David Kingman explains some new research which suggests that economies become less productive as the population ages

It seems no exaggeration to say that most of the developed world is currently engaged in a desperate struggle for growth. Ever since the Great Recession first began to draw blood in 2007, growth has remained sluggish across much of Europe and America, leading to pronounced anxiety about whether we will ever return to the type of buoyant economic expansion which characterised the preceding two decades, and causing dreaded expressions such as “double-dip” and “triple-dip” to become part of the common political vocabulary.

Pessimistic commentators have compounded this anxiety by suggesting all manner of potential barriers that may mean we never return to high growth, from the impacts of global warming to the increasing competition provided by China and other developing economies.

One factor which is often highlighted as a weakness is the poor demographic outlook of most mature economies, which are witnessing rapid population ageing because of decades of low birth rates. Unfortunately, some recent research suggests that population ageing may make it harder for developed countries to return to high growth rates, as population ageing is associated with low productivity growth.

Low productivity growth

In very simple terms, the rate of economic growth can be thought of as the combined effect of changes in three related factors: the labour force (the number of workers), the tools the workers have to work with, and productivity (how efficiently the workers can use these tools).

The crucial dilemma facing mature economies that have a poor demographic outlook is that if they are going to continue generating growth in the face of a stable or shrinking labour force (assuming they don’t allow mass-immigration), then the burden of achieving growth will fall much more heavily on the other two factors. In other words, in order to generate more growth from fewer workers these countries will have to invest a lot more money in giving their workers more sophisticated tools to work with, and improving the efficiency with which they are used.

Unfortunately, this is likely to be extremely challenging, according to some new research from the financial institution HSBC. This argues that productivity gains are harder to achieve if a country has an ageing workforce. This might seem unexpected, as you would imagine that workers would get better their jobs as they gain experience and receive more training.

However, there appears to be a point at which older workers start becoming less efficient overall than younger ones. Some studies indicate that cognitive abilities in areas such as motor-coordination and numeracy have declined on average once workers reach the 45-54 age range. Speed and problem-solving abilities in workers over the age of 50 also show declines, according to a study from the Max Planck Institute for Demographic Research which was published in 2003. There is also research which suggests that older workers are less enthusiastic adopters of new technologies than younger ones, and that this can have institutional impacts; companies with a higher share of workers over the age of 55 are less likely to adopt the latest technologies than ones with a higher share of workers under 30.

Also, it seems obvious that older workers are likely to encounter greater challenges than younger ones in performing highly physical jobs, such as labouring on farms or in factories, which you would expect would make them less efficient.

“Grad-to-granny ratio”

The HSBC research argues that the most important statistic for measuring likely gains in economic productivity in the future will be the ratio of workers aged 20-29 to those aged 55-75, which the authors dubbed the “grad-to-granny ratio”. The poor demographic outlook in mature economies is likely to result in later retirement ages and fewer young workers joining the economy at the bottom, so the overall workforce in these countries will be ageing and, according to this research, becoming less efficient.

By 2030 there are forecast to be only half as many grads as grannies in Western Europe as a whole, and fewer than that in Japan. Interestingly, Germany is in a worse position than Britain or France on this measure, while it also underscores the rapid ageing of China’s population, where the ratio will be lower than it is in America in two decade’s time.

Of course, other factors are very significant in determining economic growth. Policy remains crucially important, although if an economy has poor fundamentals than there is only so much that good policy can achieve. Technological changes are hard to predict, and may yet deliver ways of achieving more growth from fewer workers (although a lot of the easy gains have probably already been made). However, what this research shows is that mature economies face an additional hurdle if they want to return to high growth, which goes beyond simply having fewer workers.

The IF Film Competition “Young, Gifted and Broke” (in association with the Guardian and the National Union of Students), received so many high-quality films that the judges, who included Christopher Hird and Dominic Minghella, decided to award seven of them the honour of being “Highly Commended”.

The Guardian will be posting these Highly Commended films one by one over the coming days. Follow this link to view them.

