Autor: Nermin Sefić
The world is undergoing the largest demographic reshuffling in modern history. While the developed economies of Europe, East Asia, and increasingly China enter a period of accelerated population aging…
The world is undergoing the largest demographic reshuffling in modern history. While the developed economies of Europe, East Asia, and increasingly China enter a period of accelerated population aging and workforce decline, sub-Saharan Africa and parts of South Asia are experiencing demographic growth that will shape global labor markets, migration flows, and economic power over the next fifty years.
Japan leads this trend, with a ratio of those over 65 to the working-age population that has already reached levels unimaginable decades ago. South Korea, with one of the world's lowest fertility rates, follows a similar trajectory at an even faster pace. China, despite ending its one-child policy, faces the demographic consequences of that policy that will last decades — a shrinking workforce at precisely the moment the country tries to shift from an export-oriented growth model toward one driven by domestic consumption.
Europe, though more slowly than East Asia, follows a similar path, with southern European countries like Italy and Spain recording fertility rates well below replacement level. This demographic reality creates structural pressure on pension systems designed during a period when the ratio of workers to retirees was far more favorable, forcing governments into difficult decisions about retirement age, contribution levels, and pension amounts.
In contrast to the developed world's aging, sub-Saharan Africa remains the fastest-growing region demographically on the planet. Nigeria, already Africa's most populous country, is projected to become one of the world's most populous countries by mid-century. This demographic dynamic creates both opportunity and challenge — opportunity through a potential "demographic dividend" if the young, growing workforce can be provided adequate education and employment, and challenge through the risk of mass youth unemployment if economic growth fails to keep pace with working-age population growth.
East Asia's experience over prior decades shows the demographic dividend isn't automatic — it requires deliberate investment in education, healthcare, and industrial policy capable of absorbing a growing workforce into productive employment. Whether African countries succeed in replicating that success, or face a destabilizing combination of rapid population growth and insufficient economic growth, remains one of the most significant open questions of the global economy in coming decades.
The demographic imbalance between aging Europe and young Africa creates strong structural incentives for migration likely to become increasingly significant over coming decades, regardless of specific policies of individual governments. Europe needs young workers to sustain its pension systems and economic growth; Africa has a surplus of young workers seeking economic opportunities that domestic economies can't always provide at sufficient scale.
This structural dynamic creates a political challenge in nearly every European country, where economic logic favoring greater migration to address demographic challenges often conflicts with political resistance to immigration, creating a persistent tension between economic needs and political realities likely to shape European policy over coming decades.
Long-term, this demographic reshuffling has profound implications for the global distribution of economic power. Countries with aging populations face structural slowdown in potential economic growth, simply because fewer people work and produce, while simultaneously having to finance ever-larger healthcare and pension costs for a growing retiree population.
Countries with young, growing workforces, on the other hand, have potential for significantly faster economic growth, provided they can productively employ that workforce. If this potential materializes, there could be significant redistribution of global economic weight over the next fifty years, with African and South Asian economies playing a considerably larger role in the global economy than they do today.
China's demographic situation deserves special attention as it combines the aging speed characteristic of East Asia with an additional layer of complexity stemming from the one-child policy enforced over several decades. That policy, ended a few years ago, left behind a demographic structure with a dramatically disproportionate male-to-female ratio in certain generations, alongside rapid population aging occurring before China reached a level of wealth per capita comparable to Japan or Western European countries when they went through a similar demographic transition — a phenomenon economists describe as the risk that China will "grow old before it grows rich."
This dynamic creates a unique challenge for the Chinese government, which must simultaneously manage slowing economic growth, a transition toward a domestic-consumption-driven model instead of export-driven growth, and rising costs of caring for an aging population, all with a GDP-per-capita level remaining considerably lower than countries that went through a comparable demographic transition with more available resources per person.
Nearly every developed country facing fertility decline has tried implementing birth-promoting policies — from direct financial incentives like child benefits, through extended parental leave, to subsidized childcare easing the combination of career and parenthood. These policies' results remain mostly disappointing relative to stated goals — while individual policies may produce modest, short-term increases in birth rates, there's little evidence any combination of policies can durably return fertility rates to replacement level once a society crosses the low-fertility threshold.
This pattern suggests fertility decline reflects deeper structural and cultural changes — including changes in gender roles, housing costs, youth employment insecurity, and a shift in priorities toward individual development instead of family life — that are considerably more resistant to policy engineering than policymakers would like, leaving migration as practically the only fast-acting tool for mitigating demographic workforce decline.
Japan, as the country furthest along the path of demographic aging, offers valuable insight into how a society can structurally adapt to long-term workforce decline without mass migration, an option Japanese society traditionally avoids for cultural and political reasons. Japan's adaptation includes a combination of automation and robotics replacing labor shortages in manufacturing and, increasingly, the service sector, extending working life through gradual retirement-age increases and incentives to continue working past formal retirement age, and significantly increasing women's labor-market participation through labor-law reforms and childcare availability.
