OccupierEdge_Ed.4_US 5_17

Age Dependency Ratio (%)

45

40

35

30

25

20

15

10

5

0

Germany

France United Kingdom Italy

Japan

United States

Canada

1960

2015

Graph 3: Changes in Age Dependency 1960-2015 of G7 Economies (elderly people as % of working population)

AN AGING WORLD

All the G-7 countries are also facing increasing age dependency ratios – the number of elderly people that need to be sustained by the wealth generated by the working population. Since the 1960s, there have been very large increases in dependency. This will be made significantly worse in Japan, Germany and Italy as their low birth rates results in a reduced working population in the medium term. International migrants tend to include a larger proportion of working-aged persons compared to the overall population. Positive net migration can contribute to reducing old-age dependency ratios as well as driving up birth rate. However, international migration cannot reverse, or halt, the long-term trend towards an aging population. Even if current migration patterns continue, all major areas are projected to have significantly higher old- age dependency ratios in 2050.

The population implosion risks for Germany, Japan and Italy, as well as many smaller developed countries, are significant. Together with increasing old-age dependency ratios in all G7 countries raises many fundamental questions, especially at a time of low growth and high debt. • Can standards of living be sustained in societies where the labor force shrinks in the wake of an aging population? How can this be achieved at a time of unprecedented debt burdens? • Is a debt-driven economic model sustainable in the long run in a zero- growth economy? • Can increased immigration and/or workforce expansion alleviate the problems? • How will industries adjust to fewer and older consumers with different needs and demands?

• Will social security funding be sustainable?

• Can a new equilibrium between working and retired people be found?

These fundamental questions will impact where and how we work, shop and live in the future, and the associated real estate needed to facilitate this.

NEIL MCLOCKLIN Co-head of Strategic Consulting, EMEA Global Occupier Services neil.mcklocklin@cushwake.com

MARK ZOLTAN IVADY Consultant, Strategic Consulting, EMEA Global Occupier Services mark.ivady@cushwake.com

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