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Special Report
Ageing – Passing the baton to Asia
Highlights
 China, Thailand, Korea, Singapore and Hong Kong will be the
fastest-ageing societies in the world in the coming decades. China
and Thailand face the greatest challenges, while others such as
India and Indonesia should reap a demographic dividend.
 Ageing to detract from GDP growth for China, Hong Kong, South
Korea and Thailand by 2020 and for Singapore by 2025, according to
our analysis. This follows decades of positive contributions. Policy
measures, including investing in education and increasing low fertility
rates, will be needed to counter the effects of an ageing population.
 On the positive side, we find that ageing is unlikely to dampen Asia’s
high household savings significantly in the coming decades. The
Enam Ahmed +44 20 7885 7735
[email protected]
Senior Economist, Thematic Research
Standard Chartered Bank
Tony Phoo +886 2 6603 2640
[email protected]
Senior Economist, NEA
Standard Chartered Bank (Taiwan) Limited
Samantha Amerasinghe +44 20 7885 6625
[email protected]
Economist, Thematic Research
Standard Chartered Bank
Chidu Narayanan +65 6596 7004
[email protected]
Economist, Asia
Standard Chartered Bank, Singapore Branch
Kathleen B. Oh +82 2 3702 5072
[email protected]
Economist, Asia
Standard Chartered Bank, Korea Branch
market for seniors’ consumption will also increase rapidly. We
estimate that total consumption by the 65+ age group in China will
jump to USD 2.8tn by 2030 from USD 0.4tn now.
 Asia’s pension systems are unsustainable. Policy reform options will
vary across countries: China needs to increase the retirement age,
extend pension participation to rural areas, and improve the
transparency and governance of state and private pension systems.
Important disclosures can be found in the Disclosures Appendix
All rights reserved. Standard Chartered Bank 2017
https://research.sc.com
Special Report: Ageing – Passing the baton to Asia
Contents
Executive summary
3
Infographic
5
Demographic trends and economic impact
7
A greying world
8
Key drivers of population ageing
10
Getting old before getting rich
11
Ageing limits the labour supply
13
Does ageing reduce savings?
17
Sizing up senior consumption
22
Asia’s policy response to ageing
24
Policy reform in Asia
25
The challenges posed by an ageing population
25
Labour policies in response to ageing
27
Country focus – The ageing societies
30
China
31
Japan
34
South Korea
37
Singapore
40
Thailand
44
Taiwan
47
Country focus – The demographic dividend
51
India
52
Indonesia
55
References
58
Global Research Team
59
8 February 2017
2
Special Report: Ageing – Passing the baton to Asia
Executive summary
Our key findings are as follows:
Asian economies are poised to age faster than elsewhere

While many advanced economies have a high share of the 65+ age group in their
populations, emerging markets currently represent two-thirds of the world’s
elderly. The UN forecasts that the share of those aged 65+ in emerging markets
will rise to almost 80% by 2050. China already has 131mn seniors, more than
double the combined older generations of the world’s three most aged economies
– Japan, Italy and Germany.

Korea and Singapore are set to become ‘hyper-aged’ societies (defined by the
UN as those in which seniors make up more than 21% of the population) by 2030;
they are already ‘ageing’ (7-14% of the population is 65+). Thailand and China
will become hyper-aged by 2035. Hong Kong will see a rapid rise in its 65+
population: it is already an ‘aged’ society (14-21% of its population is 65+), with
15.1% over the age of 65 in 2015; this is set to rise to 22.3% by 2025.

Asia and other EM regions are getting older faster than has previously been seen.
It will take China and Singapore 25 years to progress from ageing to aged
societies, according to UN projections. Thailand’s transition will be quicker, at
only 20 years, similar to Brazil’s. For Hong Kong this process took 30 years. By
comparison, it took the UK 45 years, the US 69 years and France 115 years.

The acceleration of ageing means some societies will get old before they reach
high-income status. This could create challenges, including limiting their ability to
move up from middle-income status. Our projections show that Thailand and
China are likely to face this challenge in the next few decades.
The macroeconomic impact and influence of seniors

The most direct and significant impact of ageing on an economy is through labour
supply. We estimate that after decades of positive contributions to GDP growth,
demographics will become a drag by 2020 for China, Korea, Hong Kong and
Thailand, and by 2025 for Singapore.

We estimate that growth in China’s labour force contributed more than 1.5ppt to
GDP growth on average between 1996 and 2000, and over 3ppt in the early
1980s. By 2030, based on current demographic trends, the shrinking of the labour
force will reduce GDP growth by 0.25ppt. In Japan (the world’s most aged
society), the negative contribution will be greater by then, at 0.5ppt. We show that
modest improvements in the quality of labour can delay the impact of ageing on
GDP growth. For example, the negative effect for China could be postponed by
10 years. In the coming decades China will have the world’s biggest pool of
educated labour, opening up vast potential for future economic growth.
8 February 2017
3
Overview
The ageing phenomenon has been a dominant feature of Western economies over the
past few decades, but Asian economies will age the fastest in the next phase. We
assess the policy responses of countries in the region that most urgently need to tackle
challenges related to ageing. We also analyse the timing and impact of ageing on GDP
growth and the implications for household savings.
Special Report: Ageing – Passing the baton to Asia
Overview

The commonly held view of the impact of demographic change on savings is
based on the life-cycle hypothesis (LCH): the young borrow against their future
income, workers late in their careers should have the highest savings, and
seniors should start drawing down their savings upon retirement. This model,
however, does not seem to hold up for many Asian countries. Even studies that
have sought to link aggregate savings to ageing across countries suggest that
other factors play more important roles.

The senior consumer market in emerging economies has considerable growth
potential, led by ageing and economic growth. We estimate that spending by the
65+ age group in some major emerging markets (including the BRICs along with
Indonesia, Malaysia, the Philippines, Mexico, South Africa and Turkey) could
increase by more than 400% to USD 4.4tn in 2030 from USD 0.8tn in 2015. China
will account for a large share of the increase.

In developed markets, seniors already make up a significant share of wealth and
spending. In the US, only 11% of investable assets will be held by people
younger than 45 by the end of this decade, according to McKinsey & Company.
We estimate that seniors in the G7 economies accounted for USD 3.8tn of
household spending in 2015 (17% of total consumption). This will likely grow to
over USD 8tn by 2030.
Asia’s response to ageing

Demographic trends are challenging Asia’s traditional family values system.
China is facing a ‘4-2-1’ phenomenon, whereby an only child is responsible for
two parents and four grandparents.

Institutional support is not yet in place to respond to the rapid rise in ageing.
Pension systems remain unsustainable despite recent policy reforms. China’s
nationwide pension system may run a deficit as early as 2030; Thailand will likely
run a deficit from 2041. By then, the pension systems in Korea and Vietnam
should also run small deficits. However, low debt – particularly in China, Korea
and Thailand – gives countries the scope to absorb rising age-related costs, at
least in the near term.

Policies to raise fertility rates have been widely adopted in Asia to tackle the
effects of ageing. They have so far proven unsuccessful. Fertility rates for the
major economies – including China, Thailand, Japan, Singapore and Korea –
remain well below the population replacement rate of 2.1.

Initiatives to raise female labour participation are likely to have the largest
immediate impact in offsetting the drag on labour-force and GDP growth from
ageing. Child-care provision in places like Japan and Korea has had a positive
effect, but their impact has generally been modest, hampered by entrenched
social norms.

Measures to upgrade seniors’ skills are prevalent only in advanced Asian
economies such as Korea, Japan and Singapore.
8 February 2017
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Special Report: Ageing – Passing the baton to Asia
Infographic
Figure 1: Asia will age the fastest
Infographics
% of population
65+, 2015
Young
N.A.
Aging
<7%
Aged
7 to 14%
Hyper-aged
14 to 21%
>21%
Change between 2015 and 2030
12
10
8
6
4
2
0
SG
HK
KR
TH
CN
CA
ES
DE
CH
IT
US
CO
BR
IE
RU
FR
JP
MY
MX
UK
ID
IN
AR
PH
ZA
% of population
65+, 2030
Source: UN, Standard Chartered Research
8 February 2017
5
Special Report: Ageing – Passing the baton to Asia
Infographic
Figure 2: Demographic dividend is reversing (in most Asian countries)
Ageing will shrink the working-age population
Average annual growth of the working-age population, %
3.0
2006-2010
2011-2015
2016-2020
2021-2025
2026-2030
Japan
Philippines
2.5
Infographics
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
Singapore
China
Thailand
Hong Kong
Korea
Indonesia
India
Indonesia
India
This will reverse the demographic dividend to growth
Labour contribution to GDP growth
Ppt contribution to growth
3.0
2010
2015
2020
2025
2030
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
Singapore
China
Thailand
Hong Kong
Korea
Japan
Philippines
Source: UN, Standard Chartered Research
8 February 2017
6
Demographic trends and economic impact
Special Report: Ageing – Passing the baton to Asia
A greying world
The ageing of the global economy is set to reach an unprecedented milestone by the
end of the current decade. According to UN projections, for the first time in at least 60
years, the number of adults aged 65 and over globally will outnumber children under
the age of four (Figure 3). This transition has been led by advanced economies,
where seniors will outnumber the population aged below 20 by 2030. In countries
such as Japan and Germany, where ageing has become acute, the demographic
transformation has already led to shrinking populations.
Two-thirds of seniors live in
emerging markets
Emerging markets actually represent two-thirds of the world’s elderly (Figure 4).
China became an ageing society soon after 2000, with the share of those 65+
exceeding 7% of the population. In 2015 it had 131mn seniors (or 9.6% of the
population), more than double the combined number of seniors in Japan, Italy and
Germany – the world’s most aged economies. The UN forecasts that the proportion
of elderly in emerging economies will rise to almost 80% by 2050.
Asia is ageing fast
The next phase of global ageing will be driven by rapid ageing in key Asian economies.
The UN forecasts that the global share of those aged 65+ will increase to 11.7% in
2030 from 8.3% in 2015, faster than the rise in recent decades (the share of the over
Demographic trends
65s increased to 8.3% in 2015 from 6.8% in 2000). This will push the global headcount
of seniors to nearly 1bn from 608mn in 2015. This 386mn increase is more than the
current population of North America.
The most rapidly ageing societies
will be in Asia in the coming
decades
According to UN forecasts Korea, Singapore and Hong Kong will see the biggest
rises in the share of seniors in their populations, despite already having relatively old
populations (Figure 5). Thailand and China will also be among the most rapidly
greying societies (Figure 6), becoming ‘aged’ (14-20% of the population above 65
years) by the middle of the next decade. They will both become ‘hyper-aged’ by
2035, with 21% or more of their population 65+. This would be only five years after
Canada, the UK and the US become hyper-aged.
In contrast, most economies in Sub-Saharan Africa will remain young through 2050.
In Ghana, Nigeria and Kenya, for example, the population share of those aged 65+
will remain well below the 7% threshold for an ‘ageing’ society in the coming
decades. Although South Africa will cross this threshold in 2030, it will not reach
‘aged’ status until after 2050.
Figure 3: World population aged 65+ vs 0-4
Figure 4: Population aged 65 and older in 2015 vs 2030
% of total world population
Mn
18
16
600
65+
14
12
400
10
8
6
300
0-4
4
2
0
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Source: UN, Standard Chartered Research
8 February 2017
500
2030
200
2015
100
0
Asia
Europe
Latam
N America
SSA
Oceania
Source: UN, Standard Chartered Research
8
Special Report: Ageing – Passing the baton to Asia
Figure 5: The world’s most aged or ageing societies
Share of population aged 65+
2020
2025
2030
2035
2040
2045
2050
Japan
26.3
28.5
29.4
30.4
31.9
34.2
35.5
36.3
Italy
22.4
24.0
25.9
28.6
31.4
33.8
34.9
35.1
Germany
21.2
22.7
25.0
28.0
30.8
31.3
31.6
32.3
Spain
18.8
20.3
22.7
25.7
28.8
32.0
34.8
35.8
France
19.1
20.8
22.4
23.9
25.1
26.0
26.1
26.3
Hong Kong
15.1
18.2
22.3
26.3
29.2
31.5
33.3
34.5
Austria
18.8
19.8
21.8
24.7
27.5
29.0
29.7
30.6
Switzerland
18.0
19.2
21.0
23.5
25.8
26.9
27.6
28.4
Canada
16.1
18.3
20.9
23.5
24.6
25.3
25.7
26.4
UK
17.8
18.4
19.6
21.4
23.1
23.8
24.1
24.7
New Zealand
14.9
16.7
18.8
21.2
22.6
23.9
23.9
24.1
Korea
13.1
15.8
19.7
23.7
27.4
30.8
33.3
35.1
Singapore
11.7
15.1
19.3
23.3
26.7
29.8
32.2
33.9
US
14.8
16.7
18.9
20.7
21.4
21.9
21.8
22.2
Thailand
10.5
13.0
16.1
19.5
22.8
25.8
28.4
30.1
9.6
12.1
14.2
17.2
21.3
24.6
26.0
27.6
Australia
15.0
16.3
17.8
19.4
20.3
21.3
21.6
22.5
Chile
11.0
12.8
15.0
17.6
20.3
22.5
24.3
26.2
Sri Lanka
9.3
11.2
13.3
15.4
17.3
18.9
21.0
22.8
Lebanon
8.1
9.4
11.5
14.1
16.2
17.9
20.2
23.3
Brazil
7.8
9.4
11.3
13.5
15.6
17.7
20.1
22.8
Colombia
7.0
8.7
10.6
12.8
15.2
16.9
18.9
21.1
Brunei
4.4
6.2
8.6
11.3
14.5
17.8
21.0
24.0
Vietnam
6.7
8.0
10.1
12.4
14.6
16.8
18.8
21.0
Turkey
7.5
8.8
10.4
12.1
14.0
16.1
18.3
20.6
China
Argentina
10.9
11.6
12.4
13.1
13.9
15.0
16.7
18.1
Mexico
6.5
7.6
8.8
10.4
12.3
14.6
16.8
18.9
Peru
6.8
7.7
8.9
10.3
11.9
13.6
15.5
17.4
Malaysia
5.9
7.0
8.4
9.9
11.4
12.8
14.3
16.8
UAE
1.1
1.9
3.4
6.3
9.6
12.4
14.1
16.3
Demographic trends
2015
Source: UN, Standard Chartered Research
Figure 6: Asian economies are ageing the fastest
Countries with the largest ppt increase in 65+ share of population, 2015-50
25
Increase in 65+ share, 2030-2050
Increase in 65+ share, 2015-2030
20
15
10
5
0
SG
KR
TH
HK
CN
ES
BR
VN
CO
IT
MX
DE
MY
JP
ID
IN
RU
US
AU
FR
GB
ZA
PH
KE
GH
NG
Source: UN, Standard Chartered Research
8 February 2017
9
Special Report: Ageing – Passing the baton to Asia
Acceleration in ageing
Asia is ageing five times faster than
France and almost three times
faster than the US
A remarkable feature of the ageing phenomenon in Asia, in particular East Asia, is
that these regions are getting older at a faster rate than has previously been seen.
For example, it took France more than a century for the share of the 65+ group in its
population to rise from 7% to 14%. In the US it took 69 years, while in the UK and
Japan, 45 and 25 years, respectively. We expect many East Asian economies to
experience a similar transition within 20 to 25 years (Figure 7).
Key drivers of population ageing
We believe three main factors will drive the pace of ageing in the coming decades.
(1) Declining fertility – Declining fertility rates in the past 30 years have pushed up
the share of the elderly worldwide while reducing the number of young people.
Declining fertility reflects a combination of factors, including better education,
urbanisation, higher wages, access to contraception, a reduction in subsistence
agriculture and government policies. Total fertility has fallen fastest in Asia in
recent decades and is forecast to decline to 2.0 children per woman in 2025-30
from 5.1 in 1970-75 (Figure 8).
