Last updated September 16th, 2018.

 

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

This has led to an increase in the average lifespan and even the option to keep people alive artificially. Such 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, accessible healthcare service, and declining fertility rates.

 

World Bank Fearful About Aging Population

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

The communist party already lifted that policy. However, Moody’s Analytics said it’s extremely difficult to reverse fertility rates once they decline 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, realize the problem and are taking appropriate measures. Singapore has similarly low fertility rates. But pro-immigration policies are still keeping the city state’s population growth healthy.

The Singaporean government even launched an online dating portal aimed at helping workers 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 since Asia’s elderly population will demand higher public spending. Because of this, 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 productiveness, reform social security, and ensure affordable public services.”

 

Companies Concerned Over Demographics

Governments aren’t the only ones feeling huge pressure. Private companies will also be greatly affected.

Julio Portalatin, CEO of Mercer, 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 does not affect the workforce too much. More options include encouraging women across the world to join the labor force.

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 like China and Japan where fertility rates are now shrinking. World governments along with the private sector must both work together to maintain their workforce.

Nonetheless, there are still plenty of ways to invest and profit from an aging global population.

 

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About Reid Kirchenbauer

Reid Kirchenbauer is the Founder of InvestAsian. He's an international stock trader and property investor based in Thailand, Cambodia, and several other places. Reid manages the world's first and only frontier market real estate fund and has been featured in publications such as Forbes, Property Report, the South China Morning Post, and Seeking Alpha. You can download his free investment guide by clicking here.

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