I was at EPF’s International Seminar yesterday, and one of the presenters showcased this video:
I don't know about you, but this worries me a lot. It’s the flipside of the demographic dividend – the end-game, if you like, of development. There are so many ramifications – growth rates must drop off and many developing economies will lose dynamism, savings will increase (and long term interest rates fall), healthcare expenditures will dramatically increase, while asset prices – I don’t know what will happen to asset prices.
Many advanced economies – notably Japan – are already there, and Europe is going down the same road. In ASEAN, Thailand is most at risk, while Singapore (especially if they are truly closing off immigration) is getting there.
If you think Malaysia will miss this particular trend, going by current fertility and death rates as well as increases in expected lifespan, we’ll hit aged nation status by 2022 and 2030 at the latest. Malaysia is currently in the sweetspot for the demographic dividend, with larger cohorts of the young coming into the workforce. Combined with higher survival rates, this boosts labour force growth rates and the proportion of the population of working age.
But at some stage, when those born within the last decade begin to retire, we’ll hit a growth wall where higher investment and labour productivity won’t be enough to compensate for a decreasing labour force. The aged will outnumber the young, and society will be very, very different. I’ll never see that day, but my daughter and her children will. So, I suspect, will more than a few readers of this blog.
There’s still time to prepare though. We need for example a better social safety net; an expansion of healthcare, particularly of specialisations in geriatric care like orthopaedics or cardiovascular care; changes to architecture and infrastructure to be more elderly friendly (less stairs and more ramps please). Seeing what my parents are going through right now (my Dad just had another knee replaced), makes me more aware of the physical challenges faced by the elderly, and they will be the fastest growing portion of the population for decades to come.
With any luck, there’ll be an announcement on some remedies at the tabling of the 2015 government budget. Stay tuned.