This will affect both the make-up of the workforce and business in general. This fast-accelerating trend is already favouring those industries which cater for the older age groups, while putting those aimed at younger groups at a distinct disadvantage.
This is not just a British phenomenon. The relentless growth in average age worldwide comes from a combination of rising longevity and falling birth rates. The World Health Organisation reports that the world's average life expectancy has risen by a third in the past 40 years to 65, and is projected to reach 70 in the 2010s. Moreover, fertility rates are already at or below replacement level in 61 countries, which collectively contain almost half the world's population. And by 2010 these will be joined by a further 28 developing countries including India, Indonesia and Egypt.
Paul Wallace, former economics editor of the Independent, points out in his recent book Agequake that the demographic fundamentals of Western economies that we take for granted - an ever-expanding and youthful population - are shifting beneath our feet. As people live longer and fewer children are born, a seismic shift is under way. He describes this as the agequake - "the most fundamental force to affect our lives, sending shock waves through every element of our world".
He says: "The agequake will be accompanied by the most dramatic demographic reverse in centuries. Not only will the age structure shift, but populations in the rich industrial democracies are poised to decline. The UN's central projection is that the population of Germany, where births have been running well below replacement level in the past 25 years, will fall by 10 per cent in the first half of the 21st century. Italy's population will decline by over a quarter." Populations in Europe are poised to plunge on a scale not seen since the Black Death in 1348.
How will this affect us? Mr Wallace covers six major areas: the financial market, property prices, changes to the business environment, cultural change, the pensions crunch, and workplace trends.
As the post-war baby-boom generation reaches middle age, growing numbers of people in their peak years for saving and financial investment are fuelling a gold rush for financial services. He also argues that despite the market collapse in Asia and elsewhere, demographics are on the side of the bold investor who persists with emerging markets in the next century.
There are shrinking numbers of first-time homebuyers, typically in their twenties and early thirties, to buoy up house prices. In the next 10 years there will be hot spots and black holes. "Hot spots are those areas and kinds of homes favoured by new types of households, mainly single people, and baby boomers trading up to larger accommodation. Black holes are mainstream starter homes on the wrong side of town."
Business strategies are having to adapt to the changing age structure. This will boost the market for new pharmaceutical products generated by the revolution in molecular biology. We can expect a surge in the leisure industry. But firms that have made the young the targets for goods such as fast food, jeans, beer, sports shoes, and start-up furniture, are moving into rougher waters.
Although Western populations are ageing fast, youth culture still lives. Baby boomers are turning middle-aged, but they don't want to be categorised as such. The absurd term "mid-youth" is favoured by some marketeers.
Also, pension promises made on the old demographics are unaffordable and governments accept the need for reform. However, not enough is being done. Moreover "the imbalance between pension liabilities among the different states of the European Union is potentially the most serious threat to the long-term success of the euro".
Mr Wallace is pessimistic about how these demographic changes will affect people at work. He accepts that one can take an optimistic view, in which weight of numbers batters down ageism, letting people work longer and more flexibly and so relieve the pressure on pensions. But, he believes it is the smaller number of young people who will benefit, as most companies enter into a bidding war for their services. "Scarcity, not glut, confers power in markets." He may be mistaken. There is growing awareness that an age-balanced workforce is essential and that older workers safeguard both the intellectual capital and the corporate culture of organisations.
Moreover, he predicts the downsizing will continue "as companies shake out an excess of middle-aged managers". However, this seems unlikely. Many believe that the process has gone as far as it can. There is now a consensus that managers work too many hours to the detriment of their productivity and their home lives. Recent surveys show that graduates entering the market are emphatic in wanting a better balance between home and work.
`Agequake' by Paul Wallace (Nicholas Brealey) pounds 18.00.Reuse content