Demographic trends
Hong Kong, Korea, Japan and Singapore have among the lowest birth rates in
the world, at between 1.0 and 1.4 children per woman, well below those seen in
other developed countries. In major middle-income countries in Asia such as
China (1.6) and Thailand (1.5) the fertility rate is also well below the replacement
fertility rate of 2.1. Even in South Asian countries where fertility rates are high
they have fallen significantly. In India the fertility rate has declined to 2.3 recently
from 5.4 in the early 1970s.
(2) Increased longevity –The rapid increase in life expectancy due to improved
material well-being, advances in medicine and better access to health services will
continue to be a key driver of the transition to an ageing world population. Life
expectancy at birth in less developed countries is 69 years old, from 42 in the
1950s; this signals a rapid closing of the gap with developed economies, where it
increased to 78 from 65 during the same period. In Asia, average life expectancy
has increased further to 72 from 42 in the 1950s. China’s demographic transition is
noteworthy because its relatively high levels of good health were achieved at a low
per-capita income level. Life expectancy in the country has risen to 75 years from
45 since the 1950s, a transition that took developed countries a century.
Figure 7: Ageing in emerging markets is accelerating
Figure 8: Declining fertility rates in Asia
Years taken for share of 65+ age group in total population to
double from 7% to 14%
Children per women
Vietnam
Korea
Thailand
Brazil
Indonesia
Malaysia
Lao PDR
Cambodia
Japan
Singapore
China
Turkey
Hong Kong
Philippines
South Africa
UK
Russia
US
France
15
20
20
20
20
20
20
25
25
25
25
25
30
35
40
45
50
0
20
40
60
Source: World Bank, Standard Chartered Research
8 February 2017
8
7
6
5
4
3
Asia
SSA
Latam
Aust & NZ
2
1
69
80
115
100
120
140
Europe
N America
0
1970-1975
1990-1995
2010-2015
2025-2030
Source: UN, Standard Chartered Research
10
Special Report: Ageing – Passing the baton to Asia
(3) A fall in mortality before a fall in fertility or past variations in birth and death
rates – Like developed economies, many Asia-Pacific countries, including Japan
and Singapore, experienced a baby boom after the end of the Second World War.
These people are currently 60 years old or more. The population cohort born in
China before the implementation of strict family planning in the 1970s is another
example of previous episodes of demographic change having a big influence on
the pace of ageing going forward.
Getting old before getting rich
The speed of Asia’s demographic transition is a major concern as it means that many
countries in the region risk growing old before they get rich. For many, their workingage populations are currently peaking and will decline within the next decade.
Thereafter, population ageing will likely be a drag on economic growth. It is
imperative that these countries make the most of their ‘demographic dividend’.
To identify which countries could have hyper-aged populations before their
economies reach high per-capita GDP levels, we compared how quickly countries
will reach the median age of 40 years (associated with c.22% of the population being
above 65) with how quickly they will achieve high-income status (income per capita
of USD 30,000).
China’s population is getting old before it gets rich (Figure 9). In contrast, Japan,
Korea and most of the rest of the OECD had relatively young populations when they
became rich. China may not become ‘rich’, according to our analysis, until 2026
when its income per capita exceeds USD 30,000. Thailand and Brazil face a similar
fate, with their populations becoming aged in 2035 but not rich until well after 2040.
In contrast, countries such as Malaysia, the Philippines and Mexico look set to get
rich before they get old, with fast-growing, young populations.
Implications of getting old before getting rich
Getting old before getting rich is one of the biggest medium-term structural
challenges in developing Asia and Latam. The main reason why middle-income
countries are concerned about this is that it might inhibit their ability to join the group
of high-income developed countries. Unfavourable demographics could lower
Figure 9: Countries getting old before they get rich
No. of years to reach USD 30,000 GDP per capita and median age 40
MY
TR
CN
TH
MX
ID
IN
VN
PH
BR
BD
ZA
GH
KE
NG
No. of years to reach USD 30,000 GDP per capita
No. of years to reach median age 40
0
10
20
30
40
50
60
70
80+
Source: UN, Standard Chartered Research
8 February 2017
11
Demographic trends
China, Thailand and Brazil are
getting old before they get rich
Special Report: Ageing – Passing the baton to Asia
potential GDP growth rates and hamper development. Ageing populations may also
put a strain on public finances and necessary infrastructure – such as robust pension
systems – is less likely to be in place.
Ageing affects a population’s productive capacity, consumption patterns and
Demographic trends
investment. China’s, Thailand’s and Brazil’s ability to navigate the transition from
‘poor’ to ‘rich’ under these circumstances will have a significant influence on their
success in ‘getting rich’ or gaining high-income status.
8 February 2017
12
Special Report: Ageing – Passing the baton to Asia
Ageing limits the labour supply
The demographic changes described in the previous section will affect Asia’s shortand long-term macroeconomic conditions via several channels. Different age groups
could have different savings behaviour and productivity levels; they could work
differently and contribute differently to innovation. The size and impact of many of
these channels – sometimes including their direction – are highly uncertain, as we
show in the next section on savings behaviour.
However, the consensus in the economic and empirical literature is that an ageing
population, all else being equal, will inevitably start eroding the size of the labour
force and therefore economic growth. In this section we quantify the historical and
future impact on growth from the change in the size of the workforce in some of the
key economies in Asia.
Quantifying the impact on GDP growth
The positive impulse from
demographic trends will likely
reverse soon for major Asian
economies
Current demographic projections suggest that for economies where the ageing
process is well underway the impact of the labour force on growth will soon become
negative. In forecasting the contribution of the labour force to growth from 2015
onwards, we use UN estimates of the working population (Figure 10), and assume
that the share of the working-age population, as well as the labour force’s share of
growth remains constant at its most recent five-year average. Our base-case
estimate of the likely labour-force contribution to growth assumes that the quality of
the labour force remains at the same level as in 2011-14.
We estimate that the decline in the labour force will detract from GDP growth in the
coming decades for many Asian economies. China, Hong Kong, South Korea and
Thailand will likely be the earliest affected; on average they are likely to experience
Figure 10: Asia’s demographic slowdown
Average annual growth in working-age population, 2006-30
3.0%
2006-2010
2011-2015
2016-2020
2021-2025
2026-2030
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
-1.5%
CN
HK
KR
TW
ID
MY
PH
SG
TH
IN
JP
AU
US
Source: UN, Standard Chartered Research
8 February 2017
13
Demographic trends
Demographics have played a strong role in Asia’s growth story. We estimate that for
China, Korea and Thailand, labour-force growth accounted for at least 3ppt of GDP
growth in 1980. That year China’s economy grew by 7.9% and Thailand’s by 4.6%.
Korea’s recession that year would have been deeper than the 1.7% recorded without
labour-force growth. Since then this impact has diminished. In China and Thailand, in
particular, the contribution of the labour force became negligible in 2015.
Special Report: Ageing – Passing the baton to Asia
negative contributions to growth from a shrinking labour force in the five years to
2020, while for Singapore this will happen soon after (Figures 11 to 14). For Japan,
labour has not made any contribution to growth since 2000 (Figure 15). At the other
end of the spectrum, growth in India, Indonesia and the Philippines should continue
to enjoy a demographic dividend, though the magnitude of the effect has declined
(Figures 17 to 19). Malaysia has also benefited from the demographic dividend
(Figure 20).
Mitigating the negative impact on labour
Demographic trends
Smaller and more open economies such as Hong Kong and Singapore could counter
the effects of ageing by importing labour. This is more difficult for larger economies,
most notably China, given that it has the world’s largest population. Immigration is
also a sensitive issue in the region, as in other parts of the world. Many governments
still seek to tightly control immigration and migrants’ rights are often limited. The good
news for China is that despite a contraction in the working-age population,
urbanisation has a long way to go, which may keep labour productivity growth strong
during this period.
Another way to offset the impact of the contraction in the working-age population is to
increase the labour-participation rate. A higher participation rate means that although
the number of working-age adults in the country declines, the corresponding
reduction in the productive labour force is minimised, reducing the impact on GDP
growth. We believe this would be the quickest way to tackle problems related to an
ageing population; however it is not our base-case scenario.
An alternative scenario
Improving the quality of labour
could delay the effects of ageing by
a decade in China
All these measures could be complemented by improving the quality of human
capital. We calculate the likely upside to growth from a more productive labour force,
assuming the quality of the labour improves 2% in every five-year period. For most
countries the quality of human capital has remained flat over the last 10 years. Our
results show that even under this modest increase scenario, the negative impact of
the decline in the labour force can be delayed. For example, China’s demographic
trends would become a drag a decade later than under a no-change policy
(Figure 11). For Singapore, Korea and Thailand we would see a five-year delay
(Figures 12, 14 and 15).
To quantify the quality of labour we use the human capital index from the Penn World
Tables. This combines average years of schooling with a measure of the
‘effectiveness of schooling’ (Barro, 2013), using an assumed rate of return for
primary, secondary and tertiary education (Caselli, 2005). While this approach is not
perfect, it enables us to better estimate the quality of the labour force in different
countries at different points in time, and measure their productivity.
8 February 2017
14
Special Report: Ageing – Passing the baton to Asia
Demographic impact to reverse soon
Figure 11: China
Figure 12: Korea
Contribution to GDP growth, ppt
Contribution to GDP growth, ppt
4.0
5
Contribution to growth
moderate improvement in labour force quality
3.5
3.0
2.5
Contribution to growth
moderate improvement in labour force quality
4
3
2.0
2
1.5
1.0
1
0.5
0
0.0
Source: Penn World Tables, UN, Standard Chartered Research
Source: Penn World Tables, UN, Standard Chartered Research
Figure 13: Hong Kong
Figure 14: Thailand
4.0
Source: Penn World Tables, UN, Standard Chartered Research
Source: Penn World Tables, UN, Standard Chartered Research
Figure 15: Singapore
Figure 16: Japan
Contribution to GDP growth, ppt
Contribution to GDP growth, ppt
4.0
Contribution to growth
moderate improvement in labour force quality
3.5
4.0
2025
2030
2030
1965
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
-1.0
1980
-1.0
1975
0.0
-0.5
1970
0.0
-0.5
2025
0.5
2020
1.0
0.5
2015
1.0
2010
1.5
2005
1.5
2000
2.0
1995
2.5
2.0
1990
2.5
1985
3.0
1980
3.5
3.0
1965
Contribution to growth
moderate improvement in labour force quality
1975
3.5
2020
Contribution to GDP growth, ppt
Contribution to growth
moderate improvement in labour force quality
1970
4.0
Demographic trends
Contribution to GDP growth, ppt
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
-1
1965
-0.5
Contribution to growth
moderate improvement in labour force quality
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
1.0
Source: Penn World Tables, UN, Standard Chartered Research
8 February 2017
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1965
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
-1.0
1980
-0.5
1975
-0.5
1970
0.0
1965
0.0
1970
0.5
0.5
Source: Penn World Tables, UN, Standard Chartered Research
15
Special Report: Ageing – Passing the baton to Asia
Still enjoying the demographic dividend
Figure 17: India
Figure 18: Indonesia
Contribution to GDP growth, ppt
Contribution to GDP growth, ppt
Contribution to growth
moderate improvement in labour force quality
4.0
3.5
Contribution to growth
moderate improvement in labour force quality
3.5
3.0
3.0
2.5
2.5
2.0
2.0
1.5
1.5
1.0
Source: Penn World Tables, UN, Standard Chartered Research
Source: Penn World Tables, UN, Standard Chartered Research
Figure 19: Philippines
Figure 20: Malaysia
Contribution to GDP growth, ppt
Contribution to GDP growth, ppt
Source: Penn World Tables, UN, Standard Chartered Research
2030
2025
2020
2030
2025
2020
2015
2010
2005
2000
1995
1990
1965
2030
0.0
2025
0.0
2020
0.5
2015
0.5
2010
1.0
2005
1.0
2000
1.5
1995
1.5
1990
2.0
1985
2.0
1980
2.5
1975
2.5
1970
3.0
1965
3.0
1985
3.5
1980
3.5
Contribution to growth
moderate improvement in labour force quality
4.0
1975
Contribution to growth
moderate improvement in labour force quality
1970
4.0
2015
2010
2005
2000
1995
1990
1985
1980
1975
1965
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
0.0
1975
-0.5
1970
0.5
1965
0.0
1970
1.0
0.5
Demographic trends
4.0
Source: Penn World Tables, UN, Standard Chartered Research
.
8 February 2017
16
Special Report: Ageing – Passing the baton to Asia
Does ageing reduce savings?
Life-cycle predictions for household saving
Another important channel through which seniors can impact the macro economy is
via their saving behaviour. Households account for a large share of the national
savings of an economy, especially in Asia, and therefore its capacity to finance
investment. The commonly held view of the impact of demographic change on saving
is derived from the life cycle hypothesis (LCH): the young borrow against their future
income; workers late in their careers should have the highest savings; and seniors
should start drawing down their savings upon retirement. This model, however, does
not seem to hold up for many countries in Asia.
The demographic cliff
According to the LCH, the drag on national savings from demographics is more
keenly felt when total dependency in the economy increases, triggering a fall in the
ratio of the working-age population to children and seniors. This threshold has
already been reached by many Western economies. The UK, Canada and US
exceeded it in 2010 (Figure 21). Germany reached it in 1985 and Italy in 1990 – both
among the world’s most aged societies. Total dependency ratio trends have been
driven by the rising share of over 65s in the population that more than offset the
effect of the fall in the share of the under 15s (reflecting declining fertility rates).
The picture for Asia is similar. Japan hit the demographic cliff in 1995, while
Singapore and Hong Kong reached it in 2010; China, Thailand and Korea followed in
2015 (Figures 21 and 22). Malaysia will be at the same point by 2030. India,
Indonesia and the Philippines, which are still enjoying a demographic dividend, will
not see any meaningful decline in their total dependency ratios before 2050.
These observations are based on static age ranges over time, which is unrealistic;
societies are likely to change to tackle demographic challenges. Elderly labour-force
participation, for example, is rising in Europe, the UK and Japan. This is one of the
main reasons why Japan’s labour force fell by only 0.8% in the past decade, despite
the working-age population (15-64) falling by almost 9%. China is expected to
announce plans to increase its retirement age this year. As an illustration, if we
assume that China extended its citizens’ working life by five years to 70 years old by
2025, then its demographics would be as strong as they were in 2010 for several
more decades (Figure 23).
Figure 21: Advanced economies hit cliff by 2010
Figure 22: China hit the demographic cliff in 2010
Ratio of 15-64 to 0-14 and 65+
Ratio of 15-64 to 0-14 and 65+
3.0
Japan
3.0
UK
2.5
Italy
2.5
France
Germany
2.0
2.0
Canada
US
1.5
1.5
Hong Kong
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
Source: UN, Standard Chartered Research
8 February 2017
Singapore
1.0
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
Korea
1.0
China
India
Indonesia
Malaysia
Philippines
Thailand
Turkey
Russian
Mexico
Brazil
Chile
Source: UN, Standard Chartered Research
17
Demographic trends
China and Thailand have hit the
demographic cliff, Malaysia will
follow by 2030
Special Report: Ageing – Passing the baton to Asia
Not much dis-saving by seniors in Asia
Despite many countries hitting or being poised to hit the demographic cliff, the
relationship between ageing and saving is not as clear as theory suggests. Some
evidence suggests little dis-saving by seniors in Asia.
There are relatively few available estimates of age profiles of savings but data from
the National Transfer Accounts (NTA) attempts to fill this gap and provide a useful
basis for country comparisons. The NTA estimates private savings by age by
disaggregating flows in countries’ national accounts. Savings is the balancing item
after taking into account the difference between labour income and consumption and
after considering income from private and public transfers and assets.