The Highly Commended films are:

Documentary Category

Jasper Kain: “Shape Up”

Lauren Nicholas: “Life After University”

Drama Category

Ciarra Nevitt: “Young, Talented and Broke”

Makeda Mantock: “Debt Slaves”

16-18s Category

Yomi Sontan:  “Envision”

Cody Mackenzie: “Words of Wisdom”

Amber Curtis “Getting it Right”

About the filmmakers

Jasper Kain: “Shape Up”

(Documentary Category)

When submitting the film, Jasper Kain wrote: “I am 25 years old, in debt and have to share a room. I decided to film other young people in Hackney who also feel trapped by their lack of prospects. The mood is sombre and the future uncertain as they cry out for people with authority to see the world through their eyes.”

Lauren Nicholas: “Life After University”

(Documentary Category)

When submitting the film, Lauren Nicholas wrote: “I am a first class honours illustration graduate struggling to find work after university. This animation tells my story, as well as that of a couple of friends in the same situation.”

Ciarra Nevitt: “Young, Talented and Broke”

(Drama Category)

The Guardian writes: “Young, Talented and Broke is Ciarra Nevitt’s highly commended film in the Intergenerational Foundation young film-makers’ short film competition in association with the Guardian and the National Union of Students. It explores through the voice of one young women the numerous struggles facing young people.” The film stars Ciarra Nevitt and was directed by Jamal Woon, with music by Celeste Deveazey.

Makeda Mantock: “Debt Slaves”

with Havana Wellings-Longmore (Drama Category)

Profiles submitted on request:

“Makeda Mantock is a talented emerging filmmaker who has a passion for directing and editing stories, which will challenge audiences. Makeda was drawn to filmmaking from an early age and plans to break the glass ceiling and prejudices, which prevent ethnic women from making and sharing films worldwide.

“Havana Wellings-Longmore is a talented theatre producer, writer and poet. Havana is inspired by her multi-cultural heritage to explore identity and women’s rights through film and politically motivated poetry.

“Collaborating together Makeda and Havana, both from London, want to produce films such as Debt Slaves. They want to share the stories and images of those marginalised by mainstream society. By giving a voice to the British underdog, we encourage the world to better understand and appreciate the rich diversity found within modern UK life.”

Yomi Sontan:  “Envision”

(16-18s Category)

When submitting the film, Yomi Sontan wrote: “I am a 17-year-old college student, studying Biology, Maths, Psychology and Sports Science. My interest in Media and Drama inspired me to attempt to create a video about youth unemployment – one of the most talked-about subjects in the social circles of teenagers. I wanted to show what happens 80% of the time.”

Cody Mackenzie: “Words of Wisdom”

(16-18s Category)

When submitting the film, Cody Mackenzie wrote: “The reality of living in a routine, each day going past in black and white. For a girl who has noticed life, the only task is to keep your chin up. Forget the routine and turn black and white to colour.”

Amber Curtis “Getting it Right”

(16-18s Category)

Amber Curtis has written: “I’m a student at college studying media production and, like all young people my age, I’m trying to work out what I want to do with my life, whether I should move out, go to university or get a job. I’m constantly getting advice from family and friends telling me their experiences and how it could help me.

“This is when I realised that all three generations of my family – my granddad, dad and sister – all left home during a recession and under a Conservative government.  I wanted to talk to them and see what their opinions were, having the same situation repeat 30 years between my granddad and my dad and from my dad to my sister.”

Congratulations to F. M. J. Botham, who has won first prize in the Drama category of the IF Film Competition (in association with the Guardian and the National Union of Students). He has supplied this brief description about the background to the film, and how winning the prize will make a difference.

See his award-winning film, Getting By here

In Great Depression-era America they used to put on dance marathons which preyed on the desperation of the impoverished, promising large cash prizes to those who could dance the longest. Large crowds would gather to witness these disturbing spectacles.

