However, experts on health policy clearly need a more thorough understanding of its medical science. In her chapter Social capital and Aging Brain Health in the Elgar Companion to Social Capital and Health, Dr. Anderson, a cognitive neuroscientist and neuropsychologist, describes here Alzheimer’s (AD) genetic basis, the identified dementia risk factors emanating from our very early years in our lifespan, through midlife, and in later life.

 The genetic component of the most common variant of AD, where the symptoms tend to appear in the early 70s, is identified in 50 percent of patients with the disorder.  Clearly AD has an inherited component. But research also finds experiential risk factors that have influence.

Seven examples of these include physical factors (diabetes mellitus, midlife hypertension, midlife obesity, smoking, physical inactivity) and cognitive/psychological factors (low education, depression). Just these seven have been shown to account for nearly 30% of global cases. Other more indirect influences occur such as cognitive reserve, the beneficial experience gained when one learns to pivot from a usual cognitive method to something new.

Early Life Social Capital Contributions to Later Cognitive Health and Dementia Risk

Research findings describe risks of later dementia include a childhood spent in lower social economic status than others in the community. The same occurs when assessed in both wealthy countries and developing countries, even when high SES people and low status ones are from the same culture (Zeki al Hazzouri et al, 2011). Studies also report higher risks of dementia can arise from experiencing factors associated with systematic racial discrimination and from abusive relationships received within the family. Lower education and poor nutrition when young are also harmful factors. 

Midlife Social Capital Contributions to Cognitive Health and Dementia Risk

Higher SES in the midlife years improves cognition, and living in cities advantages cognition compared to rural living (Chiao, 2017). Working in occupations with social elements or in more cognitively complex occupations helps (Rebled et al, 2016 and Rebled et al, 2016). Cognitive activities such as playing music, reading, playing games, engaging in social activities also lowers dementia risks (Verumi et al, 2014; Schreiber et al, 2016). 

Later Life Social Capital Contributions to Cognitive Health and Dementia Risk

Enjoying a good socioeconomic position in the community is correlated with lower risk of later dementia. Stable social connections are beneficial, such as living with your spouse versus living alone (Yeh and Lo, 2004). Family and friends may also help to provide a sense of life satisfaction (Gau et al, 2007). Trusting the people in your community is important, as is volunteering for local projects, and the evidence suggests that you need only volunteer a few hours a week to reap the greatest benefits (Anderson et al, 2014). 

Conclusions

Thus while physical and complex cognitive experiences during life provide major contributions toward lower dementia risks, social factors also add substantially to these benefits. Social experiences in the very early years, during midlife, and the elderly are very important. Many of these beneficial social factors seem possible to improve with community policies. References referred to are provided more fully in the chapter.

Nicole Anderson researches the Aging Brain in her practice in neurological science and cognitive neuropsychology. She attained her graduate degrees in Toronto, Canada, where she continues to practice.

Why Trust is Good for your Health by Martin Ljunge. Read Martin Ljunge’s chapter Trust promotes health: addressing reverse causality by studying children of immigrants 

The Importance of being Social –Sherman Folland investigates the influential role social capital plays in mental health and physical wellbeing.

Religious Capital, Social Capital and Health Ephraim Shapiro and Chen Sharony explore the link between religion and health

Does Health Affect Social Capital Hope Corman, Kelly Noonan, and Nancy E. Reichman examine the relationship between health and social capital.

Social Capital in Epidemiology, Martin Lindström explores the link between religion, social capital and health.

James Midgley, Espen Dahl and Amy Conley Wright examine how social investment ideas have been adopted in different countries and the resulting outcomes. […]