The Asia and Pacific region is aging rapidly, and that is affecting the region’s workforce, but increased longevity is adding an unexpected element to the picture
Asia is greying rapidly. Close to 9% of Asia and the Pacific’s 4.3 billion people are now aged 65 years and older. Population growth has decelerated amid low birth rates while people live longer and healthier. All of these are translating to a steep increase in the proportion of older adults in Asia. By end 2050, people aged 65 and above will comprise 18.3% of total population in the region.
Increasingly, the region will rely on older workers to meet their labor requirements. Currently, at least one in five workers belongs to the age bracket of 55–64 in seven economies: Hong Kong, China (23%); Republic of Korea (21%); and Singapore (21%). These economies also have an average workforce age at more than 40. Workforce aging will be a common trend for many regional economies.
By 2050, 13 economies will have an average workforce age of at least 40. There will be a notable rise in countries either aging at a slower rate or still young, such as Bangladesh (+4.7 years) and the Lao People’s Democratic Republic (+4.4 years).
More people who are older than the typical “conventional” working age threshold of 64 years are actively looking for employment opportunities than two decades ago. Labor force participation of workers aged 65–69 shot up in New Zealand, from 16.5% in 2000 to 44.8% in 2018.Japan and the Republic of Korea also witnessed a similar trend. For the same age bracket, the labor force participation rate in Japan jumped from an already high of 35.5% in 2002 to 47.6% in 2018. The Republic of Korea sustained its over 40% labor force participation rate from 2000–2018.
Interestingly, people aged 70–74 as well as those aged 75 and above also join the similar trend. These older adults are relatively healthier, more educated, and less prone to severe age-related disabilities than the same group in earlier periods, which partially explains why more and more of them either remain in or re-enter the jobs market. From 1990–2017, Asians, on average, had almost 7 more years of healthy life. Corresponding to the rapid expansion in basic education during their youth, the average years of schooling was 7.8 years among those aged 55–64 in 2015, up from only 3.4 years in 1980.
An individual is often classified “old” when he/she turns 65, just beyond the working age of 15–64. Capturing the improvements in the condition of older persons, including their physical and cognitive abilities, recent studies redefine “old” by applying the “prospective” concept, that is, based on the expected remaining years of life. Accordingly, old persons are those with the remaining life expectancy of 15 years or less, which was derived from the observed life expectancy at age 65 from low mortality countries in 1970. With sustained extension of life expectancy, the threshold age at which individuals can be considered old will eventually move up.
In 1970, old persons in the People’s Republic of China (PRC), Sri Lanka, and Thailand were those at around aged 65 and above. In 2019, the threshold for old age increased to as high as 75 in Thailand, 73 in Sri Lanka, and 71 in the PRC. With relatively low life expectancy, 60-year-olds were considered old in Bangladesh in 1970, but this improved to 71 in 2019. The share of the ‘old’ to the total population based on prospective age are significantly smaller than what is expected using a fixed chronological age of 65. The charts suggest that countries that will successfully capitalize on longevity by encouraging older persons to remain active and stay employed may undergo a more gradual and possibly smoother transition towards an aging society.
Creating an enabling working environment with policy reforms that support a longer and healthier working life is key to sustaining productivity and growth as an economy ages. Reforms in areas such as labor and social security policies, flexible employment arrangements for older workers, lifelong learning, and technology adoption are essential to effectively prepare for population aging and to reap potential benefits as people live longer, healthier and more productive lives.
This blog post is based on research in the theme chapter of the Asian Economic Integration Report 2019/20, entitled “Demographic Change, Productivity and the Role of Technology in Asia.”