Last updated September 16th, 2018.

 

Humans now have ways to extend life beyond what nature allows through technology advancements.

This has led to an increase in the average lifespan and even the option to artificially keep people alive. These developments will obviously have a major impact on the global economy.

It’s usually considered a good thing when a person lives longer. They’re able to spend more time with their family, after all.

But from an economic perspective, it’s a headache to accommodate senior citizens while deciding whether to increase public spending on healthcare.

Rapidly aging populations now pressure entire governments and economies throughout much of Asia.

To take countermeasures, understanding the factors that contribute to an aging population is necessary. These include higher living standards, more accessible healthcare, and declining fertility rates.

 

World Bank Fearful About Aging Population

Each individual country has their own unique obstacles as well. For example, the one child policy in China led to a steep fall in fertility rates.

The communist party already lifted the policy. However, Moody’s Analytics said that it’s extremely difficult to reverse fertility rates once they fall to a certain level.

China’s fertility rate is the lowest in the world which will impact its future growth prospects.

Some countries, on the other hand, realized the problem and are taking appropriate measures. Singapore has similarly low fertility rates. But pro-immigration policies have kept the city state’s population growth healthy.

The Singaporean government even launched an online dating portal aimed at helping professionals find love, eventually leading to higher birth rates. The country’s Social Development Network has personals on their website and holds matchmaking events.

A report from the World Bank released at the end of 2015 warns an aging population will pose many risks. Korea, Thailand, China, and most notably Japan, are on the path to losing as much as 15% of their working-age population by 2040.

There’s a lot at stake here. Asia’s elderly population will demand higher public spending. Pension spending in Asia will increase by at least 20% by 2070 without reform.

Axel van Trotsenburg, regional vice president at the World Bank, suggested “proactive policies that will increase labor force participation, encourage healthy behaviors, boost productivity, reform social security, and ensure affordable public services.”

 

Companies Concerned Over Demographics Too

Governments aren’t the only ones feeling pressure. Private businesses will also be greatly impacted.

Julio Portalatin, CEO of Mercer, spoke out and shared his thoughts on the subject. Governments must extend benefits for older workers in a “fiscally responsible” manner, according to Portalatin.

His recommendations include raising the retirement age so that an aging population doesn’t affect the workforce too much. More options include encouraging women to join the workforce.

Portalatin also suggests setting aside a portion of employee salaries as savings. Workers could opt out if they wish. This plan means employees would have more awareness of their pension program.

These measures could lead to a higher percentage of salaries kept as savings.  A multi-pronged, comprehensive solution is needed to fully solve the aging problem though.

Having an aging population is a worrisome ordeal. That’s especially true in East Asian countries where fertility rates are shrinking as well. Governments and the private sector must work together to maintain their workforce.

Nonetheless, there’s still ways to invest and profit from an aging global population.

Skip the Next Western Recession

Learn the best places to invest – and where to avoid – by downloading our free Investment Cheat Sheet.

About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an accomplished stock trader and property investor in Thailand, Cambodia, and many other places. He's been featured in publications such as Forbes, Nomad Capitalist, Property Report, and Seeking Alpha. Download his free investment guide by clicking here.

You Might Also Like


Share This