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The Aging Population: Robotics as the Long-Term Play

November 15, 2023

Read Time 4 MIN

The demographic shift toward an aging population heralds labor shortages, pressing the need for robotic solutions to sustain global economic stability.

The aging population crisis casts a shadow over the global economic future. The world is going through a significant demographic shift. Declining birth rates and increased lifespans bring several challenges for governments and businesses worldwide.

A core issue is the growing gap between retirement age and the number of young individuals entering the workforce. By 2040, 40 percent of adults will be older than 65 in high-income countries like the United States. More people are living long into their retirement years. The pipeline of new labor entrants is dwindling. Labor shortages will be widespread across various sectors of the global economy. The growing number of dependents on the shrinking labor force will severely strain economies.

Percentage of Working Age vs. Retirement Age

Percentage of Working Age vs. Retirement Age

Source: United Nations as of July 2022.1

Japan and China: Aging Crisis

In nations like Japan and China, the population is aging and shrinking. China’s population will decline by over 100 million over the next 30 years.2 In 2022, Japan had double the amount of deaths compared to births.3 This demographic contraction places immense stress on social security and pension systems while posing a significant challenge for businesses to find skilled workers.

Plummeting fertility rates are also playing a crucial factor in the aging problem. The fertility rate is the average lifetime childbearing rate of women in a population in a specific year. In 2020, the U.S. recorded a rate of 1.64 births, its lowest level ever recorded.4 Fewer births translate into more young workers needing to replace the aging workforce. There will become a tipping point where the workforce can no longer sustain the rest of the population.

Global Labor Shortage: Looming Threat

The looming inevitability of a global labor shortage will affect the industrial landscape. In a shortage, companies struggle to find and retain talent, and wages face upward pressure in a market dealing with a lack of skilled labor. The coming “elder era” presents a formidable set of challenges for governments and businesses.

Robotics emerges as a promising solution for the challenges an aging population poses. The ability of robots to automate tasks currently carried out by humans can alleviate labor shortages, boost productivity, and reduce operational costs.

In an era of labor shortages, robots prove indispensable. They are perfect at taking over mundane tasks from manufacturing to healthcare and logistics. By assuming these responsibilities, robots ease labor scarcities and ensure the smooth operation of businesses that a shortage of human workers would otherwise hamper.

Labor shortages already plague healthcare. An aging population will add more strain to the industry. Introducing robots into the sector can ease the labor strain and provide better care. Intuitive's da Vinci Systems surgical robot has already revolutionized modern surgery with its minimally invasive surgeries. The robot’s precision and safety reduce risks and promote faster patient recoveries. Since the widespread use of da Vinci Systems, highly competitive surgical robots have emerged, characterized by increased user-friendliness and affordability. Beyond surgery, robots can administer medications, monitor vital signs, and even conduct physical therapy. This will relieve healthcare professionals of routine tasks, allowing nurses and doctors to focus their expertise on more intricate responsibilities, such as diagnosing ailments and devising treatment plans.

Robotic-Assisted Surgery with da Vinci Systems. Intuitive Surgical

Robotic-Assisted Surgery with da Vinci Systems. Intuitive Surgical.

Automation's Silver Lining: Skilled Job Creation

Robots will not only fill the labor shortage from an aging population but also create highly skilled jobs. Contrary to concerns about automation leading to job losses, less than 10% of jobs are fully automatable.5 The industry is already emerging as a generator of new employment opportunities. Roles in engineering, design, manufacturing, and maintenance are growing within this field, which would help counterbalance the job losses experienced in other sectors due to automation. Robotics and automation enable humans to concentrate on more skilled, higher-quality, and better-paying tasks.

The integration of robotics presents a compelling answer to the challenges of an aging population. With the potential to mitigate labor shortages, lower healthcare costs, and create new jobs, robots are a transformative force that holds the key to ensuring a more sustainable and efficient future in the face of demographic change.

The robotics industry is poised to capture the growing demand that changing demographics will bring. The VanEck Robotics ETF (IBOT) is one way to provide investors the opportunity to benefit from the industry’s potential growth. This ETF tracks the performance of the robotics industry with companies focused on everything from automation to surgical robots.

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Important Disclosures

1 United Nations, July 2022.

2 United Nations, July 2022.

3 AP News, January 2023.

4 CDC, May 2021.

5 International Federation of Robotics, 2018.

Intuitive Surgical Inc is 1.86% of IBOT net assets as of 11/7/23.

This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.

An investment in the Fund may be subject to risks which include, among others, investing in the robotics industry, information technology sector, industrials sector, equity securities, medium-capitalization companies, Japanese issuers, foreign securities, semiconductor industry, depositary receipts, market, operational, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risk, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks.

BlueStar® Robotics Index is the exclusive property of MarketVector Indexes GmbH (a wholly owned subsidiary of Van Eck Securities Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MarketVector Indexes GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck Robotics ETF is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the Fund.

An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.

© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.

Important Disclosures

1 United Nations, July 2022.

2 United Nations, July 2022.

3 AP News, January 2023.

4 CDC, May 2021.

5 International Federation of Robotics, 2018.

Intuitive Surgical Inc is 1.86% of IBOT net assets as of 11/7/23.

This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned are unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.

An investment in the Fund may be subject to risks which include, among others, investing in the robotics industry, information technology sector, industrials sector, equity securities, medium-capitalization companies, Japanese issuers, foreign securities, semiconductor industry, depositary receipts, market, operational, index tracking, authorized participant concentration, new fund, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount and liquidity of fund shares, non-diversified and concentration risk, all of which may adversely affect the Fund. Medium-capitalization companies may be subject to elevated risks.

BlueStar® Robotics Index is the exclusive property of MarketVector Indexes GmbH (a wholly owned subsidiary of Van Eck Securities Corporation), which has contracted with Solactive AG to maintain and calculate the Index. Solactive AG uses its best efforts to ensure that the Index is calculated correctly. Irrespective of its obligations towards MarketVector Indexes GmbH, Solactive AG has no obligation to point out errors in the Index to third parties. The VanEck Robotics ETF is not sponsored, endorsed, sold or promoted by MarketVector Indexes GmbH and MarketVector Indexes GmbH makes no representation regarding the advisability of investing in the Fund.

An investor cannot invest directly in an index. Returns reflect past performance and do not guarantee future results. Results reflect the reinvestment of dividends and capital gains, if any. Certain indices may take into account withholding taxes. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.

Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.

© Van Eck Securities Corporation, Distributor, a wholly owned subsidiary of Van Eck Associates Corporation.