In the face of a population ‘eclipse’

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KUCHING: As the nation aspires to acquire a fully developed status by 2020, it has to consider viable measures to better manage its ageing population – those above the age of 60 as defined by the United Nations (UN).

Based on UN data, the number of ageing Malaysians had reached over seven per cent out of the total population – a rough estimate of more than two million citizens. To note, UN categorises any country with 10 per cent of its population above the age of 60 as an ‘ageing nation’.

“In the case of Malaysia, we will continue to have proportionately ‘dynamic’ demographics, unlike that of Japan,” opined RAM Holdings Bhd’ group chief economist Dr Yeah Kim Leng in a recent telephone interview with The Borneo Post.

“We do not expect to see drastic changes on our ‘demographic tree’ where the numbers of our working age group are still higher than that of the dependant group – those aged 60 and above. The dependency ratio is still improving and will continue to improve until 2035,” he added.

Dr Yeah’s response touched on a global key issue, of which a number of economically-advanced countries had to cope with rising numbers of ageing citizens coupled with low birth rate – an economic woe that had already befallen Japan.

Rising out of the World War II ‘ashes’, Japan shot up to become one of the world’s economic superpowers with its leadership in technological innovations. But come the new millennium, the once mighty island nation had quickly become one of the world’s fastest ageing societies.

“Current statistics from Japan’s Health Ministry has shown that one out of five Japanese men was above 60 years, while for the woman population it is one out of four. On such trends, Japan’s population of 127 million would by 2055 shrivel to 90 million – back to its post-war boom in 1955,” pointed out the National Institute of Population and Social Security Research in a published report.

In his statement early this month, Japan’s Prime Minister Naoto Kan expressed his “deep sense of crisis and resolution about the sustainability of social security and economy, as the ageing population increases under a low birth rate”.

Correlating to this, Japan could expect to face a shortage of workers, which in the longer term would also result in a higher tax burden for the working age group.

“Malaysia is certainly grappling with an ageing or mature workforce,” stated Kelly Services Malaysia Sdn Bhd’s managing director, Melissa Norman. Further, the head of the recruitment and human talent consultancy firm underlined that for a country moving towards a fully-developed status, such a trend was deemed ‘inevitable’.

“Research has indicated that the proportion of Malaysians above 60 iss expected to more than double, rising to a high of 16 per cent, by 2020. However, given the robust population of job seekers in Malaysia, it may not pose as great a threat to the employment and recruitment industry here as compared with Japan,” she disclosed in response to an e-mail.

In terms of human resource and supply of talent to the business world, Melissa pointed out that there were known measures to be taken against the ‘collapse’ of a population, “or in this case, workforce,” she stressed.

“It is not a government’s effort alone. Organisations have already begun to put in place strategies to groom future leaders or the younger workforce by means of training and up-skilling programmes. For the preservation of critical knowledge, companies should implement effective recruitment measures for mature job needs, at the same time utilising retirees and part-time workers, as well as properly preparing employees for retirement.”

Generally, the official retirement age here remains at 55 for the private sector, and 60 for the public sector.

“Raising the retirement age may not completely solve the current issues of ‘brain drain’ faced by the workforce. However, it creates a workforce pool temporarily, while the issues of reversing the brain drain is being implemented,” added Melissa.

In a similar sentiment, Malaysian Rating Corporation Bhd’s chief economist Nur Zahidi Alias viewed the motion to raise the retirement age as ‘a good move’.

“It will solve part of this problem, while providing a continuous flow of income to workers who would otherwise be forced to retire – many of whom could still be at their peak of their careers,” he wrote via e-mail.

For Japan, however, extending the retirement age might not be enough a measure to soften its population problem. The country’s Centre for Economic Research estimated that the proportion of people over 65 could rise to nearly 40 per cent by the middle of this century. Along with this, pension and care costs would also continue to rise.

Mizuho Research Institute forecast that by the year 2025, around 70 per cent of Japan’s government spending would be eaten up by debt service and social security spending.

“The age profile of the Malaysian population will not mirror Japan’s anytime soon,” said Zahidi. “Indeed, a bulk of the population will remain in the relatively ‘young’ segment.”

However, he also warned that there could be a possibility of a profile change in decades to come for Malaysia, “should birth rates continue to decline,” he cautioned.

“Nevertheless, this might not likely take place in the next 30 to 40 years,” he countered.