This image seemed all too fitting for the current state of things in recession-hit UK, with the situation becoming increasingly difficult for many young, unemployed people.

I have personally experienced at least some of the despair of job-searching. Each week brings new job applications, the majority of which I will never hear back about. Work experience and internship vacancies seem just as competitive now. Meanwhile, it is a constant struggle to pay the bills and keep afloat.

The winnings from the IF film competition will be a massive help in this regard. Additionally I hope to put the money towards making another short film.

Congratulations to Adam Offord, Stephen Szemelak, Safiqul Alum and Adil Yaqub, who have  won first prize in the 16–18 age-group category of the IF Film Competition (in association with the Guardian and the National Union of Students). They have supplied this brief description about the background to the film.

See their award-winning film, Limelight, here.

We all live in different areas in the Medway Towns, Kent, where there are limited jobs and it can be very unpleasant for some people. Each individual who helped in the making of this short film has a real passion for film, media and drama. Once the props were sorted, the short film was shot over three days, using whatever abandoned, demoralizing locations we could find.

Filmed by Stephen Szemelak, starring Safiqul Alum and Adil Yaqub, and edited by Adam Offord, the aims of this short film were to show how life can be a struggle living on the streets and that everyone has a dream of some kind that they may have lost or not achieved.

During the preproduction stage, every one of us said we wanted this film to feel realistic and gritty, showing life as it really is, and we all believe that we have achieved this.

Congratulations to Dorothy Allen-Pickard and Nicki Williams, who have won first prize in the Documentary category of the IF Film Competition (in association with the Guardian and the National Union of Students). They supplied these brief descriptions about how they got there, and their motivations.

See their award-winning film, “In the Name of Greatness”, here.

Dorothy Allen-Pickard is studying French and Film and Nicki Williams an MA in English at the University of Warwick. They recently began collaborating to develop their respective video and spoken-word projects and saw the IF film competition as an ideal platform.

They feel the current working environment in Britain makes living independently as graduates very challenging, and believe there is an inherent injustice in excluding many young people from university education through extortionate fee rises, when there’s simultaneously an expectation to endure years of unpaid labour. The capital city is affordable only for graduates with family support.

Dorothy has been involved with arts centres such as the Cinémathèque de Tanger, ICA, BFI and Warwick Arts Centre. She moved towards documentary filmmaking through her interest in cinema and politics. She considers this medium democratic in its potential to provide a space for artistic expression, dialogue and reflection upon current concerns, and with open access, free for all – as information and education should be.

Nicki has performed in productions at the Warwick Arts Centre, the English Theatre of Rome and with Shoot From The Lip, a poetry collective. She believes that spoken-word poetry is an excellent way to engage people with social and political issues, and loves how the performance element allows her to play with language.

A new report by Unicef puts British children in 16^th place among the world’s rich countries, when it comes to well-being. Antony Mason reports

The United Nations Children’s Fund (Unicef) has recently issued an update on its assessment, called Report Card 11, of how the children of the world’s 29 richest countries are faring.

It does not make happy reading for Britain, whose citizens might have expected the results to show a society which – even though facing long and deep recession and austerity – at least looks out for its young.

Instead, Unicef’s “League Table of Child Well-Being”, which heads the report, places the UK 16^th of the 29 countries, well behind the Netherlands (1^st), Norway (2^nd), Iceland (3^rd), and with less-wealthy Slovenia, the Czech Republic and Portugal ahead of us on the list.

Teenage alcohol and pregnancy

Unicef has produced this table by assessing and scoring a wide range of indicators, grouped under five main areas: material well-being, health and safety, education, behaviour and risks, and housing and environment.

Britain scored particularly badly in under-age drinking and teenage pregnancy – areas which suggest a decline in social responsibility and the duty of care.

Britain has a relatively high number of NEETs – young people Not in Education, Employment or Training. With 10% of 15–19 year-olds classed as NEETs, only Italy, Spain, Ireland and Romania fared worse. Britain also has the lowest number of young people in further education (post-compulsory education, currently from age 16).