NTA estimates for the US show that individuals follow the traditional LCH. Income
follows a bell-shaped curve, peaking when individuals are in their early 50s, with
consumption smoothing over the person’s lifetime (Figure 24). Prime saving age in
the US is between 34 and 64 years. From 70 years on seniors generally start
dis-saving.
Demographic trends
Flows from national accounts do
not indicate dis-saving by seniors in
Asia
A very different picture emerges in Asia, where data is available (Figures 25 to 27). Percapita private savings for Japan, India, the Philippines, Taiwan and Korea do decline
but later than would be expected under the LCH. Asset income remains significantly
more positive than expected, something we also see in the US. Only in Indonesia is
there dis-saving. Seniors there would have to borrow or sell assets to fund their
consumption. The results are very similar in some Latin American countries (Figures 28
and 29). Private savings, in particular in Brazil, remain elevated in old age.
Factors other than ageing are important
Numerous empirical studies have tested the LCH predictions. For Japan and Korea,
for example, analysis based on time-series and cross-country data finds that
demographic effects on household savings are significant, with seniors saving less
(World Bank, 2012). However, many of these studies also confirm that other
structural and cyclical factors are equally or more important in explaining savings in
the short to medium term. One prominent study of OECD countries (Weil 1994)
shows that demographics explained as little as 11% of the variation in savings
across countries.
Figure 23: Raising retirement age extends cliff
Figure 24: US saving follows the LCH profile
Ratio of working age to children and seniors
Annual per-capita flows by age, 2003, USD
3.0
China
(working age
15-70 from
2025)
2.5
50,000
Labour income
40,000
Private
consumption
30,000
Private asset
income
20,000
2.0
10,000
1.5
China
(working age
from 15-64)
Source: Japan Statistics Bureau, Standard Chartered Research
8 February 2017
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1.0
0
-10,000
-20,000
Private
Private saving
transfers
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
Source: National Transfer Accounts, Standard Chartered Research
18
Special Report: Ageing – Passing the baton to Asia
Figure 25: No senior dis-saving in Japan
Figure 26: Private saving remains high in India
Annual per capita flows by age, 2004, yen
Annual per capita flows by age, 2004, rupee
5,000,000
40,000
Labour income
4,000,000
Private asset
income
3,000,000
Private
consumption
2,000,000
30,000
Private
consumption
20,000
10,000
Private saving
1,000,000
0
Private asset
income
Labour income
0
Private saving
Private
transfers
-1,000,000
Private
transfers
-10,000
-2,000,000
-20,000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
Source: National Transfer Accounts, Standard Chartered Research
Source: National Transfer Accounts, Standard Chartered Research
Figure 27: Indonesia is bucking the trend in Asia
Figure 28: High senior saving and asset income in Brazil
Annual per-capita private saving, normalised by labour income
of 30-49 year olds
Annual per-capita flows by age, 1996, Brazilian real
10,000
Philippines
1999
0.8
0.6
Private asset
income
8,000
6,000
Private
consumption
4,000
0.4
Taiwan, 1998
Labour income
2,000
0
0.2
Korea 2000
0.0
Indonesia
2005
-0.2
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
-2,000
Private saving
-4,000
Private
transfers
-6,000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
Source: National Transfer Accounts, Standard Chartered Research
Source: National Transfer Accounts, Standard Chartered Research
Figure 29: Senior Mexicans also have high savings
Figure 30: Saving rates stay high in Thailand
Annual per-capita flows by age, 2004, Mexican peso
Household saving rate from household survey, by age of
household head, 2013
80,000
60,000
Labour income
Private asset
income
Private
consumption
40,000
Private saving
30
20
20,000
0
10
-20,000
Private
transfers
-40,000
-60,000
0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88
Source: National Transfer Accounts, Standard Chartered Research
8 February 2017
0
22
27
32
37
42
47
52
57
62
67
72
Source: World Bank, Standard Chartered Research
19
Demographic trends
1.0
Special Report: Ageing – Passing the baton to Asia
Studies based on household surveys, in contrast, refute some of the main predictions
of the LCH. In Thailand, household surveys suggest the saving rate rises from an
individual’s early 20s and while it does fall slightly after the age of 62, it remains
elevated (Figure 30). We get a similar outcome for China, where urban household
surveys show a U-shaped age-saving profile, whereby the savings rate is high in the
person’s early 20s but starts to drop before climbing back up from around the age of 45
(Chamon, 2010). For Japan, which has the world’s most aged population, surveys do
show saving rates falling for seniors, but there is little suggestion of dis-saving or largescale selling of assets. While the discrepancy between micro and macro data may
reflect differences in measurements of savings it nevertheless reinforces the
importance of other factors.
The empirical evidence for a strong correlation between asset returns and age
structure also does not clearly support the idea of seniors significantly drawing down
their financial assets (see Bosworth, 2004, Poterba, 2004). Research on advanced
economies is more readily available and suggests that decumulation of assets by
seniors is likely to be small, slow and subject to several offsetting forces.
Motivation for private saving for old age
Demographic trends
Other sources also do not clearly
support the proposition that seniors
significantly draw down savings
Drawing together the NTA, micro (household surveys) and macro analysis of
demographics indicates that national household savings rates in Asia are likely to be
less affected by ageing than conventional wisdom suggests. This is particularly true
of the populations of EM Asia who have more reason to save during old age. The
impact of ageing on these countries will be mild at most in the coming decades. This
is also because most have just hit the demographic cliff. For the more advanced
economies the impact could be greater.
The LCH does not consider factors that provide additional incentives for higher
savings for old age. A key factor that could help maintain saving rates in advanced
and EM Asia is bequests, whereby individuals build and leave savings for the next
generation. For emerging markets, precautionary savings could also be playing an
important role. The lack of large public pension fund programmes or health-care
systems, or limited financial protection from health insurance, is an important
motivation for higher savings. This factor is likely to be weaker in more advanced
economies like Japan, Korea, Singapore and Hong Kong. Increased life expectancy,
a key driver of demographics in recent years, can also mitigate the drag on savings
as people save more to cover the extra retirement years.
Figure 31: Elderly Thais rely on their children
Source of income in households with senior members, 2013
Insurance, 1%
Other, 3%
Money from family,
36%
Inheritance, 2%
Interest on deposits,
4%
Rental income, 6%
Elderly/
disability living
allowance, 17%
Social security and
pensions, 31%
Source: Economics Intelligence Center, Standard Chartered Research
8 February 2017
20
Special Report: Ageing – Passing the baton to Asia
Going forward, Asia will have an increasing number of households with fewer
children, which means seniors will have to rely on their own savings to support
themselves rather than rely on their children. The elderly in Thailand, for example,
rely on financial support from children and grandchildren for more than one-third of
their monthly income (Figure 31). Now that families have fewer children, old people
will not be able to rely on this.
Growth will support savings
Current incomes in Asia may need
to be significantly higher to reduce
saving rates
Saving rates also tend to rise as incomes grow from low levels. In Asia, for example,
total saving rates have risen along with the rise in per-capita income to USD 10,000.
Incomes will have to be significantly above this threshold to trigger a material decline
in savings (Figure 32). Per-capita income in many major EMs in Asia remained
significantly below USD 10,000 in 2015 (Figure 33).
Some studies assert that financial deepening – especially in terms of greater
availability and use of insurance and pension arrangements – will put downward
pressure on household saving rates, in particular the need for precautionary saving.
While we do not disagree with this, we would argue that financial deepening is also
likely to be associated with higher income growth. This complex relationship between
Figure 32: Savings tend to accumulate with faster growth
Figure 33: EMs remain below the USD 10,000 threshold
Total saving rate, % (y-axis); per capita GDP (x-axis)
GDP per capita, USD, 2013
55
Savings % GDP
50
45
India
Korea
Thailand
Cambodia
Indonesia
Malaysia
Vietnam
Hong Kong
Japan
Philippines
China
Taiwan
60,000
50,000
40,000
40
35
30,000
30
20,000
25
20
10,000
15
Source: World Bank, Standard Chartered Research
8 February 2017
10,000
100,000
India
Thailand
China
Malaysia
Korea
Philippines
1,000
Indonesia
100
Japan
Per capita GDP (log)
0
Hong Kong
5
Singapore
0
10
Source: IMF, Standard Chartered Research
21
Demographic trends
ageing, growth and financial deepening therefore further reinforces projections of
little drag to household saving rates in the coming decades from ageing in major
emerging markets in Asia.
Special Report: Ageing – Passing the baton to Asia
Sizing up senior consumption
Consumption by seniors in emerging markets to rise sharply
The rising number of seniors in Asia and income growth will boost the over 65s’ total
personal consumption expenditure, which should rise dramatically in the coming
decades. This will help close the gap between senior consumption in emerging
economies and G7 counterparts (Figures 34 and 35).
Share of senior spending in major
emerging markets will almost
double in the next 15 years
We estimate that spending by the 65+ age group in China will rise to USD 2.8tn by
2030 from USD 0.4tn currently. At the same time, seniors in India will see their
consumption increase by more than 500% to USD 0.4tn. This will raise consumption
by the 65+ group in major emerging markets to USD 4.4tn by 2030 from USD 0.8tn
(Figure 34). The rising share of senior private-consumption spending should
Demographic trends
underpin this trend. We forecast it to increase to an average of 12% of total
consumption for the major emerging markets by the end of the next decade, almost
doubling from 7% in 2015. We expect China’s and Thailand’s share to rise to over
15% from around 10%. Their larger shares reflect their more advanced stage in
terms of ageing populations.
Figure 34: A surge in China’s senior market
Figure 35: Senior spending dominated by the US
Personal consumption expenditure, USD tn
Personal consumption expenditure, USD tn
5
South Africa
4
3
Philippines
8
Thailand
7
Malaysia
6
Indonesia
5
Turkey
2
Mexico
2015
2030
Source: GlobalDemographics, Standard Chartered Research
Italy
France
UK
4
Germany
2
Japan
India
1
US
China
0
Russia
0
Canada
3
Brazil
1
9
2015
2030
Source: GlobalDemographics, Standard Chartered Research
Figure 36: Seniors in emerging markets spend more on food and beverages
Share of consumption by spending category
Personal care
100
90
Education
80
Recreation
Communication
70
Transportation
60
Health
50
Household equipment
40
Housing utilities
30
Housing rent
20
Alcohol and tobacco
10
Clothing
0
Brazil
Thailand
India
China
Mexico
France South Africa
Japan
US
UK
Food and non alcohol beverage
Source: GlobalDemographics, Standard Chartered Research
8 February 2017
22
Special Report: Ageing – Passing the baton to Asia
Across emerging markets, seniors seem to concentrate much more of their
expenditure on basics such as food and beverages than in advanced economies
(Figure 36). But as their economies develop, we expect spending patterns to mirror
more closely what is happening in the West.
Today’s silver economy versus tomorrow’s
We must be careful about categorising seniors as one homogenous market segment.
People can be divided into different segments with different values and attitudes,
depending on their generation. In China, these differences will play a key role in the
future direction of its silver economy.
The over-70s in China are predominantly poor. They were affected by war and were
part of Mao’s big push to industrialise China. They are typically conservative, pricesensitive and unlikely to embrace Western brands. The next generation between the
ages of 55-69, known as the ‘Lost Generation’, experienced the Cultural Revolution.
They are starting to embrace consumerism; many of China’s elite who built today’s
modern China are in this group. Tomorrow’s silver economy is the generation from
35-54 years old. This group is open to Western brands, strongly invest in their only
child and are more educated than their predecessors. Further down the age structure
Seniors are already a powerful force in advanced economies
In developed markets seniors already make up a significant and increasing share of
wealth and spending. Their influence will grow even stronger in the coming decades.
Analysis by McKinsey & Company shows that for the US, by the end of this decade
only 11% of investable assets will be held by people younger than 45. The older
generation also make up a significant share of consumption in advanced economies.
We estimate that seniors in the G7 economies accounted for USD 3.8tn of spending
in 2015, which would make this group equivalent to the fourth-largest economy in the
world (Figure 35). Consumption evolves as people age and changes in consumption
patterns seem to be broadly similar across the major advanced economies. In the US
and Japan, spending on medicines, health services, and housing repairs and
maintenance are of more importance to older households (Figure 37).
Figure 37: Consumption preferences of the older cohort
Ppt difference in 2014 household spending between household heads aged 75-and-over vs 35-44
US
Japan
Nursing homes
11.1
Hospitals & physician services
6.0
In-home health services
3.8
Medical care
2.3
3.0
Fuel & utilities
Education
-1.6
Recreation
Motor vehicles
-1.7
Restaurants
Rental housing -2.1
2.4
1.7
-2.8
Rent
Recreational services -2.6
-4.1
Transport and communication
Restaurants -2.6
-4
6.5
Home repairs & maintenance
3.0
Medicine & drugs
Food
Education
-2
0
2
4
6
8
10
12
-6.5
-7.4
-10
-8
-6
-4
-2
0
2
4
6
8
Source: PGIM, Standard Chartered Research
8 February 2017
23
Demographic trends
in the 25-34 age group people are more tech savvy, focus more on leisure activity
and many have been educated abroad.
Asia’s policy response to ageing
Special Report: Ageing – Passing the baton to Asia
Policy reform in Asia
Governments in Asia have undertaken many reforms to tackle the challenges of a
rapidly ageing demographic. Our detailed analysis of some of the most aged or
ageing societies in the region suggests policy measures aimed at improving fertility
rates have so far been ineffective, while efforts to raise labour-participation rates
have yielded positive results, albeit modest. Major policy initiatives to retrain seniors
to improve their employability and productivity also seem to be limited to the
advanced Asian economies such Singapore, Japan and Korea. Note that take-up of
training by seniors is low.
Governments facing more immediate ageing pressures need to step up their efforts
to ensure sustainable institutional support – such as the provision of public health
care and a social-security system – to meet the rapidly growing demand from seniors
(Figure 38). This will likely test policy makers’ political resolve to push for bold
fundamental reforms.
For countries like India and Indonesia – still enjoying a demographic dividend – the
challenge is to maximise GDP growth by investing to raise productivity and also to
improve youth employment.
The challenges posed by an ageing population
Demographic trends in Asia are
challenging the traditional family
values system
Asia’s ageing process is occurring at the same time as the region undergoes rapid
economic development and increasing urbanisation, as reflected by high rates of
rural-urban migration. This will continue to bring about change in the traditional family
values system, whereby retirement care for elders is provided by their children.
Current low fertility rates mean that future generations of seniors can also expect to
have fewer children to look after them.
The 4-2-1 phenomenon in China
Figure 38: Health-care expenditure could rise rapidly
Figure 39: Low level of long-term care in Asia
Government health-care expenditure, 2015
Public expenditure on long-term care, % of GDP, 2015
Source: World Bank, UN, Standard Chartered Research
8 February 2017
3,000
4,000
UK
2,000
Germany
1,000
Healhcare per capita
Italy
0
Japan
0
-1,000
Singapore
US
5
S Korea
Spain
10
Thailand
China
Vietnam
Malaysia
India
Myanmar Indonesia
Brunei
Cambodia Philippines
Korea
15
Indonesia
20
India
Japan
25
% of 65+ in population
1.0
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0.0
R² = 0.8446
China
30
Source: ILO, Standard Chartered Research
25
Asia’s policy response
Countries like China and Thailand that are ageing rapidly will have limited time to
meet the increasing challenges to their health-care and social-security systems from
the large and growing senior population. Pressure will increase on social-services
agencies and on the pensions system. China, for example, faces a so-called ‘4-2-1’
phenomenon whereby each only child is responsible for two parents and four
grandparents. It is unlikely that the younger generation will be able or willing to afford
such a burden. However, institutions are not yet prepared for the change in the
Special Report: Ageing – Passing the baton to Asia
traditional values-based system. Long-term care services (designed to support
seniors perform daily activities independently) remain particularly weak in many parts
of Asia (Figure 39).
