Asia is Getting Old Too Quickly

Population aging will be one of the most significant demographic phenomena of the twenty-first century. In 2022, there will be 771 million persons aged over the age of 65 worldwide, accounting for about 10% of the global population. This category has been rising at a rapid pace, and it is predicted to reach 16% by 2050, and 24% by 2100. The majority of the aging population will live in Asia; it is expected that there will be more than one billion people aged 60 and above by 2025, and nearly two billion by 2050, with three-fourths of them living in the developing world. Asia's aging is a direct result of severe drops in fertility over the last 40 years, as well as huge improvements in life expectancy. For the first time in history, Asian populations and governments are dealing with an aging population, which raises a number of social and economic difficulties for both families and the state. One of the most pressing issues is the well-being of elderly persons. Economic development is causing profound changes in the larger environment for Asian nations. Changes in family structures and intergenerational support for elderly people are being caused by urbanization, industrialization, migration, and, most recently, globalization.

A significant excess of a country's working-age population is a gift. Many individuals labor to support a small number of children and retirees. Output per person grows as long as the labor market can absorb a rush of job seekers. This can increase savings and investment, resulting in stronger economic growth, greater productivity gains, and developmental acceleration. However, if governments do not take this chance, the consequences can be dire, as many developing countries will soon find.

Philippine President Ferdinand "Bongbong" Marcos Jr. recently commented on the rapid aging of Southeast Asia at a plenary session of ASEAN. Citing a study by the Asian Development Bank, he pointed out that by 2050, 25% of the population of Asia Pacific will be over the age of 60 by 2050.

"I think, therefore, it is time that ASEAN should start discussing the concerns of an ageing population, consistent with the ASEAN tradition of valuing our elders. We must view this, all this as an opportunity and as a challenge, especially in terms of adequate social benefits on the one hand and social empowerment on the other."

In 2021, the percentage of the population of Thailand over the age of 65 reached 14% of the population, the threshold demographers use to identify an aged population. However in Thailand, the per capita GDP is on only $7000. By comparison, Taiwan, Japan and South Korea fall between $32,000 and $34,000. Even the People's Republic of China is near $13,000. When Japan passed the 14% threshold, it was five times richer than present-day Thailand.

This is a significant impediment to Thailand's future growth. Thailand's government will have to spend more on health care and pensions to safeguard its elderly residents, many of whom have low incomes. This will make investing in productivity-boosting skills and infrastructure more difficult. Many poor countries will follow Thailand. Indonesia and the Philippines are likewise projected to become old societies with lower income levels than the developed world. Sri Lanka, whose average income is one-third that of Thailand, will become an aged society by 2028. Vietnamese are almost half as wealthy as Thais and are aging at a quicker rate.

Developing countries must begin planning for old age sooner. They should modernize their pension systems, including raising the retirement age. They should support financial markets by offering opportunities for long-term savings and health insurance. They should establish the framework for well-regulated private social care. They should also work more to improve female labor-force participation.

Developing countries must also have more open approaches to immigration. Rich countries like Japan have created barriers, both formal and informal, to immigrants, avoiding a revitalizing force which could reinvigorate the economy for the sake of extreme cultural preservation. Thailand has been flooded by immigrants from next door Myanmar. While these immigrants are nearly all undocumented, Thailand could find a way to formalize this group, it would provide a needed boost to the working population.

Vietnam reached the definition of "aging society" in 2015, and will be an "aged society" by 2035. Japan became a super-aged nation in the 1960s and has had many problems as a result. Demand for social services is on the rise and will not plateau for several decades. Vietnam has a fairly well-developed social support net for a country of its size and comparative wealth, but the rapidly aging population will put a strain on these systems.

The problems in these societies are all similar. The population is aging, creating more demands for health care and social welfare, but the society has not had a long enough period of wealth for strong institutions to be built nor for citizens to save up personal wealth for retirement. The nations of Southeast Asia can, with appropriate and decisive policy, overcome these challenges. The question to be answered is will they, and how?