Ageing Population and How It Effects the Workforce
1. EXECUTIVE SUMMARY
The first warns of looming disaster a shrinking labour force, unsustainable pension, and healthcare subsidies increasing the fiscal strain and destabilising the economy. Here, demographic upheaval foreshadows an inevitable economic decline, if not total collapse. Those who disagree consider this analysis too Malthusian: it overlooks increases in productivity, and the reduced fiscal burden of households with fewer children to support. These pundits see demographic change as a gradual transition and not an imminent crisis.
In the swirl of commentary on the Asian countries in recent years, one facet of their longer-term prospects not often remarked upon is that their population is aging. By 2025, the share of the elderly in the population of Singapore, Hong Kong, Taiwan, Japan and South Korea will at least doublem and the share of the young will fall sharply.
The ageing of the population will drag down the potential rate of growth as a result of the fall in volume of labor input and the decline of the domestic saving rate. Furthermore, it will also serve as negative effects upon fiscal conditions and households through the decline of tax revenues, rise of healthcare costs and pension burdens. However, the rate of economic growth is the sum of the rate of per capita GDP growth and the rate of population growth. Even if the labor force population decreases, economic growth will not turn negative as long as the rate of productivity growth is sufficiently high. From this perspective policy initiatives to raise productivity such as the following would be important: measures to upgrade human capital through education and the improvement of capital efficiency through innovation
2. INTRODUCTION
Demographic ageing and the decline of the birthrate are no longer issues inherent to industrialized countries. It is a phenomenon which is also progressing in the countries of Asia experiencing rapid growth as the “world’s growth centre” (Heller,
The first warns of looming disaster a shrinking labour force, unsustainable pension, and healthcare subsidies increasing the fiscal strain and destabilising the economy. Here, demographic upheaval foreshadows an inevitable economic decline, if not total collapse. Those who disagree consider this analysis too Malthusian: it overlooks increases in productivity, and the reduced fiscal burden of households with fewer children to support. These pundits see demographic change as a gradual transition and not an imminent crisis.
In the swirl of commentary on the Asian countries in recent years, one facet of their longer-term prospects not often remarked upon is that their population is aging. By 2025, the share of the elderly in the population of Singapore, Hong Kong, Taiwan, Japan and South Korea will at least doublem and the share of the young will fall sharply.
The ageing of the population will drag down the potential rate of growth as a result of the fall in volume of labor input and the decline of the domestic saving rate. Furthermore, it will also serve as negative effects upon fiscal conditions and households through the decline of tax revenues, rise of healthcare costs and pension burdens. However, the rate of economic growth is the sum of the rate of per capita GDP growth and the rate of population growth. Even if the labor force population decreases, economic growth will not turn negative as long as the rate of productivity growth is sufficiently high. From this perspective policy initiatives to raise productivity such as the following would be important: measures to upgrade human capital through education and the improvement of capital efficiency through innovation
2. INTRODUCTION
Demographic ageing and the decline of the birthrate are no longer issues inherent to industrialized countries. It is a phenomenon which is also progressing in the countries of Asia experiencing rapid growth as the “world’s growth centre” (Heller,