The Silver Lining in Asia’s Demographic Dilemma
Despite recent market turbulence and reductions in GDP forecasts, China and other emerging Asian economies are still expected to lead global growth through this decade. In the longer run, Asia’s ability to fire on all cylinders will depend on tapping the full potential of its human capital. While each country in the region faces unique challenges, they all share one in particular: an increasing shortage of skilled workers in high-productivity industries. That problem will worsen as Asia’s largest economies grow older and their workers leave the scene at traditional retirement age. The proportion of people over 60 years old—already extremely high in Japan—is projected to more than double in China, India, and South Korea between now and 2040.
Initiatives to address this anticipated demographic shift and resulting skills shortages are myriad, from promoting fertility and relaxing immigration laws to robots. None of these solutions on their own appear sufficient to produce benefits soon enough.
The Milken Institute report “Wisdom in the Workforce: Unlocking the Economic Value of Asia’s Aging Population” explores the idea that Asia’s aging “problem” is actually part of the solution for economies in search of skills. In countries like China and South Korea, retirement age norms push many talented, capable workers out in their 50s, wasting the productive energies of those who are willing and able to continue.
Older workers possess the abilities employers need. Managerial roles, for example, are commonly cited as the most difficult jobs to fill in the region. Mature workers can offer the experience, and the soft skills, that younger workers lack.
One Asian country taking the lead on progressive aging policies is Singapore. The small island nation’s government, employers, and workers have collaborated to craft a number of initiatives harnessing older workers’ potential. Examples include lifelong educational programs, promoting flexible work environments, and re-employment programs for individuals who want to continue working beyond the standard age for stepping down.
Similar efforts in the region’s larger economies (China, India, Japan, and South Korea) would be promising. While demographics, political environments, and particular skill shortages vary widely across these nations, all would benefit by enabling working people of all ages to contribute to prosperity.