As Nordic economy faces an ageing population, its businesses seek an opportunity
Europe is slowly and steadily getting older. Today there are 3.3 people of working age — 15 to 64 — for every one over 65; by 2070 it will be just 2, according to the European Commission.
The conventional way to look at this ageing is as a huge challenge to society, public services, and governments. An older population will put immense strain on everything from healthcare to pensions. There is little sign that Europe is well prepared.
However, there is another way of viewing the shifting demographics — as an untapped opportunity for businesses to reach a new breed of customer. There has been some talk of the so-called “silver economy” but there are finally small signs that the topic is being taken more seriously in boardrooms and cabinets.
There is little surprise that one of the countries taking it most seriously is Finland. The Nordic country of 5.5m people has the most rapidly-ageing population among large EU countries and was once only behind Japan globally. Its previous centre-right government collapsed in March due to its inability to pass a healthcare reform necessary to offset the impact of an ageing population.
Finland has been thinking for decades about the effect of having an increasing number of elderly citizens. But it is only recently that business has caught up. Esko Aho, who is both a former senior executive at Nokia and ex-Finnish prime minister, is one of the movers behind a new high-level forum on the silver economy to be held in Helsinki next month.
The forum — tied into Finland’s EU presidency that starts just days earlier — brings together business leaders such as senior executives from pharmaceuticals group Bayer, insurer Aegon, and furniture retailer Ikea with policymakers including the mayor of Manchester and the president of the Federal Reserve of Kansas City.
“If we don’t do anything it will stay a problem, not an opportunity,” said Mr Aho. “But if we are able to meet these challenges, there will not be much harm for society. Maybe the opposite — people will live longer and be happier.”
He espouses the catchphrase of many in this area: “silver is the next green”. The parallels with climate change may be inexact but some are striking.
The changes from ageing are perhaps not visible day to day but over several years they certainly are. As with the early days of renewable energy, there is a lack of both a market and investors with both needing the other. “It’s like sustainability — it’s not enough to change something in the field of climate change; you have to change mindsets and the fundamental set-up of the economic system,” said Mr Aho.
For business, the size of the market is apparent but seizing the opportunity is harder. A study from last year estimated the value of the silver economy in Europe — defined as the spending by the population aged over 50 on goods and services — is €3.7tn and is expected to grow to €5.7tn by 2025, according to a European Commission study.
Some companies are an obvious fit with an ageing population. Bayer, the German pharmaceuticals group, is sending both its chief executive Werner Baumann and chief medical officer Michael Devoy to Helsinki. “As we continue to see rapidly ageing populations around the world, effectively tackling and managing age-related illnesses have become pivotal. We have to focus on addressing these unmet needs,” said Mr Devoy.
But there is an opportunity for businesses not just to provide what older people need but also what they want. Technology and entertainment groups, financial services companies, home designers, travel businesses — all are not obviously connected to ageing but each one could adapt their products better to better serve older customers. Some start-ups are active in the area but few have shot to prominence yet. Experts believe entrepreneurs and venture capitalists need to take the silver economy more seriously.
Mr Aho’s aims for the first meeting are relatively modest — to start dialogue between companies and governments while bringing the opportunities arising from an ageing population to a global audience. But as much of Europe and Asia face rapidly ageing populations over this century the need for businesses to come up with their own strategy for dealing with it will grow and grow.
Source: Financial Times