28 October 2016
Asian societies will need to encourage home- and community-based care rather than rely on less affordable long-term hospital services. Photo: Hong Kong Christian Service
Asian societies will need to encourage home- and community-based care rather than rely on less affordable long-term hospital services. Photo: Hong Kong Christian Service

Asia needs to get ready for an aging population

The aging of our society is in many ways a sign of human success.

For the first time in tens of thousands of years, most human beings in the world can expect a life without major fear of hunger or deadly infectious disease.

In those parts of the world where this is not the case, it is usually because of man-made problems like conflict, environmental degradation or extreme inequality.

This achievement means that the human race no longer needs to struggle to survive.

Many of our ancestors would have felt lucky to live into their 30s.

Just a few generations ago, parents aimed at having as many children as possible, essentially for economic reasons.

Nowadays people feel that they and their children will probably be better off as a smaller family, and they can still look forward to a long and happy retirement.

The “problem” with an aging population is not that we are healthier and live longer, nor simply that we have fewer kids.

The challenge is statistical and, basically, financial.

Longer life expectancies mean more time during which we consume goods and services.

Yet the way things are now structured, we are not increasing wealth creation and savings in line with this.

In many developed economies – where this imbalance is most serious – policymakers have at least started to address the problem.

They have attempted to raise retirement ages, so pension systems become better financed.

In some western countries, immigration will help prevent a decline in the number of workers paying taxes.

Asia faces the biggest challenge in the longer term.

At a recent conference, the Fifth Asia-Pacific Pensions Forum, a World Bank study revealed just how big the challenge will be.

In absolute terms, East Asia already has the world’s largest population of people over 65 years old.

But the number will grow rapidly to the point where there are half a billion in the region by 2040.

In western countries like Britain and the United States, it took 50 or 60 years for the number of over-65s go from 7 percent to 14 percent of their population.

East Asian countries, mostly with much younger populations, will see this happen in the space of 20 or 25 years.

It won’t happen for several decades, but it will require a sharper adjustment.

Another way of looking at it is the fall in the size of the population of working age.

The 15-64 age group will shrink by over 15 percent in Hong Kong and Korea in 2010-2040, and around 10-15 percent in Singapore, Thailand, Japan and mainland China.

Asian economies do have enough time to prepare for this gradually evolving population structure.

One key thing is to increase labor participation rates.

This means encouraging women and the older (but still fit and healthy) generation to stay at work.

We need to look at ways to help and encourage mothers to work, through better workplace flexibility and childcare provision.

And we need to help people extend their working lives, through encouraging lifelong learning and healthier aging.

Another area we need to look at is health and long-term care.

Although people are getting healthier and living longer, certain types of lifestyle- and age-related diseases will become bigger problems.

This means chronic conditions from unwise diets and problems like dementia.

New approaches to health and long-term care financing will probably be necessary.

This will require some creative thinking by policymakers and providers.

For example, societies will need to encourage home- and community-based care rather than rely on less affordable long-term hospital services.

Not least, there is the issue of pensions.

Some places in Asia, including Japan and Singapore, had introduced pension systems by the 1950s.

Many others have left it until much later.

The systems themselves vary a great deal: some are not financially sustainable; some do not cover enough of the population; some do not offer adequate incomes for retirees.

Nearly all have at least one of these problems.

But most Asian societies have one thing in common where pensions are concerned: they are all spending less on retirement savings than other parts of the world with similar demographics.

This implies higher increases in spending on pensions in the future.

The World Bank analysis expects that governments will have to help fill the gap.

This may seem like a worrying picture.

Poorer Asian countries, in particular, face a challenge in terms of future productivity growth.

To put it simply, they might get old before they get rich.

However, there is no actual crisis: in every society in the region, movement toward an older population is gradual.

Provided that leaders and citizens recognize the situation now, they can start to prepare with relatively small steps – in things like retirement ages, healthcare and pension systems.

The important thing is not to put it all off for another decade.

– Contact us at [email protected]


Executive Council member and former legislator; Hong Kong delegate to the National People’s Congress

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