China and Thailand will need to implement policies that minimise the impact of the
structural decline in the labour force as their working populations shrink; this will
weigh on GDP growth in the coming decades (see ‘Demographic trends and
economic impact’ section). This will also be a priority for Asia’s advanced economies
that have already aged – Japan and Hong Kong – and Singapore and Korea, which
will become aged societies by 2020. In particular, they need policies that maintain or
improve labour-force participation rates. This is likely to be the quickest way of
mitigating the impact of ageing on labour supply.
Sustainability of pension systems
A key concern is that pension systems in Asia do not provide cover for most people.
This could lead to widespread old-age poverty. In Korea, for example, the poverty
rate among those aged 65 and above is 49.6%, the highest among OECD countries.
This reflects the lack of policy measures, as well as a social safety net to provide
adequate protection for the elderly after retirement. The share of the labour force
covered by mandatory pension systems is low across most of the region (Figure 40).
This is despite a high replacement rate or ratio of retirement income to pre-retirement
income in some countries, such as China and Thailand.
Despite major pension-reform efforts since the Asian Financial Crisis, without further
policy change pension Asia’s systems will remain unsustainable in the long run.
Estimates of cash-flow deficits (current contributions minus current benefits) in public
pension programmes based on current demographic trends suggest they will become
negative for Thailand by 2041. For China the deficit will be 3.5% of GDP by then,
1.4% for Korea and 1.7% for Vietnam (World Bank, 2015). According to the Chinese
Academy of Social Sciences pension deficits could materialise as early as 2030
for China.
A major overhaul of the systems may be required for some. According to the OECD
(2013), in order to continue to provide a high replacement rate and early pension
ages, especially for women, pension contributions would have to rise eventually to
50% of earnings in China to ensure the long-term viability of the public pension
system (Figure 41). For Vietnam, the contributions would have to rise to more than
40% and for Thailand almost 30%.
Figure 40: Low pension coverage in Asia
Figure 41: Long-term viability of pensions under strain
Coverage of mandatory pension scheme, % of labour force, 2012
The steady state contribution, % of earnings, 2015
100
90
80
70
60
50
40
30
20
10
0
50
40
30
20
10
Source: OECD, Standard Chartered Research
8 February 2017
China
Vietnam
Pakistan
Thailand
Philippines
Canada
Korea
US
Japan
India
Vietnam
Indonesia
China
Thailand
Philippines
Malaysia
Singapore
Hong Kong
OECD
0
Japan
Asia’s policy response
Pension systems are unsustainable
in the long term
Source: OECD, Standard Chartered Research
26
Special Report: Ageing – Passing the baton to Asia
Sound fiscal positions could buy some time
Scope to absorb rising health and
pension expenditure in the near
term
The immediate risks from age-related costs are somewhat mitigated by low
government debt for countries such as China, Korea and Thailand. This provides
some cushion, at least in the near term, against future increases in health-related
expenditure and subsidising the pension system, should it become necessary.
Furthermore, given most Asian economies have relatively low tax-to-GDP ratios,
there is room for governments such as China, Taiwan and Korea to raise taxes
without causing major economic distortions (Figure 42).
Without further policy change we could see a drastic deterioration in the fiscal
balance for some. Countries experiencing slower economic growth and an ageing
population are likely to see their fiscal health weaken. The Asian Development Bank
(ADB) estimates that in a scenario of unchanged policies, Korea’s fiscal balance
could deteriorate by over 10ppt by 2050 from a surplus of 1.3% of GDP in 2010. The
bulk of the deterioration is related to the change in the age structure of the economy.
Meanwhile, China’s strong economic growth prospects mean revenue should pick
enough to cover the additional public expenditure.
Japan will face a similar fiscal predicament to Korea in the coming decades; but with
an already weak balance sheet. Government debt in Japan is excessive, at just
below 250% of GDP. This limits the scope for further public support for seniors, even
in the near term. Singapore also has high debt, at over 105% of GDP, which would
limit its options; note, however, that its strong credit ratings from Fitch, S&P and
Moody’s are supported by a modest to high fiscal surplus.
Labour policies in response to ageing
Countries facing the most immediate challenges from ageing, including China,
Japan, Singapore, Korea, Taiwan and Thailand, have responded by adopting various
labour-market policy measures. These include attempts to improve fertility rates,
raise the participation of women and seniors and upgrade older workers’ skills.
Asia’s policy response
Figure 42: Fiscal positions are strong in Asia
2015
60
France
Tax revenue to GDP, %
50
Austria
Italy
Germany
40
Spain
UK
Japan
US
30
China
Thailand
Vietnam
S Korea
Malaysia
Philippines
Taiwan
Indonesia
20
Singapore
10
0
0
50
100
150
200
250 +
Debt to GDP, %
Source: IMF, Standard Chartered Research
8 February 2017
27
Special Report: Ageing – Passing the baton to Asia
Measures to improve the fertility rate
Measures to raise fertility rate are
among the most common response
to ageing
Asian countries have introduced many initiatives to boost low fertility rates over the
last few decades. Measures include tax subsidies, cash rewards and other financial
incentives. Singapore offers cash gifts for the birth of a second, third and fourth child.
Vietnam provides a lump-sum of two months’ pay within the social insurance system
for every newborn. Countries like Japan and Korea have implemented family-friendly
employment policies. Japan started on this path in the early 1990s.
Such measures have had very little success (Figure 43). Japan’s unsuccessful
attempts over a prolonged period to lift fertility rates suggest a broader policy
approach is required, which changes entrenched social norms. This includes
attitudes towards roles of men and women in society. Governments have been slow
to react. Korea, for example, launched its first major initiative to tackle low fertility
rates in 2006, well after they had declined to low levels. China only recently scrapped
its one-child policy, allowing all couples to have two children. We do not believe this
will be enough to significantly raise China’s fertility rates. In addition, surveys from
urban areas suggest only a small minority will take up this option at present.
Attempting to raise labour participation
Policy makers have also focused their attention on raising labour-force participation
rates by targeting specific groups. The biggest and immediate impact would come
from making work more accessible to women. While measures have been introduced
to encourage the participation and employment of seniors, the senior labourparticipation rate is already high for many countries (Figure 44). Japan introduced
subsidies to companies for hiring seniors in 2003; Korea introduced them in 2011 and
Singapore introduced grants and credits to companies to retain and re-employ
mature workers that same year. There are few studies on the effect of such policies
but in Japan the impact of age-related employment services has been small (World
Bank, 2015).
Female participation is high by international standards for many Asian economies but
the gap with men tends to be much wider than in the West (Figure 45). This points to
untapped potential. Governments have started to implement policies to encourage
women to return to work after giving birth. Paid parental leave is spreading across the
region, though coverage is limited because this is normally restricted to the formal
sector, which means many families are excluded. Maternity leave also tends to be
shorter: 98 days in China, three months in Thailand and six months in Vietnam. This
compares with the OECD average of up to one year.
Figure 43: Fertility rate in general has fallen across EM Asia
2000
2010
Brunei
4.5
China
Number of children per female population
Fertility rate, latest 2014
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
Philippines
Cambodia
Indonesia
Global
India
Myanmar
Vietnam
Malaysia
Thailand
Japan
Singapore
S Korea
0.0
Taiwan
Asia’s policy response
Raising female participation rate
will have the biggest immediate
impact
Source: World Bank, Standard Chartered Research
8 February 2017
28
Special Report: Ageing – Passing the baton to Asia
Countries like Korea, Singapore, China, Taiwan and Japan have launched various
initiatives – including child-care subsidies and allowances, targeted active labour
market programmes and employer incentives – to become more family friendly.
Japan’s and Korea’s experience with child-care provision has been positive (World
Bank, 2015). Nevertheless, the impact of many of these policies is limited by
attitudes towards childrearing and other care commitments. Singapore is trying to
address this through public information efforts and Japan through its 2005 Gender
Equality Law. Note that some parts of Japan’s tax system discourage full-time work
for women. For example, it provides dependent tax exemptions for heads of
households (usually men) as long as the spouse earns below a modest
income threshold.
Upgrading senior skills
Asia’s advanced economies are
leading the way in senior training
initiatives
Lifelong learning systems are underdeveloped in Asia, with the region’s advanced
economies much more active than others in implementing training programmes for
seniors. Singapore’s SGD 4.6bn Lifelong Learning Endowment Fund is committed to
education and retraining of workers, including the older generation. In addition,
government policies provide direct financial assistance to employers who train
older workers.
In Korea, the Employment Promotion Plan promotes the training of seniors, including
a requirement that large firms retrain older works forced out of their jobs and granting
seniors the right to request unpaid educational leave. Korea also offers job training
subsidies to employers who provide training opportunities. Similarly, Japan has
implemented various measures over the years under its Basic Policy of Employment
Measures for the Elderly and the 2012 revised Act on Stabilization of Employment of
Older Persons.
However, older workers’ participation in training programmes is low, though it is not
Figure 44: Senior participation rate is high in Asia
Figure 45: Women’s participation rate is high for many
Labour-force participation rate by the 65+, %
Labour-force participation, %, 2014
30
80
Women Men
70
60
20
50
40
10
30
20
Source: OECD, ILO, Standard Chartered Research
8 February 2017
Taiwan (2007)
UK (2015)
OECD (2015)
US (2015)
China (2010)
Japan (2015)
Singapore
(2015)
Thailand (2014)
Korea (1999)
0
10
0
China
Thailand Singapore
UK
US
Korea Hong Kong
Source: World Bank, Standard Chartered Research
29
Asia’s policy response
clear if this is driven by employer attitudes or weak demand. A World Bank report
suggests that only 19% of those aged between 50 and 64 took up training
opportunities in Singapore, compared with 37% for those aged 20-29. Similarly, in
Korea less than 10% of workers aged 50-64 took part in any form of training, less
than half the rate for other workers. For the US and Nordic countries the equivalent
rate was 40% (World Bank, 2015).
Country focus – The ageing societies
Special Report: Ageing – Passing the baton to Asia
China
Current demographic trends
Se Yan +86 10 5918 8302
[email protected]
Senior Economist
Regional or FICC Research
Standard Chartered Bank, China
The one-child policy is the main
reason for the decline in China’s
labour supply
One-child policy lowered the fertility rate
China has experienced a transition from high to low birth rates since the 1970s, when
the government began enforcing the one-child policy. Women were generally allowed
to have only one child, and additional births were heavily fined. As a result, the
fertility rate slumped to around 1.5 recently from over two in 1980 and four in 1973
(Figure 46), according to the China Statistical Yearbook. This triggered a drastic
slowdown of population growth. According to the UN World Population Prospects
(2010), China’s annual population growth rate averaged only 0.47% between 2005
and 2010 (Figure 47). During the same period, the average annual population growth
rate was 0.41% in developed countries and 1.60% in developing countries ex-China.
Relaxation of the one-child policy is unlikely to reverse the trend
In October 2015, China announced the abolition of the one-child policy and the
introduction of a two-child policy to be universally enforced. This will be insufficient to
reverse the imminent ageing problem and raise the fertility rate significantly, in our view.
Various socioeconomic factors act as disincentives to having multiple children. These
include the soaring financial and opportunity costs of raising children, women’s growing
role in the workforce, and changing social expectations. The shift to the two-child policy
will raise the newborn population from 16mn to 21mn at most in 2016, and this effect
will fade over time, according to a 2012 research paper published in Sociology
Research. By 2030, the increase in the newborn population due to the two-child policy
is projected to be only about 1mn.
Ageing – Getting old before getting rich
Getting old before getting rich is a
threat to China’s long-term growth
potential
The UN estimates that as a consequence of low fertility, 15.2% of China’s population
was over 60 and 9.6% was over 65 in 2015. This trend is set to increase: China’s
elderly population (over 65) will exceed 204mn by 2050, accounting for almost 30%
of the total population. The rise in the proportion of the elderly increases both
household and fiscal burdens. According to the Chinese Academy of Social
Sciences, as many as 14 provinces (out of 31) are currently experiencing pension
deficits. Nationwide, the pension surplus stands at RMB 3.1tn. It estimates pension
deficits could appear as early as 2030, and by 2050 the accumulated shortfall could
amount to 90% of China’s GDP. In addition to direct pension costs, other expenses,
such as health care, will rise as the population ages.
Figure 46: China’s population growth rate and total
fertility rate
Figure 47: Population, labour force and college graduates
Millions of people (LHS); thousands of people (RHS)
8
35
7
1,400
6
1,200
5
1,000
4
800
3
600
2
400
1
200
30
25
20
Population
growth rate
(LHS, %)
15
10
5
0
Total fertility
rate (RHS)
-5
-10
1949
1956
1963
1970
1977
Source: CEIC, Standard Chartered Research
8 February 2017
1984
1991
1998
2005
0
2012
1,600
7,000
Total
population
6,000
5,000
4,000
Labour force
(age 15-59)
College
graduates
(RHS)
3,000
2,000
1,000
0
0
1950 1958 1966 1974 1982 1990 1998 2006 2014 2022 2030
Source: CEIC, Standard Chartered Research
31
The ageing societies
40
Special Report: Ageing – Passing the baton to Asia
Challenges and opportunities
Fading demographic dividend calls for economic transition
Labour shortages and rising wages
are eroding profit margins in
China’s manufacturing sector
China’s abundant supply of unskilled labour, low wages, a relatively high-quality labour
force, and a low dependency ratio all contributed to sustained double-digit growth until
2008. However, China’s demographic dividend, driven by a large quantity of unskilled
labour, has faded rapidly in recent years. The size of the labour force fell to 911mn in
2015 from 937mn in 2012, leading to a labour shortage.
The labour shortage has resulted in dramatic wage growth. Urban wage growth
started to pick up steam in the late 1990s. From 1998 to 2010, average real wages
grew 13.8% p.a., exceeding real GDP growth of 12.7%. By 2008, China’s wages
were the second-highest in East and Southeast Asia after the Philippines. Wages in
India and Indonesia were only about 41% and 34% of China’s level, respectively.
Sharply rising labour costs and labour shortages are eroding profit margins in China’s
manufacturing sector, which has previously driven growth. Many companies have
shut down or moved out of China due to rising labour costs. For example, in 2000,
40% of Nike sports shoes were made in China and 13% were made in Vietnam,
according to the company’s annual statements. By 2013, China’s share had fallen to
30%, while Vietnam’s had surged to 42%. Adidas has shut all of its factories in
China. In April 2015, Microsoft shut down its Nokia production lines in Dongguan, a
manufacturing hub in Guangdong province, and moved production to Vietnam; about
9,000 workers lost their jobs.
Transition to a quality-based demographic dividend
The surge in college graduates will
fundamentally change China’s
demographic structure
In 2010, only 3.9% of China’s labour force had a college education, compared with
an average of 29.6% in OECD countries. In 1999, the central government pledged to
rapidly expand tertiary education, aiming to raise the college enrolment rate from 9%
to 15% by 2010. The subsequent expansion of higher education was even faster
than planned. College enrolment increased by 43% in 1999. By 2014, the number of
college graduates reached 6.59mn, almost eight times the 1999 level. The college
enrolment rate – the percentage of secondary school graduates admitted to college –
also surged to nearly 90% in 2014 from about 43% in 1999 (Figure 48).
This unprecedented growth in college education is reshaping China’s demographic
structure. About 60mn college students have graduated in the past 15 years. As
population growth slows, China’s unskilled labour pool will gradually decrease,
replaced by a skilled, young, educated labour force. We estimate that another 120mn
college graduates will enter the job market in the next 15 years. This number,
combined with almost 60mn graduates in the past 15 years and 40mn from the
The ageing societies
previous period, means China’s labour force will have 220mn college graduates by
2030. The total labour force is likely to have declined to about 800mn by then, based
on UN estimates. This will take college graduates to about 27% of the labour force –
around the same level as in Germany, France and the UK today. China will have the
world’s biggest pool of educated labour, opening up vast potential for future
economic growth.
