Issue:
June 2024 | Deep Dive
Asia’s demographics are both a challenge and an opportunity, according to FCCJ panel
Apart from the many external threats we face – from geopolitical tensions and climate change to trade wars and inflation, an “enemy within” is creeping up on us in the shape of aging and shrinking populations.
Could these trends undermine the Asian economic miracle, as younger populations elsewhere emerge as growth drivers? And could the socio-economic burden of supporting the elderly prove too onerous for younger generations in Asia?
These were among demographic and economic challenges facing Asia – in Japan, but also in China and elsewhere – discussed at a Deep Dive event held at the FCCJ on May 17.
These challenges are no longer on the distant horizon, according to Aiko Kikkawa, senior economist in the Economic Research and Development Impact Department at the Asian Development Bank in Manila.
Kikkawa, who attended the event remotely, likened aging and declining populations as the elephant in the room. Under Kikkawa’s leadership, the ADB produced an inaugural study titled Asian Development Policy Report 2024: Ageing Well in Asia to help focus policymakers’ minds on four key issues: health, productive life, economic security, and family and social engagement
“In this report, we really try to highlight that this issue is quite urgent, and something that is going to reshape our economies and societies,” Kikkawa said. An aging Asia, she added, “must urgently step up efforts to help Asians age well”.
Apart from Japan, South Korea and Thailand are already well advanced along this road, while China is also moving down it quite rapidly. Alone among the most populous Asian nations, India is still quite young by comparison.
Japan tops the charts in terms of population ageing, with UN and other data showing the proportion of people aged 65 and over at close to 30%. The ADB report does not include Japan in data for developing Asia but shows that populations aged 60 and above have reached 20% in South Korea and Thailand and are approaching those levels in China.
The proportion of older people (those over 60) in developing Asia – which means most of the region – will double over the next 30 years to around 1.2 billion, or one in four people, according to the report.
This can be seen as a tribute to Asia’s success in tackling absolute poverty, so that people now live longer and healthier lives. But while absolute poverty has fallen, relative poverty is still high, and that brings a new set of challenges in improving the quality of life.
The problem of aging, especially when accompanied by low fertility rates in countries such as Japan, won’t be solved simply by increasing immigration or raising pensions, Kikkawa said, adding that a much broader approach was needed.
Kikkawa and fellow panelist Naohiro Ogawa, a visiting fellow at the Asian Development Bank Institute in Tokyo, argued for a more holistic approach towards nurturing longevity in the workplace that includes education, health, human resource management and workplace practices.
Asian societies are suffering not just from declining fertility rates and ageing populations, but from a failure to make full use of the human resources at their disposal – a point that is rarely discussed.
“Older workers’ ability to work is an untapped resource,” Kikkawa said, while Ogawa noted: “The elderly are a source of untapped work capacity.” He added that it was time to “re-measure population ageing, based on cognitive ability”, which is often higher than mandatory retirement ages suggest.
“We need to adopt a different perspective on our future. Population aging is not destiny,” added Ogawa, whose data suggested that retaining older workers in active employment could add 1.4% to Japan’s annual GDP.
This would require reforms in working environments, and changes in attitudes among policymakers and the public. Maintaining people in employment into older age could benefit their health and motivation and help ward off what Ogawa referred to as a potential “taxpayer revolt” over the increasing burden of public pensions in aging societies.
Jesper Koll, a third panelist and veteran Japan economist and analyst, took a different view. In Japan, population aging can serve as “a catalyst for some very positive changes in industrial restructuring”, he said. It will also result in a huge “wealth transfer from older to young people, providing financial resources that can be tapped for investment in the future”.
The bottom line is that that the Asian economic miracle is still alive, but not in as good health as it once was. It will require looking after in its advancing years.
Anthony Rowley is a columnist and contributor for the South China Morning Post.