Even in infant mortality, the UK scored badly, ranking in the bottom third of the table.

The research covers the years up to 2010, which lets the present Coalition Government off the hook, as they have been quick to point out.

But the implications should be seen in the context of welfare cuts that have affected families and the younger generation particularly heavily. Their benefits will be held at 1% while inflation stands at 2.8%. (Benefits for the elderly, by contrast, will keep apace with inflation).

In the UK, there were signs of improvements in children’s general well-being in the early part of the first decade of this century, but these seem to have gone into reverse.

In a widely quoted statement, the Deputy Executive Director of UNICEF UK, Anita Tiessen, has said: “There is no doubt that the situation for children and young people has deteriorated in the last three years, with the government making policy choices that risk setting children back in their most crucial stages of development.

“With the UK ranking at the bottom, or near the bottom, of the league table on teenage pregnancy and young people not in education, employment or training, we know that many are facing a bleaker future. The government needs to acknowledge this and act now. While children and young people will be the first to bear the brunt if we fail to safeguard their well-being, over time society as a whole will pay the price.”

A recent paper published by the Harvard Kennedy School reveals how the wars on Iraq and Afghanistan will cost the US $4 to $6 trillion over the next 40 years – far more than was expected. Antony Mason explains

This year marks the tenth anniversary of the start of the Second Gulf War, and the costs to the USA of this venture, and the overlapping (and continuing) Afghanistan War are still being assessed.

One recognised authority on the subject is Professor Linda J Bilmes (Daniel Patrick Moynihan Senior Lecturer in Public Policy at the Harvard Kennedy School), who in 2008 published The Three Trillion Dollar War: The True Cost of the Iraq Conflict, co-authored by Joseph E. Stiglitz, winner of the 2001 Nobel Prize for Economics.

Professor Bilmes has recently updated their findings with a paper called “The Financial Legacy of Iraq and Afghanistan: How Wartime Spending Decisions Will Constrain Future National Security Budgets”.

The shocking bottom line is in this summary: “The Iraq and Afghanistan conflicts, taken together, will be the most expensive wars in US history – totalling somewhere between $4 to $6 trillion.” That implies a cost of more than $50,000 for every household in the USA.

The actual costs of the wars to the US to date already stands at $2 trillion. This has to been seen the context of an original White House estimate for the Iraq War of no more than $200 billion.

Future generations pay

There are two primary reasons for this massive miscalculation. One is that the US government of President George W. Bush chose to fund the wars entirely out of debt, adding to the national debt whilst simultaneously implementing tax cuts. This debt will take decades to pay off.

Added to this are the costs of long-term care for veterans. Over 1.5 million US military personnel were involved in the wars and have now been discharged, and more than 50% or these have claimed, and have been awarded, medical benefits for life – including many suffering from post-traumatic stress disorder (PTSD). The Department of Veteran Affairs has been inundated with disability claims and has a nine-month backlog.

All wars devastate economies, and the financial consequences rumble on for years after the dust has settled. The new paper gives this a historical context (in reference to the US experience), which may come as some surprise:

“The peak year for paying disability compensation to World War I veterans was in 1969 – more than 50 years after Armistice. The largest expenditures for World War II veterans were in the late 1980s. Payments to Vietnam and first Gulf War veterans are still climbing.”

Professor Bilmes then goes on to point to a grim paradox: “The magnitude of future expenditures will be even higher for the current conflicts, which have been characterized by much higher survival rates, more generous benefits, and new, expensive medical treatments.”

Such huge and continuing debts and liabilities, needless to say, have had a considerable impact on US government spending on other fields, such as education, infrastructure, social and health care, and scientific research.

And in the UK?

It would be interesting to make parallel calculations for the long-term costs to the UK of its involvement in Iraq and Afghanistan. They will surely be – albeit scaled down – of the same order.

We may wonder now whether it has all been worth it: what will future generations think as they continue to pay the bill 40 years from now?