8 February 2017
32
Special Report: Ageing – Passing the baton to Asia
Industrial upgrade and urbanisation to sustain long-term growth
A new demographic dividend based
on the quality of labour will help
sustain growth in the coming
decades
The surge in the supply of skilled labour should support long-term economic growth.
However, China’s current socioeconomic structures were designed to suit the country’s
old demographic profile. These need to be adjusted to boost the economy in the short
run and lay the foundation for long-term growth. Properly leveraging China’s emerging
educated labour force should sustain GDP growth of at least 5% by 2030, in our view.
First, an industrial upgrade is needed to provide the fast-growing skilled labour force
with sufficient job opportunities. China’s secondary industry still accounts for over 40%
of GDP, and about 70% of this is heavy industry. A disproportionate number of China’s
manufacturing firms still use old technologies suited to unskilled labour. Meanwhile,
many college graduates have difficulty finding suitable jobs. Adopting skill-intensive
technologies would allow companies to take advantage of the emerging high-quality
workforce and move into higher-end manufacturing, generating wider profit margins.
Second, a rapid increase in the number of college graduates requires faster
urbanisation. The urbanisation rate based on place of residence rose to 56% in 2015
from 20% in 1980. However, the urbanisation rate based on China’s hukou household
registration system was only about 35% (Figure 49). The hukou system is tied to a
variety of social-security benefits, and the failure to extend these benefits to migrants
has impeded rural-urban migration. Some 270mn migrant workers are unable to obtain
hukou and stay permanently in the cities where they live and work, slowing the rise of
China’s big cities.
Apart from the four Tier 1 cities – Beijing, Shanghai, Guangzhou and Shenzhen – most
others are relatively small and cannot provide sufficient job opportunities for college
graduates. Surveys show that more than 60% of current college graduates intend to
work in the four Tier 1 cities. The rise of more big cities would create economies of
scale and boost the development of the services sector – a crucial step in China’s
transition to a services-based, consumption-driven growth model.
The rising college-educated population also provides new investment opportunities for
both the central and local governments. Until now, government investment has focused
disproportionately on infrastructure, such as transportation and telecommunications. In
the next stage, investment in urban amenities and high-end services and facilities such
as hospitals, stadiums, sports fields, theatres, parks and shopping centres is required
to meet demand from the surging middle class, contributing to long-term growth.
Figure 49: China’s urbanisation rate (%)
Figure 48: College enrolment in China (%)
10,000
100
Secondary school graduates (mn)
Students admitted to college (mn)
Enrolment rate (RHS, %)
55
80
6,000
50
Residencebased
urbanisation
rate
The ageing societies
8,000
60
45
40
60
4,000
35
30
40
2,000
25
Hukou-based
urbanisation
rate
20
Source: CEIC, Standard Chartered Research
8 February 2017
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
20
1990
0
15
10
1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013
Source: CEIC, Standard Chartered Research
33
Special Report: Ageing – Passing the baton to Asia
Japan
Current demographic trends
Tony Phoo +886 6603 2640
Japan’s population is the world’s oldest. It became a hyper-aged society (defined as
[email protected]
Senior Economist
Regional or FICC Research
Standard Chartered Bank, Taiwan
those in which more than 21% of the population is 65+) in 2007 (Figure 50).
According to the UN, 26% of Japan’s population is aged 65+, well ahead of secondplaced Italy, where the share of seniors was 22% of the total population in 2015
(Figure 51). This group is expected to rise to almost 40% of Japan’s population by
2050. Meanwhile, Japan’s fertility ratio – at 1.4 – is lower than many other developed
countries (1.9 for the UK, the US and Australia). The labour force has been declining
since 1999, and stood at 65.3mn in 2012 (before Abenomics) from 67.8mn in 1999.
Total employment shrank by 3% during the same period.
The over 65s will account for almost
40% of the population in 2050
Japan’s working-age population has declined consistently since 1996, coinciding with
a period of sluggish domestic economic growth after the asset bubble burst. Japan’s
shrinking working-age population has had a negative impact on growth over the last
few decades. At the same time, its urbanisation process is complete, providing little
channel for labour productivity to improve.
Challenges
Ageing did not diminish high total private savings
Japan’s consumers are well-known savers, which played a key role in fuelling the
country’s rapid industrialisation. Persistently high private savings emerged in the mid1970s as investment moderated following the post-war boom. Household savings
actually started to fall due to the ageing population (though, as noted earlier, not as
much as predicted by models such as the LCH), but corporate savings continue to
rise. High private-sector savings necessitated higher government spending, leading
to bigger budget deficits. Weak consumption and investment also necessitated easier
monetary conditions to support growth.
High private savings need quality
investments
A high savings rate is not problematic if there are enough quality investments to
absorb these savings. For Japan, however, quality investments became much
scarcer after the economy had boomed for more than two decades. Misallocation of
resources – to conglomerates in Japan’s case – crowded out more efficient
investments. Investment demand is also bound to decelerate as an economy shifts
Figure 50: Japan has become an ageing society
Figure 51: Japan has a higher ageing population than
other countries
% of total population
Percentage of ageing population % of total population
The ageing societies
30
850
Labour force
mn (RHS)
25
800
45
40
2030
35
20
750
Above 65
years old
15
2050
2015
30
25
700
10
20
15
Below 10
years old
5
0
1971
50
650
5
600
1976
1981
1986
1991
Source: CEIC, Standard Chartered Research
8 February 2017
1996
2001
2006
2011
10
0
JP
US
AU
GE
UK
CN
Source: UN, Standard Chartered Research
34
Special Report: Ageing – Passing the baton to Asia
from capital-intensive manufacturing growth to services growth. External shocks,
from the oil shock of the 1970s to the GFC in 2008, create overcapacity that can be
exacerbated by short-term policy responses aimed at avoiding mass bankruptcies
and layoffs.
One outlet for excess savings is investment abroad, which commonly translates into
a large current account surplus. A persistent trade imbalance, however, is never
desirable or sustainable. In Japan’s case, the 1985 Plaza Accord triggered the
beginning of the Endaka (ultra-strong yen) era; this not only hit the export-dependent
economy hard but had plenty of other unwanted side effects: the authorities turned to
fiscal pump-priming as the strong currency hurt the economy; Interest rates were
lowered to counter an appreciating JPY, fuelling asset bubbles; exchange controls
were relaxed to encourage capital outflows for the same reason, kick-starting an
irreversible wave of liberalisation in an otherwise largely closed and tightly regulated
financial sector.
The fiscal cost of ageing
Social-security spending has
doubled since FY98
Japan’s ageing population will affect the local economy via fiscal channels. It has
significantly increased the government’s fiscal burden in the past two decades.
Social-security spending doubled to JPY 32tn in FY15 (year ended March 2016) from
FY98, accounting for 42% of total primary fiscal revenue (Figure 52). On the back of
rising social-security spending and the need to support growth, public debt issuance
also increased rapidly, surpassing 250% of GDP in FY15 (Figure 53).
Countering the ageing population
Finding jobs is hard for older workers
Older workers are one of three categories of workers in Japan who have unrealised
potential. The other two are female workers and non-regular workers. In 2015, the
participation rates for those aged above 65 was 22.1%, well above the OECD
average of 14%. However, Japan also has the highest unemployment rate for this
age group. This suggests that the elderly are motivated to find jobs, but there may
not be many opportunities for them to continue working once they retire.
Those aged 60-69 are mainly the first baby boomers, born just after WWII. Asked
until what age they want to continue working (the current official retirement age is 62;
it will be raised to 65 by 2025), 45.3% want to work until age 65 and 22.9% want to
work as long as they are in good health, according to one government survey. So far,
Figure 52: Social-security spending
Figure 53: Public debt is on the rise
JPY bn, % of primary fiscal revenue (RHS), fiscal year
% of GDP, fiscal year
35,000
45
% of total
(RHS)
25,000
35
JPY tn
30
20,000
25
15,000
20
15
10,000
10
5,000
5
0
0
1998 2000 2002 2004 2006 2008 2010 2012 2014
Source: CEIC, Standard Chartered Research
8 February 2017
250
Gross
government
debt
200
150
Net
govenrment
debt
100
50
0
1998
2000
2002
2004
2006
2008
2010
2012
2014
Source: IMF, Standard Chartered Research
35
The ageing societies
40
30,000
300
Special Report: Ageing – Passing the baton to Asia
some 95% of companies subject to a 2006 elderly employment law have
programmes to accommodate workers aged 60-65. However, fewer than half are
able to offer jobs to all the 60-year-olds who want them. Some have been unable to
provide jobs that are attractive enough.
Older people want to work and
many are highly qualified
Older people in Japan are generally highly motivated and qualified for work, even
after they retire. Many of the first baby boomers – who grew up during Japan’s era of
rapid economic growth and formed a high-quality workforce – gained impressive
professional skills during their working lives. More importantly, they are more
motivated to continue working after retirement than their peers in other countries.
Allowing seniors to work longer
According to Japan’s 2000 national census, the first of the ‘baby boomer’
generation makes up 5.4% of the population. Making good use of their talents
would help the job market and economic growth, as they are still capable of
working and can act as mentors for young talent. In addition, if the pension age is
raised accordingly, increasing employment among the elderly would help reduce
the fiscal burden, as social-security expenditure is one of the largest components
of government spending.
Allowing people to work up to 70
years old seems a reasonable plan
Either raising the mandatory retirement age, currently set at 62, or providing more
flexibility for employers to let those eligible for retirement remain employed as long as
they are medically able, are practical ways to reduce the unemployment rate among
the elderly. In 2011, the Ministry of Health, Labour and Welfare proposed allowing
people to work up to age 70 by increasing job facilities for those aged above 60 (the
life expectancy at birth in Japan was 82.7 from 2005-10, according to World
Population Prospects 2010). Although the proposal was rejected, we think the plan
could be part of future social-security reform aimed at improving Japan’s fiscal
position and creating sustainable economic growth. The cabinet also aims to
increase the employment rate for people aged 60-64 to 63% in 2020 from 57.0%
in 2009.
The ageing societies
Some worry that keeping seniors in the workplace will crowd out young workers or
new graduates. We do not agree. Senior workers can be a valuable resource to
younger employees, who lack experience and need guidance at the beginning of
their career paths. As employers will offer mainly non-regular jobs to the elderly, this
will not necessarily affect new joiners, who may assume more permanent roles.
8 February 2017
36
Special Report: Ageing – Passing the baton to Asia
South Korea
Current demographic trends
Kathleen B. Oh +82 2 3702 5072
[email protected]
Regional or FICC Research
Standard Chartered Bank, South Korea
Korea will be the third-oldest
society in the world by 2050 after
Japan and Spain
2016 was a critical year for Korea in terms of demography, marking the last year of
transition before the share of the population aged 65+ outnumbers those aged 0-14.
Of a total population of 51.5mn, the share of the young and the old stood at 13%
each as of 2016. From 2017, the gap between the two groups is expected to widen at
an accelerated pace as the older population outnumbers the young. According to the
Korean Statistical Services, it will widen by more than 10ppt by 2030 (Figure 54). The
share of the working-age population (15-64) stands at a healthy 73%; however, its
gradually expanding trend until 2016 is also expected to reverse from 2017.
Korea faces the most rapid pace of ageing in the world and urgently needs to
prepare for an ageing society. Life expectancy in Korea jumped to 82.2 (female 86,
male 80) in 2015 from 75 in 2000 (Figure 55). Meanwhile the birth rate fell to 9 (per
thousand persons) in 2016 from 9.8 in 2010. The fertility rate is the lowest among
OECD countries and fourth-lowest in the world at 1.24 children per parent (2015), far
below the global average of 2.5 and the replacement rate of 2.1. Korea is expected to
have the third-oldest population by 2050 after Japan and Spain, from 15th oldest
currently. More than 30% of the population will be over 65 in less than three decades.
Korea’s extraordinarily rapid pace of ageing poses both a demographic and
economic challenge.
Policy measures
Awareness is high. . .
Slowing the pace of ageing is
proving difficult
Measures to address Korea’s ageing population and low fertility rates have so far
proved ineffective, despite high levels of awareness among policy makers and the
public. Korea needs more urgent policy measures to prepare for the next 30 years.
The UN projects that Korea’s older population will reach 14% by 2018 from 7% in
2000, and almost 20% by 2025. It is crucial that policy makers implement measures
in the coming decade, before the senior age group exceeds 20% of the population.
Figure 54: Korea’s senior population will outpace its young population from 2017
Projected population by age, % of total population
0-14
100
25-64
65+
90
80
The ageing societies
70
60
50
40
30
20
10
2060
2055
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
0
Source: KOSIS, Standard Chartered Research
8 February 2017
37
Special Report: Ageing – Passing the baton to Asia
Issues surrounding ageing and the low birth rate are already being addressed by
local authorities. In addition, the Presidential Committee on Ageing Society and
Population Policy, chaired by the president and government ministers, was
established in 2003. Its policy goal of raising the fertility rate is explicit and significant.
Of the three administrations that have led the committee so far, the current one has
been the most active in terms of new policy implementation due to the growing
urgency to address the issue of Korea’s ageing population.
. . . but more fundamental reform is needed
However, the government faces criticism over fragmented implementation and
ineffectiveness. Policy measures introduced by the Committee provide micro-level
assistance to increase the birth rate. Latest measures include expanding state
financial support for couples seeking fertility treatment and increased paternity leave
payments for fathers with a second child. But little has been achieved so far: in H12016, the birth rate was down by 5.3% y/y.
A change in corporate culture is
needed
Further fundamental policy reforms to counter the effects of the ageing population
are urgently needed. A core challenge in terms of Korea’s low fertility rate is social
norms, specifically corporate culture. Long work hours and lack of work-life balance
in Korea result in more young couples delaying marriage and having a family. The
average age of couples embarking on their first marriage has increased by five years
in the past decade. It now stands at 31, a historic high.
In Korea, balancing a job with family life is extremely difficult. Employees are
expected to work long hours and corporate culture does not accommodate workers
with child-care needs. According to OCED data, the average number of hours
worked in Korea stands at 2,113 per worker per annum, far above the OECD
average of 1,763 (Figure 56). Hours worked in Korea are the third-longest after
Mexico and Costa Rica (2014). Moreover, just 20% of women took maternity leave in
Korea in 2014. Parental leave for men is viewed as taboo in Korea. As a result, less
than 1% of fathers took parental leave in the years up to 2014.
We believe it is crucial to introduce policies that will bring about a paradigm shift in
gender roles and social norms. As well as implementing micro-level measures,
fundamental policies that change people’s perceptions about raising children while
working and encourage family planning are also essential. Changing corporate
culture by enforcing compliance in terms of work-life balance is imperative.
Figure 56: Not enough time to raise children…work-life
balance is among the worst in the OECD
Figure 55: Koreans live longer now
Korea’s life expectancy, years
Average annual hours worked per worker per annum (2014)
2,500
The ageing societies
90
85
80
Hong Kong
SAR, China
2,000
Japan
United States
75
1,500
70
1,000
65
60
55
Korea, Rep.
50
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: World Bank, Standard Chartered Research
8 February 2017
500
0
GER
FRA
UK
CAN OECD
US
POR
KOR
MEX
Source: OECD, Standard Chartered Research
38
Special Report: Ageing – Passing the baton to Asia
Challenges and opportunities
Strengthening the old-age safety net is a slow process
Korea’s pension system, its culture of early retirement and limited labour protection
for the older generation has resulted in severe poverty among seniors. According to
the OECD, Korea has the highest relative poverty rate among those aged 65+ in the
OECD, at 49.6% in 2015 (Figure 57). As the world’s 13th-largest economy, with GDP
An unsustainable pension system
per capita over USD 27,000, such a high poverty rate reflects imbalance in Korea’s
social safety net. Despite growing concern about the ageing population, fundamental
policy measures are scarce.
