Asia Thinkers investigates the impact of Asia’s rapidly ageing population on both economic growth and society and the need to plan ahead for workplace training and the development of care systems and services to support the aged.
Asia’s population continues to grow faster than other parts of the world, as it has done for decades. Recent United Nations surveys confirm that by 2030 Asia will have the largest elderly population in the world, with over 60% being over 65 years old. Population ageing has started to pose significant challenges to the region and is having a negative impact on Asian society. In some countries, such as the People’s Republic of China, South Korea, Sri Lanka, Thailand, Vietnam and Cambodia, this transition will happen rapidly. It will not be as quick in other countries, such as Indonesia but in the end all Asian countries will have large populations of elderly citizens.
This demographic shift is likely to strain economies, public finances, healthcare systems and traditional family support structures. Asian Development Bank (ADB) has been proactive in developing a long-term strategy to improve the lives of vulnerable people in Asia, with a focus on the region’s aging population. Launched in June 2024, the Asian Development Policy Report, “Aging Well in Asia”, calls for policymakers in the region to take steps to ensure current and future generations of older people ‘age well’. ADB Economist Aiko Kikkawa stated, “Asia is aging rapidly and the region remains largely unprepared to ensure the well-being of older persons. Older Asians remain vulnerable to lifestyle diseases, lack of access to decent jobs and essential services, such as healthcare and long-term care. Pension coverage remains low and there are growing incidents of loneliness and social isolation.”
To understand how critical the problem is and the speed at which populations are ageing, compare Thailand’s transformation with those of countries better known for their ageing populations. Between 2002 and 2021 the share of Thailand’s population aged 65 and above, increased from 7% to 14%. The same transition took Japan 24 years, America 72 years and France 115 years but unlike those countries, Thailand has grown old before getting rich. This acceleration of the aging population amongst Asian countries is clearly outlined in the chart below.
Image: Economist
Thailand’s troubles underline a regional trend with long-term economic and social significance. The Vietnamese are about half as rich as the Thais. Their society will probably take about 17 years to move from “ageing” to “aged”.
The Asian Aged profile.
Japan and China are already facing a declining birth rate, with a third of their population over 65 years old by 2050. South-East Asia as a region will be “aged” by 2042. South Asia will hold out for almost another decade but with big regional disparities. Sri Lanka, where average incomes were about a third below Thailand’s even before its current economic crisis, is projected to become an aged society by 2028. Parts of India, the world’s most populous country, are already old. In the southern state of Kerala, 17% of the population is 60 or older. The speed of Asia’s demographic transition is a product of its industrial development, combined with reduced birth rates, technology and health care lengthening people’s lives. All this compounds the region’s economic problems. Donghyun Park, an economic adviser at the Asian Development Bank says that countries that are growing old before they get rich are a threat to Asia’s continuing rise. This in turn creates various macroeconomic challenges including the burden of increasing healthcare expenses and pensions.
East Asia, the Republic of Korea, China and Japan already face economic challenges due to their populations ageing. A good example is Japan, where the percentage of the elderly population has increased, causing a decline in both production and consumption and hence economic growth. The initial response from countries facing this issue has been to employ cheaper overseas labour to maintain production or establish manufacturing facilities overseas, where labour is cheaper. The advantages of these initiatives have been eroded as Asia generally ages. Even China, an economic powerhouse, faces an ageing population and declining productivity.
Photo:ADB
Strategic Planning for the future.
By 2050, the number of individuals aged 60 and above in developing Asia and the Pacific will reach a staggering 1.2 billion, approximately a quarter of the world’s total population. With this demographic shift and falling productivity, there is an urgent need for Asian countries to plan for adequate pension and welfare programs, along with improved healthcare.
The Silver Dividend.
One of the key strategies to harness growth potential is focusing on the “silver dividend.” Seniors can be a rich source of productive workers, especially among aged societies. Senior worker participation should be encouraged, given that healthy life spans are increasing and work environments are catering for the aged. The increased use of machinery and automation has made many jobs less physically demanding and more accessible to older workers. Previously workers typically retired as soon as they were eligible for a pension but this trend is starting to change, with many workers opting to work past retirement age. Asia Thinkers sort comments from Netizens from China, Japan and Singapore, which provided mixed opinions on working beyond retirement age. In China, many believe they will need to work longer due to pension concerns. In Japan, many continue working into their 70’s, driven by necessity and a shrinking workforce. Conversely, Singaporeans show a preference to keep working rather than retiring, although many are also driven by financial concerns.
Could technology be the silver lining for ageing populations?
United Nations studies suggest that health, technology and saved wealth could turn an ageing workforce into an advantage. With advancements in technology and higher levels of health care, the ageing population can make an economic impact. The “right incentives’ could readily draw seniors into returning to the labour force. To achieve this, working conditions and environments should be reviewed to accommodate the working style of senior workers and training programs that consider the special learning needs of the elderly, should be made widely available. Some experts believe employing automation, including robots and integrating artificial intelligence in support of an aged workforce, would increase overall productivity. According to some surveys, the “silver dividend,” or the additional productivity that can be gained from the untapped work capacity of older people, can boost gross domestic production by up to 1.5%.
The Asian region continues to remain unprepared to secure old-age well-being. Challenges for older Asians include a growing burden of lifestyle diseases, a lack of decent jobs, limited access to essential services such as health and long-term care, low pension coverage and increasing isolation and loneliness. A key issue in providing economic support to the aged is the availability of pensions, although even advanced Western economies are struggling to provide adequate pension support. A lack of pension planning for the aged in Asia has become a major concern. Recent studies in the People’s Republic of China suggest that, in rural areas, only about 10% are covered by rural pension schemes.
Photo:Straits times Lim Yau Hoi
Singapore has become an early adopter and leader of aged planning in Asia. A comprehensive S$3 billion Action Plan for Successful Ageing was introduced in 2015. It is working towards creating more opportunities for seniors to live comfortably, be meaningfully engaged and be part of a caring and inclusive society. Its introduction has become a role model for the rest of Asia. The plan includes enhancing workplace longevity by raising the re-employment age and promoting health, learning and volunteering among seniors. Other measures include strengthening support for caregivers, greater access to aged care services and improved healthcare affordability. Senior workers can now be found working in a number of areas, including the hospitality sector such as hotels and Changi airport. For those Asian countries that do not have the economic ability to support Seniors, intergenerational relationships and living arrangements (the traditional model of generational family support) will still be required. However, in most Asian countries, family support for the aged is declining. As one Nepalese NGO commented to Asian thinkers, “In Nepal, multigenerational household support has declined. With their children working overseas to support family back home and little Government support, the elderly continue to struggle financially.