The Globe and Mail

Three shocking events, three countries, and one ominous root cause.

In France this week, more than a million people took to the streets every day, threw paving stones at police and caused most of the economy to grind to a halt. The root of their anger was France’s effort to raise the retirement age from 60 to 62 in 2018. President Nicolas Sarkozy, whose government will need to raise 32 billion euros this year to pay unfunded pension costs, told strikers that the only possible option was to “increase the duration of working life.”

In Japan, the central bank lowered its prime interest rate to zero and purchased $60-billion in private assets, in effect giving away money in an effort to provoke any sort of economic activity and put a brake on 20 years of deflation that have sent wages, prices and living standards spiralling downward. Nobody dares start a business or purchase stocks: Why would you, when your house is worth a third what you paid for it?

In Germany, Chancellor Angela Merkel shocked her country with a speech Sunday suggesting that the “multikulti” approach of forcing 3.5 million Turkish immigrants to live in culturally isolated enclaves without full citizenship had “utterly failed.” On Tuesday, President Christian Wulff (like Ms. Merkel a Christian Democrat conservative) spoke in Ankara to reassure Turks that the next million immigrants would “belong in our country” and would not be treated so badly because they would make Germany “more diverse, open and connected to the world.”

What unites these incidents is that they are all responses to greying populations. Around the world, as population growth rates slow and stop, countries are discovering that the proportion of working-age people in their population is shrinking, and the proportion of those who’ve retired and therefore depend on state and private pension, medical and care funds is rising fast.

In Japan, an aging population and commensurate shrinking work force and taxpayer base has produced 20 years of consistent deflation, rising poverty and inequality. To avoid that fate, other countries are either shifting more of the population into the working-age bracket by raising retirement ages, or by taking in large numbers of immigrants.

Without mass immigration and much higher retirement ages, now-prosperous states will become impoverished: By 2050, most Western countries will have to devote between 27 and 30 per cent of their GDP to spending on retirees and their needs, according to the bond-rating agency Standard & Poor’s; this will produce fiscal deficits in most advanced countries of almost 25 per cent of GDP, making the current crisis seem minuscule by comparison.

The global economic and social effects of aging are chronicled in the American writer Ted Fishman’s excellent new book Shock of Gray, which notes that an aging population inevitably produces a more globalized economy, a more feminized and culturally diverse society and a less generous state.

He looks at Spain, where a fifth of the population is over 65, there are now 2.7 million people, one-16th of the population, who need daily assistance in caring for themselves – a number that will double in the next 40 years. Many of the three million caregivers are family members, whose elder-care duties withdraw them from the full-time work force. The rest are Moroccan and Central American immigrants (mostly female) drawn to care homes. As it has aged, Spain has had to increase immigrants from one-20th to one-fifth of the population. As Mr. Fishman says, Spain is “a nation of people overwhelmed by the demands of care.” And Spain is only a few years ahead of most other countries in the aging curve.

In Japan, the first advanced country to see its population shrink and age rapidly, employers have responded the only way they know: By moving to China, which is now home to some 20,000 Japanese firms.

But even China is aging fast. The working-age population, which now makes up three-quarters of China’s 1.3 billion citizens, will plummet to 66 per cent after 2035, when the country’s population starts falling. Already, China’s coastal cities are talking about taking in immigrant workers. “Given China’s age structure today,” Mr. Fishman writes, “it is in the midst of a retirement avalanche … today, for every 10 working Chinese there are two elderly dependants, but by 2050, there will be six elderly dependants for every worker.”

This is not a remote or abstract crisis. Countries like Canada will soon be fighting to attract anyone we can get to work – and squeezing as much as we can from the remaining few.