Korea’s current pension system is unsustainable. It needs fundamental restructuring
otherwise the National Pension System (NPS) will likely be in deficit in 30 years’
(Figure 58). Pension beneficiaries are expected to outnumber contributors within two
decades; the government projects the reserve fund will run out by 2047. This will
pose a heavy financial burden on households. However, political wrangling over how
to proceed with the transformation and the fiscal space to pursue reform are
expected to slow any fundamental redesign of the NPS.
Korea’s extremely low retirement age poses another challenge in terms of sustaining
a social safety net for older age groups. Koreans typically retire from full-time
corporate jobs in their mid-fifties. It is considered normal to start looking for a new job
after age 40. While the employment rate for the 50+ age group is the highest in the
OECD, at 70%, these are rarely high-paid, high-growth jobs. The number of selfemployed elderly workers, or those in short-term, irregular positions and low-skilled
jobs at small firms is rising. They do not enjoy proper benefits or job security. Again,
changing corporate culture and encouraging a longer work-life is imperative. While a
wage peak system (which would create more jobs for old employees through gradual
wage reduction after a certain age) has been partially implemented in recent years,
only a limited number of workers are covered.
Figure 57: Poverty rates are high for Koreans over 65
Figure 58: NPS scheme will fall into deficit from 2047
Relative poverty rate, %
% of GDP
9
OECD
Korea
National average
Above 65
7
51-65
6
5
41-50
4
26-40
3
18-25
2
1
Below 18
0
10
Source: OECD, Standard Chartered Research
8 February 2017
Contributed income
Invested income
Total expenditure
The ageing societies
8
20
30
40
50
0
2015 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065 2070
Source: National Pension Research Institute, Standard Chartered Research
39
Special Report: Ageing – Passing the baton to Asia
Singapore
Current demographic trends
Edward Lee +65 6596 8252
[email protected]
Head, ASEAN Economic Research
Standard Chartered Bank, Singapore Branch
Singapore’s demographics are among the most challenging in the region. The local
population is ageing rapidly, life expectancy is lengthening, and the total fertility rate
is falling. The profile of the population has already changed dramatically over the
past 50 years (Figures 59 and 60). The positive news is that the government has put
in place policies ranging from immigration, retirement adequacy and lifelong
employment, to encouraging higher birth rates.
Demographics statistics for Singapore make for sombre reading:
1)
The dependency ratio has fallen steadily over the years (Figure 61). As of 2015,
the total dependency ratio (using those aged 15-64 as the supporting group) was
37%, of which the old-age dependency ratio was 16% and that for the young
was 21%. Compare this with 2000: the old and young dependency ratios then
were 10% and 30%, respectively. The number of people that can support the
65+ age group is getting smaller, while the number of young people that will
move into the 15-64 age group is shrinking.
Around 12% of the resident population (of about 3.9mn; the total population is
about 5.6mn) is now above the age of 64. This figure was only 7% in 2000. By
2030, it could rise above 20%.
Falling fertility rates, rising
singlehood, lengthening life
expectancy – all these add to
Singapore’s demographic challenge
The median age is increasing. As of 2016, the median age rose to 40 from just
24 in 1980. Birth rates are falling while improvement in health-care services
means that life expectancy is increasing. Life expectancy rose to 82.7 in 2015
from 72 in 1980.
3)
Singapore suffers from the classic case of falling fertility rates due to
urbanisation and previous policies to slow down population growth to prevent
over-population. The total fertility rate fell to 1.24 in 2015 (Figure 62); it was 1.60
in 2000. The last time it was above 2.0 (the replacement rate for each set of
parents) was in 1976.
4)
The increase in singlehood and late marriages compounds the demographic
weakness. For example, the proportion of males and females aged 30-34 years
that are single rose to 38% and 26%, respectively, in 2015 from 21% and 17% in
1980. The median age for grooms and brides rose to 30 and 28, respectively, in
2015 from 27 and 24 in 1980. Both the rise in the number of singles and later
family formation are contributing to the decline in birth rates.
Figure 59: Resident population by age and sex in 1970
Figure 60: Resident population by age and sex in 2016
Persons, ’000
Persons, ’000
Female
70-74
The ageing societies
2)
Male
Female
70-74
60-64
60-64
50-54
50-54
40-44
40-44
30-34
30-34
20-24
20-24
10-14
10-14
0-4
Male
0-4
200
150
100
50
Source: CEIC, Standard Chartered Research
8 February 2017
0
50
100
150
200
200
100
0
100
200
Source: CEIC, Standard Chartered Research
40
Special Report: Ageing – Passing the baton to Asia
Policy measures
Retirement adequacy
The government places considerable focus on ensuring retirement adequacy.
Challenging demographics require workers in Singapore to either work longer (and
retire later), save more or retire on less. The social-security system focuses largely
on home ownership, pensions, health-care assurance and workfare (to supplement
the incomes of low-wage workers).
Pay-as-you-go pension system
limits financial risk from
demographic challenges
The national pension fund, the Central Provident Fund (CPF), is a key pillar of
Singapore’s social-security system. It is a mandatory social-security savings scheme.
Both employers and employees must contribute. A key challenge to retirement
adequacy is financial sustainability. In Singapore’s case, the pension plans are based
on workers’ own savings, as opposed to the pay-as-you-go scheme in many advanced
economies. This limits the financial risk from its demographic challenge, where the
number of elderly versus the working-age population is increasing.
The CPF is primarily allowed to be used for retirement, housing and health-care
needs. The system has been fine-tuned over the years. For example, to address
inflation and higher living standards, the government has steadily increased the
minimum sum in the CPF. The minimum sum is the amount that CPF members must
set aside for retirement needs when a member turns 55. The minimum sum will help
members receive a monthly payout when they reach the retirement age of 65.
The government has various schemes in place to support the elderly as part of the
social safety net. For example, the Silver Support Scheme was implemented to help
the low-income elderly. The scheme mainly targets the bottom 20% of Singaporeans
aged 65 and above. Eligibility criteria primarily involve income levels (including
lifetime employment) and asset holdings. Payouts can range from SGD 300-750 per
quarter. There is also the ComCare Long Term Assistance programme to provide
additional support for those on low incomes (including the elderly).
Housing policies set to encourage
parenthood
Singapore’s high home-ownership level has helped limit the problem of seniors
having to set aside resources to pay for rent. However, it has also resulted in a
situation where an elderly senior may be asset-rich but cash-poor after retiring. The
government introduced a Lease Buyback Scheme to address this issue. Broadly, an
elderly person can monetise their home while still living there by selling part of the
remaining lease back to the government. The payment will go into the member’s CPF
retirement account to supplement their retirement income.
Figure 61: Age-dependency ratios
% of working-age population (age 15-64)
Figure 62: Fertility rate
Births per women
100
7
90
5
70
60
50
Dependency
ratio (young)
40
4
Dependency
ratio
30
20
10
The ageing societies
6
80
3
2
Dependency
ratio (old)
0
1
0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: CEIC, Standard Chartered Research
8 February 2017
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: CEIC, Standard Chartered Research
41
Special Report: Ageing – Passing the baton to Asia
Encouraging parenthood
Singapore has numerous policies to encourage marriage and parenthood. Finding a
new house is part of getting married in Singapore. The government allocates a large
portion of new public housing for applicants buying their first home. Note that about
80% of Singaporeans stay in public housing. First-time couples buying a new
public housing property can also apply for housing grants to lower the cost of owning
a house.
The government provides a range of benefits to encourage people to have children.
For example, parents can claim tax relief based on the number of children they have.
In addition, subsidies are available for centre-based infant care and child care. To
move beyond financial incentives, the government has also introduced measures to
improve work-life balance to encourage couples to have children, including numerous
types of family-related leave (partly funded by the government) available to parents.
Staying employed
Encouraging old-age participation
in the labour force
The government has been encouraging workers to delay their retirement age and
employers to continue to hire older workers. This approach addresses multiple issues
related to ageing, including labour-supply constraints, resources to take care of the
elderly, and keeping the elderly in an active lifestyle and engaged with society.
The participation rate for elderly workers has increased steadily. For example, in
2001, the participation rate for residents aged 60-64 was 35.6%; this rose to 62.4% in
2015 (Figures 63 and 64). This has helped raise the overall participation rate of the
resident population.
The current retirement age for Singaporean residents is 62, but employers must offer
re-employment to eligible employees up to 65. From July 2017, the government will
raise the re-employment age to 67 (subject to various eligibility criteria). In fact, the
concept of a retirement age may require a total re-think in the future. To encourage
employers to rehire seniors, the government provides a temporary Special
Employment Credit to offset a portion of the worker’s wages.
To improve employability, various schemes are available to help workers
continuously train and upgrade their skills. For example, the Workfare Training
Support scheme helps to subsidise course fees (based on eligibility criteria), although
this scheme is not limited to elderly workers.
Figure 63: Labour-force participation rate by age
Figure 64: Labour-force participation rate
%
%
100
80
70
25-29
50-54
55-59
20-24
60
60-64
65
65-69
60
The ageing societies
90
80
50
40
30
75
Participation
rate - Male
70
Participation
rate - Resident
Participation
rate - Female
55
20
50
10
0
45
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Source: CEIC, Standard Chartered Research
8 February 2017
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Source: CEIC, Standard Chartered Research
42
Special Report: Ageing – Passing the baton to Asia
Immigration is important
Immigration is another measure Singapore uses to address its demographic
challenge. As of 2016, Singapore’s total population was 5.6mn: 3.4mn citizens,
0.5mn permanent residents (PRs) and 1.7mn non-residents (Figure 65). About 80%
of non-residents are part of the labour force. The remaining 20% are dependents
and students.
Non-residents account for almost
half of the labour force
Non-residents make an important contribution to the labour force, accounting for
about 40% of the 3.6mn total. Resident participation rates were already at a record
high of 68.3% in 2015, so room to utilise the resident labour force may be limited.
Besides employing foreign labour, immigration policies are used to augment the
resident population. Resident population growth is slow; the growth rate for
Singapore’s citizens has only been about 0.9% per annum since 2010. The
government has granted around 20,000 new citizenships and around 30,000 PRs per
annum in recent years. The majority of these are to people below 40 years old, which
helps to augment the productive demographic.
Figure 65: Non-resident vs citizen vs permanent resident
Persons, ’000
4,000
3,500
Population: Mid Year: Non-Resident
Population: Mid Year: Residents: Citizen
Population: Mid Year: Residents: Permanent Resident
3,000
2,500
The ageing societies
2,000
1,500
1,000
500
Jan-91
Jan-92
Jan-93
Jan-94
Jan-95
Jan-96
Jan-97
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
0
Source: CEIC, Standard Chartered Research
8 February 2017
43
Special Report: Ageing – Passing the baton to Asia
Thailand
Current demographic trends
Usara Wilaipich +662 724 8878
[email protected]
Senior Economist, Thailand
Standard Chartered Bank (Thai) Public Company Limited
Thailand is one of the world’s most rapidly aging societies, partly driven by a low
fertility rate. Thailand’s birth rate has dropped continuously. Only 759,838 births were
recorded in 2015 from more than 1mn births a year four decades ago. In line with
this, the average number of children per Thai woman fell to only 1.6, down from
about six children four decades ago. This is well below the population replacement
rate of just over 2. Meanwhile, the number of deaths was 524,424 in 2015. Given the
consistently lower birth-rate trajectory, annual births will likely drop below 700,000
during the next 20 years. This suggests the gap between birth rates and death rates
will narrow further. According to UN projections, Thailand’s population will peak at
68.6mn by 2025, and fall steadily to 66.1mn in 2040 and 62.4mn in 2050 (Figure 66).
The rapid decline of the working-age population
Thailand’s demographic structure is changing towards an ageing society. In 2015,
the median age of the Thai population was 38 years old. Following the drop in the
birth rate, the relative size of the older population will increase more rapidly. The UN
projects that Thailand’s older population (over 65 years old) will increase to more
than 20% of the total population by 2035 and to 30% by 2050, from only 10.5% in
2015. At the same time, the working-age population (15-64) will decrease rapidly to
less than 65% of the total population by 2035 and only 57% by 2050, from 70.9% in
2015 (Figure 67).
Policy measures
Several measures have been taken
since 1986 in preparation for an
ageing society
As the number of seniors increases more rapidly in the future, Thailand will have
relatively less time than other countries in the region to prepare for an ageing society.
Various challenges arise as a result of an ageing population, including rising demand
for health services, rising government revenue requirements to provide social
security and welfare, an increasing shortage of workers and rising labour costs.
Figure 66: Population will likely peak by 2025
Figure 67: Long-term trend of population structure
Mn people
% of total population
80
80
70
68
Ages 15-64
60
50
66
62
Source: NSO, The UN,, Standard Chartered Research
8 February 2017
2050F
2045F
2040F
2035F
2030F
2025F
2020F
2015
2014
2013
2012
2011
60
70
60
50
Ages 65 and
above (RHS)
40
64
2010
The ageing societies
70
40
30
30
20
20
10
10
0
2015
0
2020F
2025F
2030F
2035F
2040F
2045F
2050F
Source: The UN, Standard Chartered Research
44
Special Report: Ageing – Passing the baton to Asia
The Thai authorities are aware of these emerging challenges and have taken
numerous steps to address them since 1986. The National Committee for the Elderly
was set up to develop action plans to cover health, education, income and
employment, and social and cultural aspects during 1986-2001. Thereafter, the
National Commission on the Elderly, established in 1999, formulated the Second
National Plan for Older Persons (2002-21), which focuses mainly on preparation for
quality ageing, the wellbeing of older persons, and social security for seniors.
Separately, the government also provides financial assistance of THB 300 per month
to older persons, as well as the so-called ‘30 baht’ inclusive health-care scheme to
support their health care.
Thailand is stuck in the middle-income trap
Thailand needs to escape from the
middle-income trap before its
population becomes hyper-aged
Thailand needs to escape from the ‘middle-income trap’ that it has been stuck in for
several decades before its society becomes hyper-aged. After an initial spurt of ultrarapid economic growth from low levels during 1987-96, the Thai economy has slowed
abruptly since the Asian Financial Crisis in 1997, and is still unable to achieve
sustained rapid growth. Average GDP growth slowed of 5.2% from 1999-2007, and
then fell further to only 2.9% on average in 2008-15. This compares with 9.8%
average growth during 1987-96.
Improving labour productivity is critical to escaping the middle-income trap. According
to the National Economic and Social Development Board (NESDB), Thailand’s labour
productivity increased moderately by 2.9% during 2001-14, up 2.6% for the
manufacturing sector, 1.5% for the services sector and 1.4% for the agricultural
sector. Wages will rise rapidly in the long term as Thailand’s ageing society results in
a lower supply of skilled and unskilled labour. Therefore the country urgently needs
to boost labour productivity.
To make the transition to a high-income country, Thailand will also need to enhance
the attractiveness of the economy for domestic and foreign investment. After the
1997 financial crisis, the investment-to-GDP ratio dropped sharply to an average of
25% during 2000-15, from above 40%.
Challenges and opportunities
Additional challenges for manufacturing-based economies
The labour shortage in the
manufacturing sector will worsen
due to the decrease in the workingage population
The change in demographic structure towards an ageing society will pose a
significant challenge for Thailand’s export-led growth model. This is because the
labour shortage in the manufacturing sector is likely be exacerbated by the decline in
the working-age population. This is on top of existing problems facing the industry,
including an increasing mismatch between the demand for and supply of skilled
Thailand continues to have an oversupply of social science graduates, while lacking
science, engineering and health-sciences graduates. Furthermore, its younger
generation appears to have made a lifestyle change, preferring to work in the
services sector. This is a fairly recent trend, and is likely to further gain momentum.