Most pension systems in the developed world are designed on a "pay-as-you-go" model, where current workers' contributions directly finance current retirees' pensions, instead of accumulating personal savings funds. This model, functional while the worker-to-retiree ratio remained favorable, faces a structural sustainability challenge as that ratio continues declining, forcing governments into an uncomfortable choice between increasing current workers' contributions, reducing future retirees' pensions, or raising the retirement age.
According to the UN's World Population Prospects 2024 report, released in July 2024, the world population — currently 8.2 billion people — is projected to peak at 10.3 billion in the mid-2080s, before gradually declining to 10.2 billion by the end of the century. This 2100 projection is 6% lower (700 million fewer people) than the UN estimated just a decade ago, reflecting faster-than-previously-expected fertility rate declines.
The key, concrete figure for China: according to analysis by France's National Institute for Demographic Studies (INED), China's population is projected to decline by 200 million people — nearly 14% — between 2024 and 2054, while India's population, already the world's largest, is projected to grow by nearly 14% over the same period. A total of 63 countries and areas, including China, Germany, Japan, and Russia, had already peaked in population by 2024, with a projected 14% decline over the next thirty years for that group of countries as a whole.
Nigeria and sub-Saharan Africa remain the opposite pole of this demographic picture. According to the same UN projection, nine countries — including Angola, the Central African Republic, the Democratic Republic of Congo, Niger, and Somalia — are projected to double their total population between 2024 and 2054. By 2054, Pakistan is projected to become the world's third most populous country (after India and China), while Nigeria is projected to slide to fifth place, behind the United States — though by the end of the century, Nigeria and the DRC are projected to take fourth and fifth place, pushing the US to sixth.
South Korea represents the most extreme, best-documented example of pronatalist policy failure despite massive financial investment. The fertility rate fell to a record 0.72 in 2023 (from 0.78 in 2022), well below the 2.1 replacement level needed for a stable population, and further below the 1.24 average recorded in 2015. South Korea has been the only OECD member with a rate below 1.0 since 2018, and the capital Seoul itself recorded a rate of just 0.55 — among the lowest ever recorded anywhere in the world.
This decline continued despite the government spending over 360 trillion won (roughly $1.3 trillion at the time) since 2006 on birth-promotion programs, including direct cash allowances for newborns (raised to roughly $750 monthly), reduced mortgage interest rates for parents, and, at the Seoul city level, a special $1.35 billion program subsidizing fertility treatment and egg freezing. Even the private sector participated — one Seoul construction company offered a $75,000 bonus to employees who had a child.
Despite all this, Statistics Korea's projection predicts the country's population will fall from the current 51.7 million to just 36.2 million by 2072 — a 30% decline. Finance minister nominee Choi Sang-mok compared South Korea's demographic danger to the iceberg that sank the Titanic, saying it's already too late to reverse the trend through fertility rates alone. Interestingly, the rate unexpectedly rose to 0.75 in 2024 — the first increase in nine years, linked to a post-pandemic rise in marriages — but experts caution it's premature to interpret this one-year reversal as a permanent turnaround of the long-term structural trend.
Nigeria, with nearly 68% of its population under 30 and a projected population growth to 400 million by 2050, represents the largest, most concrete bet on whether Africa's "youth wave" will turn into a demographic dividend or a demographic burden. According to the World Economic Forum, if this growing workforce enters productive employment, Nigeria could generate one of the largest demographic dividends in modern history — but current conditions remain far from that outcome.
Nigeria's youth unemployment rate has risen dramatically, with 23% of young people actively seeking work, while an additional 32% remain entirely outside the labor market — a combined figure illustrating the problem's depth. According to academic analysis published in the Journal of International and Comparative Social Policy, only 37% of Nigerian youth were in full employment (working at least 40 hours weekly) by 2020, a dramatic drop from 71% in 2010 — while the youth unemployment rate simultaneously rose from 7% to 35% over the same period. The informal sector, employing about 95% of Africa's young workforce, was further hit by crises like the pandemic, when that sector's income fell 81% within just the first month.
The broader picture across sub-Saharan Africa remains equally concerning — the regional youth unemployment rate exceeds 30-40%, with extreme cases like the Democratic Republic of Congo where over 80% of youth remain unemployed. The African Development Bank estimates the continent must create 68 million new jobs by 2030 just to absorb new labor market entrants, while the UN Population Division estimates Nigeria's working-age population will grow by over 100 million people within 25 years.
The Nigerian phenomenon known locally as "Japa" — mass emigration of educated youth seeking opportunities abroad — further illustrates the risk of a squandered demographic opportunity. Despite expanding the university system to over 300 institutions, outdated curricula and limited access to structured work experience contribute to serious skills mismatches further fueling that brain drain — a dynamic experts describe as the "boomerang effect," where absence of economic opportunity fuels regional insecurity, which in turn stifles the very private investment needed to create new jobs.
The demographic reshuffling occurring worldwide represents one of the most significant, yet also most slowly developing trends shaping the global economy. Unlike financial crises or geopolitical shocks that unfold over weeks or months, demographic changes unfold over decades, making them easier to predict but harder to politically address given how slowly their consequences become visible to an individual voter.
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Autor i urednička odgovornost: Nermin Sefić. Izdavač: GNK ASG d.o.o..
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