19th June 2026

Pictet: The demographic cliff: accelerating automation

Ageing societies will accelerate the next wave of automation. Carl Frey, author of seminal research into the impact of robotics on the labour market and Pictet Asset Management thematic advisory board member, explains how.

Around the world, societies are heading towards a demographic cliff. In 1950, the global total fertility rate stood at roughly five children per woman. Today it is about 2.3 – barely above the 2.1 replacement threshold – and still falling. More than two-thirds of humanity now live in countries where fertility has dropped below replacement level. In South Korea, the total fertility rate has collapsed to 0.8, the lowest recorded on Earth. China’s is around 1.0. Across much of Europe, fertility now ranges from 1.0 to 1.6, with the EU average at a record low of 1.34 in 2024. Even the United States, long a demographic outlier among rich countries, has slipped to 1.6.

The consequences are already visible. China’s population fell for a fourth consecutive year in 2025, as deaths outpaced births by a widening margin. By 2050, China is projected to lose roughly 145 million people from its current 1.4 billion. Japan’s working-age population peaked in 1995 at 87 million and has since fallen by 16%; it is projected to shrink by a further 31% by 2060. Over the coming quarter century, 38 nations of more than one million people each will probably experience population declines, up from 21 in the past 25 years. By 2050, the share of people aged 65 and over in countries experiencing population declines is expected to nearly double, from roughly 17% to 31%.

This implies fewer workers to fill jobs, smaller tax bases to fund pensions and healthcare, and mounting pressure on economic growth. The question is whether technology can help. Specifically, can automation and artificial intelligence compensate for the workers that demography will fail to deliver? The historical record suggests they can and, in some cases, that a scarcity of workers is precisely what triggers the adoption of labour-saving machines in the first place.

Read more

Investments