Notably, there has already been a shift of skilled labour into the services sector
(Figure 68).
The export sector has been a key growth engine for Thailand in recent decades.
Exports accounted for 68.5% of GDP in 2011, before easing to 59.1% in 2015. This
8 February 2017
45
The ageing societies
labour, and a shift in the labour force to the non-manufacturing sector due to the
changing lifestyles of the younger generation.
Special Report: Ageing – Passing the baton to Asia
is a sharp increase from only 47% of GDP in 1997. The weaker export performance
in recent years is due to a combination of falling global demand and structural
problems in Thailand’s manufacturing sector, which has been slow to adapt to
changes in technology and global supply chains. As noted above, it is also partly due
to a shortage of skilled labour and underinvestment, especially in R&D and
new technology.
New opportunities amid challenges
Thailand is seeking to rebalance its
economy more towards services
The current government has acknowledged the problems facing the economy. It is
seeking to rebalance the economy away from its overdependence on exports and
manufacturing. It announced a set of comprehensive economic reforms in September
2016 to build Thailand’s ‘new economy’. The measures can be divided into four
main areas:
1) The implementation of mega-transportation projects – which would not only
enhance productivity, but make Thailand a centre of economic linkage in the region.
2) The promotion of new industrial clusters aimed at upgrading five existing
industries (automobile, smart electronics, high-income and health-care tourism,
agricultural and bio technology, and processed food), and establishing five new
ones (robots for industry, a comprehensive medical industry, an aviation industry,
bio energy and chemicals, and a digital industry).
3) The promotion of the Eastern Economic Corridor (EEC) project as a new
economic zone in ASEAN.
4) Measures to promote start-up businesses and digital-based businesses.
These reforms should help Thailand establish a more balanced economic structure
and move it more towards a services-based economy. Implementing them should
also help prepare for the ageing society. However, the government’s continued
commitment to implementation will be key to success.
Figure 68: Rising employment in the services sector
% of total employment
30
48
Services (RHS)
44
25
The ageing societies
46
42
40
20
Manufacturing
38
36
15
34
32
10
1998
30
2000
2002
2004
2006
2008
2010
2012
2014
Source: The UN, Standard Chartered Research
8 February 2017
46
Special Report: Ageing – Passing the baton to Asia
Taiwan
Current demographic trends
Tony Phoo +886 2 6606 9436
[email protected]
Senior Economist, NEA
Standard Chartered Bank (Taiwan) Limited
Fertility is among the lowest in the
world
Taiwan’s population is ageing rapidly. According to the National Development
Council (NDC), the number of people aged 65 and above will reach 14% of the total
population by 2018, which matches the UN definition of an old-aged society. Taiwan
will become a ‘super-aged’ society by 2025-26 when its share of senior citizens
reaches 20% of the total population.
Taiwan’s fast-declining birth rate is a major factor contributing to the island’s rapid
ageing process. Its fertility rate has been among the lowest in the world. The crude
birth rate was 9.1 (for every 1,000) in 2015, which is a sharp fall from 13.76 in 2000
and half the 18.04 registered in 1985. The figure is projected to drop to 7.4 in 2020
and 6.7 in 2030. Also, the number of children per female in Taiwan (1.18 in 2015) is
expected to fall to 1.1 by 2030, far below the 1.68 in 2000 and less than half the 2.51
recorded in 1980.
The growing gap between the number of senior citizens in the population and
number of young people (aged 0-14) is a concern. In 2016, Taiwan expects
number of seniors to outnumber the young for the first time (Figure 69). Unless
government takes bold steps to address its ageing society, its senior population
be more than twice the size of its young population by 2029-30.
the
the
the
will
Improved life expectancy will push dependency higher
Compounding the problem, Taiwan’s average life expectancy rose to 79.84 in 2014
from 76.46 in 2000. A better health-care system means it is likely to increase further
to 82.3 by 2030 (Figure 70). As a result, the overall dependency ratio, which stood at
35% in 2015, is expected to climb to 40% in 2020 and rise further to 54% in 2030.
While the dependency ratio for the young is expected to drop slightly to 17% in 2030
from 18% in 2015, the ratio for its senior citizens should more than double to a
worrisome 37% from 17% during the same period.
Additionally, Taiwan’s total population is projected to start declining during the period,
raising concern that the demographic transition will place significant stress on the
social and economic well-being of society as a whole.
Figure 69: Old outnumber young from 2016
Figure 70: Longer life leads to higher dependency
Persons, million
No. of years (LHS); dependency ratio (RHS)
7
82
80
5
76
3
74
Aged 0 to 14
1
0
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030
Source: NDC, MOI, Standard Chartered Research
8 February 2017
72
70
68
40
35
30
78
4
2
Life
expectancy
(LHS)
84
25
20
15
Seniors
dependency
ratio
66
1981 1986 1991 1996 2001 2006 2011 2016 2021 2026
10
5
0
Source: MOI, NDC, Standard Chartered Research
47
The ageing societies
6
Aged 65 &
above
Special Report: Ageing – Passing the baton to Asia
Policy measures
A very proactive response to
population demographic trends
Taiwan’s population policy has undergone a dramatic transformation in recent
decades. During the 1960s and 1970s, the government appealed for birth control
measures through a voluntary family planning programme owing to fears of adverse
consequences of rapid population growth. This resulted in a shift in public opinion in
favour of birth control that led to a sharp decline in fertility rates during the 1980s. By
1985, the number of children per female in Taiwan fell below the replacement level to
2.05 and has remained below 2.0 since (Figure 71).
A proactive government . . .
The government subsequently revised its Guidelines for Population Policy in 1992 in
a bid to maintain reasonable population growth amid growing concern that a rapidly
ageing society and labour shortage would result in mounting social challenges, as
well the impact on the economic well-being of society. In the following years, Taiwan
introduced various pro-natal measures, including financial assistance for dependent
children, special tax rebates, paid maternity leave, etc. The government encourages
cross-border marriages as well as welcoming new migrants.
In June 2016, Taiwan passed an amendment to the Employment Service Act to
make it easier for qualified foreign labourers to stay on without having to apply for
new work visas. This is one of several measures – including a proposal to attract
and/or retain foreign students and overseas talent – undertaken by the government in
a bid to stem the ‘brain drain’ after many Taiwanese professionals chose to relocate
overseas (including China) in search of better employment opportunities.
The main aim of the Gender Equality of Employment Law (2002) is to prevent
discrimination towards married and pregnant female workers. The Ministry of Interior
(MOI) in 2008 introduced further steps to encourage firms and businesses to adopt
family-friendly workplace practices as well as child-safe environments. Policy makers
hoped these measures would motivate working females to have children and help lift
the overall fertility rate.
. . . but with limited success
These measures have had little success thus far, as an increasing number of (highereducated) Taiwanese females prefer to stay single longer and postpone marriage, as
Figure 71: The average number of children per female has
remained below the replacement rate since 1985
Figure 72: The median age for marriage has risen for both
grooms and brides
No. of children per female
Median age
The ageing societies
7
33
Male
32
6
31
5
Female
30
4
29
3
28
27
2
26
1
25
0
24
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: MOI, Standard Chartered Research
8 February 2017
1997
1999
2001
2003
2005
2007
2009
2011
2013
Source: MOI, Standard Chartered Research
48
Special Report: Ageing – Passing the baton to Asia
well as being inclined to have fewer or no children. Also, career females in general
are reluctant to give up their financial independence, while the perceived high cost
associated with raising a child provides less motivation to start a family. The median
age for first marriage among Taiwanese women rose to 30 in 2013 from 25.7 in 2000
(Figure 72). As a result, the median age group for females giving birth to their first
child was 30-34 in 2015, versus 25-29 in 2000. As the number of seniors will
increase more quickly in the future, Taiwan has relatively less time than other
countries in the region to prepare for its ageing society. Various challenges may arise
as a result of an ageing population, including rising demand for health services,
higher government revenue requirements to provide social security and welfare, an
increasing shortage of workers and the rising cost of labour.
Challenges and opportunities
Pressure rising for further policy
action
According to the government, the number of senior citizens aged 65+ in Taiwan will
rise to 3.8mn in 2020, up from the current 2.9mn. By 2030, it is projected to surge to
5.6mn. In contrast, the working population (15-64) is expected to fall to 16.8mn in
2020, from the current 17.4mn. The figure is expected to fall further to 15.1mn in
2030. Taiwan’s rapidly greying demography implies a pressing need for policy
makers to act to ensure adequate financial support and sufficient health-care
resources to provide for its rising number of senior citizens.
Ageing is beginning to exert pressure on public funds
Taiwan’s senior citizens are generally considered to have adequate financial and
health-care support during retirement, mainly owing to the country’s National Health
Insurance (NHI) scheme, labour insurance and pension funds, as well as the public
service retirement fund. Nonetheless, the rapidly ageing society is exerting growing
stress on the overall financial health of several of these public funds, which we would
expect given other countries’ experiences (Figure 73). Spending on social welfare
amounted to c.20% of total public expenditure (or 3% of GDP) in 2015, versus less
than 10% (or c.2-2.5% of GDP) during the early 1990s. The NHI, for example, ran a
deficit for years until the government amended regulations in 2010 to include
supplementary contributions to the scheme.
Figure 73: Ageing population strains public spending
Figure 74: Low participation for 55+ age group
Aged 65+ % pop (X-axis); social welfare as % GDP (Y-axis)
Participation rate, %
14
100
10
Aged 25-49
90
y = 2.2327x + 2.2196
R² = 0.6053
80
Aged 50-54
70
8
Aged 55-59
60
6
50
4
40
2
30
Aged 60-64
20
0
0.0
0.5
1.0
1.5
2.0
Source: MOI, DGBAS, Standard Chartered Research
8 February 2017
2.5
3.0
3.5
4.0
1980
1985
1990
1995
2000
2005
2010
2015
Source: MOI, Standard Chartered Research
49
The ageing societies
12
Special Report: Ageing – Passing the baton to Asia
Taiwan’s highly regarded national social-benefits and retirement schemes are,
however, often also cited as the reason for the island’s earlier-than-normal retirement
age. The average retirement age among employees in the industrial and services
sectors rose to 58.1 in 2015 but remains significantly below the mandatory retirement
age of 65. In 2015, the overall labour participation rate for those aged 55-59 was
55.3%, dramatically lower than the 70.7% for those aged 50-54. The figure drops
significantly to a mere 36.3% for those aged 60-64 (Figure 74). This has deprived the
economy of sizeable number of productive workers. The government is currently
considering proposals for comprehensive labour reform in the hope of ensuring a
sustainable national pension system, as well as incentives for labour to stay
employed longer and/or beyond the current retirement age.
Investment opportunities from the ageing society
Ageing provides a boost to nursing
homes and related industries
Taiwan’s fast-greying population, though expected to exert significant strain on the
public health-care system, is also likely to provide new investment opportunities. The
number of nursing institutions catering for senior citizens more than doubled to 1,000
in 2012, from 475 in 2000 (Figure 75). We estimate demand will likely rise to 1,5002,000 by 2020 and to 2,500-3,000 in 2030. The demand for related nursing
professionals, which stood at 37,711 in 2012, is also likely to increase to 100,000150,000 by 2030. This presents significant new investment opportunities and
employment prospects. Taiwan’s new government, led by President Tsai Ing-wen,
has therefore earmarked long-term care for the elderly as one of its policy priorities.
Importantly, the successful implementation of the proposed elderly care programme
will also enable the economy to tap the underemployed female workforce. Taiwan’s
female workers aged 50-64 often cite the need to provide care for incapacitated
seniors at home as a major factor in choosing to stay unemployed. This deprives the
economy of many female professionals who chose to leave the labour market during
their prime years. Indeed, the average participation rate among female workers aged
50-64 was a mere 50% in 2015, versus over 80% for those aged 25-49 (Figure 76).
In contrast, the average participation rate for male workers aged 50-64 remained
high at 75% in 2015. Although this is unlikely to be enough to reverse the effects of
Taiwan’s rapidly ageing society, it could enable the economy to better manage the
challenge and risks associated with its transition to a ‘super-aged’ society by 2030.
Figure 75: Ageing drives demand for nursing homes
Figure 76: Labour-force participation falls with age
Units (LHS); no. of persons (RHS)
Women’s participation rate by age bracket (%)
The ageing societies
1,400
No. of nursing
institutions
(LHS)
1,200
1,000
800
No. of nursing
professionals
600
400
200
0
50,000
100
45,000
90
40,000
80
35,000
70
30,000
60
25,000
50
20,000
40
15,000
30
10,000
20
5,000
10
0
1997
2000
2003
2006
Source: MOI, DGBAS, Standard Chartered Research
8 February 2017
2009
2012
Aged 25-49
Aged 50-54
Aged 55-59
Aged 60-64
0
1980
1985
1990
1995
2000
2005
2010
2015
Source: MOI, Standard Chartered Research
50
Country focus – The demographic dividend
The demographic dividend
Special Report: Ageing – Passing the baton to Asia
India
Current demographic trends
Kanika Pasricha +91 22 6115 8820
[email protected]
Economist, India
Standard Chartered Bank, India
Anubhuti Sahay +91 22 6115 8840
[email protected]
Head, South Asia Economic Research (India)
Standard Chartered Bank, India
India’s population is rising. According to UN population estimates, India will overtake
China as the world’s most populous country by 2022. With half of its population aged
under 25, India has a unique opportunity to reap its demographic dividend. Its share
of the global workforce will continue to rise in the coming decades (Figure 77). While
the population has grown by more than expected during the past two decades (170180mn compared with the expected c.200mn people up to 2030), the convergence of
several factors (detailed below) is likely to provide it with a unique growth opportunity.
i)
Higher population growth in India is likely to come against the backdrop of
slowing global population growth (0.9% during 2020-30 versus 1.1% during
2010-20 or 1.2% in 2000-10).
India’s population boom is
concentrated in the working-age
population
ii) The current boom is likely to be concentrated in the working-age group (Figure
78). While also the case in previous decades, this age group is estimated to
Declining birth rate raises the
prospect of improving female
participation rate
iii) India’s declining birth rate is likely to mean 13mn fewer children in the population
during 2020-30, while any addition in the decade up to 2020 will be close to nil. This
implies less time required for child care and raises the probability of higher female
participation in the labour force. Given that females will account for more than 50%
of the increase in the working population in the coming years, their participation will
be crucial to reap the demographic dividend. Increased female participation in the
labour force (currently very low at 25% in rural areas and 5% in urban areas) is
likely to increase the market for home appliances. Also, the fall in the number of
account for 75-80% of the current increase in India’s population, up from 60-70%
previously. India’s estimated median age by 2020 will be 29, versus 37 for China
and 48 for Japan (Figure 79). These factors imply that 28% and 30% of the global
working-age population will have to come from India in 2020 and 2030,
respectively, much higher than 22% in the past two decades. This represents a
potential earning opportunity for the economy.
children should put downward pressure on the dependency ratio. This would help
boost the savings pool in the economy, because of the rise in adults’ earnings
and lower spending on dependents.
Figure 77: Growing share of the global workforce
% share of incremental world population aged 15-59
40
30
20
China
India
10
0
-10
-20
-30
-40
1990
2000
2010
2020
2030
2040
Source: UNDP, Standard Chartered Research
8 February 2017
52
Special Report: Ageing – Passing the baton to Asia
attract inward investment seeking to benefit from a large consumer market and
economies of scale. The process of reaping the demographic dividend is likely to
provide investment opportunities as India urbanises its population, expands its
manufacturing base and builds physical infrastructure. It will also help create more
jobs for its young population in manufacturing and services sectors – c.100mn new
jobs are required by 2030.
Unlocking the demographic dividend
The key challenges to overcome
India has the opportunity to reap a demographic dividend but only if it delivers the
necessary policies. Below we highlight a few of the challenges which India must
overcome.
Improving the quality of human capital
India scores low on the Human Capital index – which encompasses education,
health, workforce and employment, and an enabling environment. High dropout rates
in primary education, low enrolment rates at secondary/higher education levels, lack
of adequately trained teachers, teacher absenteeism and other issues are consistent
concerns related to the quality of education.
Focus on skills and training is
needed
Only 6% of India’s labour force has received formal vocational training, much lower
than the 60% for most industrialised nations. By 2017 India will need to train c.10mn
people annually, but currently has capacity to train just 4.5mn. The lack of an
employable and skilled workforce is frequently cited by businesses as a major
impediment. These factors are exacerbated in the least developed states, which are
likely to be the main drivers of population increases over the next two decades.
The government’s ‘Skill India’ initiative is commendable but faster progress is
needed. Issues related to low government expenditure on health and uneven access
to health facilities need to be addressed too.
Figure 78: Demographic profile
Figure 79: Younger workers in India
Average age by 2020
Indicator
1971
1981
1991
2014
529
679
839
1,251
0-14
41.2
38.1
36.3
27.6
40
15-59
53.4
56.3
57.7
64.1
30
5.3
5.7
6.0
8.3
Dependency ratio (%)
87.1
77.8
73.3
56.0
Birth rate (%)
36.9
33.9
29.5
21.0
10
Death rate (%)
14.9
12.5
9.8
6.7
0
5.2
4.5
3.6
2.3
Population (mn)
60
48
50
42
Share by age group:
60 & above
Total fertility rate
Source: Census, Standard Chartered Research
8 February 2017
37
29
20
India
China/US
Europe
Japan
Source: UNDP, Standard Chartered Research
53
The demographic dividend
On balance, the rise in the young population with better earning opportunities is
expected to lead to a growing consumer market. According to OECD estimates,
India’s middle class (people with per-capita income of USD 10-100 per day) will rise
to 90% of the population by 2039, from 5-10% today. This should eventually also
The demographic dividend
Special Report: Ageing – Passing the baton to Asia
Expanding the manufacturing base is necessary for more job creation
More productive manufacturing
jobs have to be created
Agricultural productivity is very low but the sector employs over half the current
labour force (Figure 80). Thus greater efforts to create productive jobs in the
manufacturing and services sector are required. The emphasis on ‘Make in India’ is a
step in the right direction but sustained efforts are necessary to create the required
number of jobs. India needs 10mn new jobs annually for a decade in order to employ
its young population productively.
Easing the rigid labour laws
Stringent labour laws have led to greater employment of capital in the organised sector
and have driven the rise of the informal sector, which employs more than 90% of the
workforce. The easing of labour laws could help to break the vicious loop of low skills,
low productivity and low income. A few state governments have taken measures to
ease labour laws since 2014. These changes need to be rolled out nationwide to
provide an enabling environment for both employers and employees.
Handling the technology challenge
Technology advancement poses the
risk of job losses, with c.40-70% of
jobs at risk
Policies to nurture a young population will have to adapt to a world where technology
is changing rapidly. A World Bank study shows a negative relationship between the
level of development of an economy (proxied using per-capita income) and risk of job
losses due to automation, with c.40-70% of jobs in India at risk (Figure 81). While job
losses for the country as whole should not be a foregone conclusion – it is likely that
new technology will provide new job opportunities, replacing those that become
obsolete – it is essential to rapidly upgrade the skills of the labour force.
Figure 80: Job growth not in line with productivity trends
Employment shares and labour productivity differentials(FY10)
Figure 81: c.70% of jobs in India are vulnerable to
automation
16,050
FIRE
700
PU
600
500
REGMFG
400
MIN
300
GOV
TSC
200
100
CSP
CONST
UNREG
Agriculture
WRT
0
20
40
60
LVA
12,050
10,050
MYS
CHN
8,050
BGR
80
100
Employment share (%)
UNREG: Unregistered manufacturing, CONST: Construction, CSP: Community, social and
personal services, WRT: Wholesale—retail trade and restaurants—hotels, TSC: Transport, storage
and communications, GOV: Government services, MIN: Mining and quarrying, REGMFG:
Registered manufacturing, PU: Public utilities, FIRE: Finance, insurance and real estate
SAF
6,050
THA
AGO
4,050
NGA
UZB
2,050
0
ARG
LTU
14,050
GDP per capita (2015, USD)
Sectoral labour productivity as % of average labour
productivity
800
IND
UKR
BGD
NPL
ETH
50
50
60
70
80
90
Share of employment at 'high risk" from automation)
Source: World Bank, IMF, Standard Chartered Research
Source: Economic Survey 2012-13,Standard Chartered Research
8 February 2017
54
Special Report: Ageing – Passing the baton to Asia
Current demographic trends
Aldian Taloputra +62 21 2555 0596
[email protected]
Senior Economist, Indonesia
Standard Chartered Bank, Indonesia Branch
The economy will start to age only
after 2025
Indonesia is among the few Asian countries not facing an ageing population. Its
population reached 257mn in 2015 and the UN estimates it will grow to 285mn by
2025. It is the fourth-largest in the world after China, India and the US. Its large
population has created sufficient domestic demand to sustain economic growth,
especially during the recent period of weak global demand. Indonesia’s population is
relatively young. According to the UN the share of the 65+ age group in the
population is 5.8%, compared with 8.2% for Asia. An economy is defined as ageing
when this figure rises above 7%. This will happen to Indonesia only after 2025.
Demographics in the sweet spot
Indonesia’s working-age population is growing and its total dependency ratio is
declining (Figure 82). This has been largely driven by a drop in the fertility rate, in
part reflecting the family planning programme implemented from the 1970s to the
1990s. The fertility rate has declined to 2.1 from 5.5 in the 1970s. Indonesia’s total
dependency ratio should continue to fall, from 49% currently, to 47.5% in 2025 (it
peaked at 87% in 1970). The total dependency ratio in China and Thailand has been
rising since 2010 (Figure 83); based on the growing share of those aged 65+ in their
populations, the dependency ratio for both will start to climb from the late 2020s.
The young population will foster economic growth as long as there are jobs they can
fill. Indonesia has been quite successful in creating jobs, though the majority are still
in the informal sector. Employment growth outpaced population growth in the last 10
years (2.0% versus 1.3%), reducing the unemployment rate to 5.5% in 2015. This is
reflected in the population’s higher purchasing power. According to the World Bank,
62% of households consumed more than USD 2/day in 2013, a significant increase
from 38% in 2003 (Figure 84). Private consumption has been a key growth engine,
consistently accounting for more than half of Indonesia’s economic expansion.
Figure 82: Indonesia’s population projection by age group
Figure 83: Indonesia to enjoy demographic dividend
%
Total dependency ratio, %
100
110
Total
dependency
ratio
90
80
Percentage
aged 15-64
70
100
Thailand
90
China
80
60
70
50
India
Indonesia
60
40
Percentage
Aged 0-14
30
Percentage
aged 65 or
over
20
10
50
Philippines
40
30
0
20
1960
1970
1980
1990
2000
Source: UN, Standard Chartered Research
8 February 2017
2010
2020
2030
2040
2050
1950
1975
2000
2025
2050
2075
2100
Source: UN, Standard Chartered Research
55
The demographic dividend
Indonesia
The demographic dividend
Special Report: Ageing – Passing the baton to Asia
Challenges to the demographic dividend
Despite job creation, the quality of human capital needs to be improved to maximise
the demographic dividend. This will help boost productivity and therefore growth
(Figure 85). The UN Human Development Report ranked Indonesia 110th out of 188
countries in 2014. Its assessment is based on health, education and income
attainment. Although Indonesia’s ranking has increased in the last five years, it
remains at a moderate level compared with its regional peers.
Government policy is focused on
improving the quality of human
capital
Government efforts to prioritise human development include a law passed in 2009
that requires 5% of government spending (outside salaries) to be allocated to health
spending. It also allocates 20% of total spending to education as mandated by the
constitution. In the 2016 revised budget the government allocated IDR 104tn (0.8% of
GDP) to health spending, mainly aimed at providing better access to health services
for mothers, children and seniors. Meanwhile, IDR 416tn (3.2% of GDP) was
allocated to spending aimed at increasing children’s access to education, improving
vocational training and the quality of teachers (Figure 86).
Figure 84: More than 60% of households consume more
than USD 2/day
Figure 85: Positive correlation between productivity and
human capital
Share of household based on daily consumption, USD
Human development index, GNP per capita, USD ’000
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
90
2010 2013
80
2003
Singapore
GNI per capita
70
Norway
60
50
US
40
Germany
Korea
30
Malaysia
20
< USD USD1.25 - USD2 1.25
USD2
USD4
USD4 USD6
Low
USD6 USD10
10
USD10 - > USD20
USD20
Middle
0
High
Source: World Bank, Standard Chartered Research
China
Indonesia
India
0.5
0.6
0.7
0.8
0.9
1.0
Source: UN, Standard Chartered Research
Figure 86: Health and education spending
IDR tn
450
Education
400
350
300
250
200
150
100
Health
50
0
2015 revised budget
2016 revised budget
2017 budget
Source: MoF, Standard Chartered Research
8 February 2017
56
Special Report: Ageing – Passing the baton to Asia
Some recent studies have found that those in the 60+ age group in Indonesia tend to
be poorer than the other age groups. Their situation is exacerbated by poorer health,
low literacy levels and living alone. The percentage of seniors living below the
poverty line in 2012 was 13.2%, compared with the non-elderly population at 11.9%.
The poverty rate doubles to 26.3% if the poverty line is increased by 20% to USD 28
per-capita per month, suggesting that many seniors live close to the poverty line.
The government has introduced
several pension schemes, but
coverage remains low
Most elderly people depend on family support or other informal safety nets to sustain
their living. Such informal support, in most of the cases, is not sufficient to meet their
basic needs and this forces them to enter into employment. To tackle this problem the
government has implemented a number of social insurance programmes such as (1) a
social-security programme for employees that provides insurance for workers; (2) a civil
service pension fund that provides pensions for retired civil servants; (3) a military
pension fund; and (4) social health insurance for civil servants and military personnel.
The first three programmes are now merged into one body, BPJS Ketenagakerjaan.
However, coverage is limited as it only involves the formal employment sector. In 2010,
the programme provided cover for only 15.5% of the 60+ age group. Moreover, the
amount of pension received is very low relative to monthly household spending. Percapita monthly pensions
household spending.
8 February 2017
cover
only
6.4%
of
average
per-capita
elderly
57
The demographic dividend
Seniors and poverty
Special Report: Ageing – Passing the baton to Asia
References
Asian Development Bank, ‘Aging, economic growth and old-age security in Asia’, 2012.
Bosworth B, Bryant R and Burtless G, ‘The Impact of Aging on Financial Markets and the Economy: A Survey’, The Brookings
Institution, July 2004.
National Transfer Accounts, country summaries - http://www.ntaccounts.org/web/nta/show/
Poterba J, ‘The Impact of Population Aging on Financial Markets’, NBER Working Paper Series, October 2004.
References
United Nations, ‘World Population Ageing’, 2015.
Weil D, ‘The Saving of the Elderly in Micro and Macro Data’, 1994.
World Bank Group, ‘Live Long and Prosper: Ageing in East Asia and Pacific, December 2015.
OECD, ‘Pensions at a Glance Asia/Pacific’ November 2013.
8 February 2017
58
Special Report: Ageing – Passing the baton to Asia
Global Research Team
Management Team
Dave Murray, CFA +65 6645 6358
Marios Maratheftis +971 4508 3311
Head, Global Research
[email protected]
Standard Chartered Bank, Singapore Branch
Chief Economist
[email protected]
Standard Chartered Bank
Thematic Research
Madhur Jha +44 20 7885 6530
Enam Ahmed +44 0207 885 7735
Samantha Amerasinghe +44 20 7885 6625
Head, Thematic Research
[email protected]
Standard Chartered Bank
Senior Economist, Thematic Research
[email protected]
Standard Chartered Bank
Economist, Thematic Research
[email protected]
Standard Chartered Bank
Eric Robertsen +65 6596 8950
Mayank Mishra +65 6596 7466
Becky Liu +852 3983 8563
Head, Global Macro Strategy and FX Research
[email protected]
Standard Chartered Bank, Singapore Branch
Macro Strategist
[email protected]
Standard Chartered Bank, Singapore Branch
Head, China Macro Strategy
[email protected]
Standard Chartered Bank (HK) Limited
Geoffrey Kendrick +44 20 7885 6175
Jeffrey Zhang +852 3983 8540
Emerging Markets FX & Global Macro Strategist
[email protected]
Standard Chartered Bank
Fixed Income Strategist
[email protected]
Standard Chartered Bank (HK) Limited
Global Macro Strategy
Economic Research
Africa
Asia
Razia Khan +44 20 7885 6914
David Mann +65 6596 8649
Greater China
Chief Economist, Africa
[email protected]
Standard Chartered Bank
Chief Economist, Asia
[email protected]
Standard Chartered Bank, Singapore Branch
Shuang Ding +852 3983 8549
Victor Lopes +44 20 7885 2110
Southeast Asia
Senior Economist, Africa
[email protected]
Standard Chartered Bank
Edward Lee Wee Kok +65 6596 8252
Kelvin Lau +852 3983 8565
Head, ASEAN Economic Research
[email protected]
Standard Chartered Bank, Singapore Branch
Senior Economist, HK
[email protected]
Standard Chartered Bank (HK) Limited
Chidu Narayanan +65 6596 7004
Se Yan +86 10 5918 8302
Economist, Asia
[email protected]
Standard Chartered Bank, Singapore Branch
Senior Economist, China
[email protected]
Standard Chartered Bank (China) Limited
Usara Wilaipich +662 724 8878
Lan Shen +86 10 5918 8261
Senior Economist, Thailand
[email protected]
Standard Chartered Bank (Thai) Public Company Limited
Economist, China
[email protected]
Standard Chartered Bank (China) Limited
Aldian Taloputra +62 21 2555 0596
Tony Phoo +886 2 6603 2640
Senior Economist, Indonesia
[email protected]
Standard Chartered Bank, Indonesia Branch
Senior Economist, NEA
[email protected]
Standard Chartered Bank (Taiwan) Limited
Jonathan Koh +65 6596 1262
Hunter Chan +852 3983 8568
Economist, Asia
[email protected]
Standard Chartered Bank, Singapore Branch
Associate Economist
[email protected]
Standard Chartered Bank (HK) Limited
Sarah Baynton-Glen +44 20 7885 2330
Economist, Africa
[email protected]
Standard Chartered Bank
Edward Cheng +44 20 7885 5284
Economist, Africa
[email protected]
Standard Chartered Bank
Emmanuel Kwapong +44 20 7885 5840
Economist, Africa
[email protected]
Standard Chartered Bank
The Americas
Mike Moran +1 212 667 0294
Head, Economic Research, The Americas
[email protected]
Standard Chartered Bank NY Branch
Head, Greater China Economic Research
[email protected]
Standard Chartered Bank (HK) Limited
South Asia
Korea
Thomas Costerg +1 212 667 0468
Anubhuti Sahay +91 22 6115 8840
Chong Hoon Park +82 2 3702 5011
Senior Economist, US
[email protected]
Standard Chartered Bank NY Branch
Head, South Asia Economic Research
[email protected]
Standard Chartered Bank, India
Head, Korea Economic Research
[email protected]
Standard Chartered Bank Korea Limited
Saurav Anand +91 22 6115 8845
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Special Report: Ageing – Passing the baton to Asia
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Special Report: Ageing – Passing the baton to Asia
Disclosures appendix
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Special Report: Ageing – Passing the baton to Asia
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Document approved by
Document is released at
David Mann
Chief Economist, Asia
11:57 GMT 08 February 2017
8 February 2017
63