Our duty to care for the elderly can be an opportunity for growth
Oscar Wilde said that the tragedy of old age is not that one is old, but that one is young. I belong to the baby-boomer generation, born between 1946 and 1965, that helped create an era of incredible economic prosperity and technological advances. At the same time, it ushered in the biggest financial bubble in history, and consumed our planet's resources at a rate that will leave future generations poorer.
Many of us feel that, before we go to the other side, we must do something to give back to society what we were able to enjoy.
In the US alone, there are 75million baby boomers, of whom roughly half are reaching retirement age. In Japan, three employed people support one retiree, but in 10 years, it will be two to one. Harvard professor Arthur Kleinman, an authority on public health, estimates that China may reach that situation by 2050.
As Asian societies become more prosperous, it is time to rethink the push for growth and consider a better quality of life. Increasingly, there is awareness that only three things matter more for most people - reasonable income/job, social equality and a sustainable environment. Asia is still able to deliver these because its growing economy can generate the resources to deal with social inclusivity and the environment. It is much tougher in European countries facing financial crises.
Population ageing should be seen as an opportunity. One of the primary goals in global rebalancing is to shift Asian production out of excessive reliance on manufacturing and exports to domestic consumption and services. Services account for only 43per cent of China's gross domestic product, 57per cent in India, but over 75per cent for US, Europe and Japan.
China's 12th five-year plan intends to raise the level of services to 47per cent of GDP by 2015, and if the Chinese GDP reaches around US$11trillion, the value of the services sector would be nearly US$5.2trillion.
Worldwide, the service sector is a major employer. Almost all policymakers in Asia want to increase the size of their services sector, but very little is known about knowledge and value generation in the sector. There are broadly three types of services - production services related to manufacturing, business services and consumer services.
Since Asians have invested so much in the manufacturing sector, there is a tendency to want to go up the value chain, without appreciating that the most advanced manufacturers and companies have already re-engineered themselves to adopt a 'servitisation of products' business model. They sell the hardware cheaply (like printers) and make more money servicing the hardware, like selling ink cartridges and service warranties. IBM earns more from services than selling computers. Once iPhones and iPads are sold, money from downloading apps keeps rolling in.
Services in emerging markets are mostly concentrated in distribution, education, health, tourism and financial services. Services tend to be domestic-oriented, but increasingly, services such as IT can be outsourced.
Health and medical care, for example, have become major foreign exchange earners for Malaysia, Singapore and Thailand, and medical tourism worldwide is estimated to be a multibillion-dollar business.
Currently, most emerging markets in Asia, like China and India, spend up to 5per cent of GDP on health services, but advanced countries spend over 10per cent of GDP. If health expenditure in China were to increase to 8per cent of GDP by 2015, the size of the market would increase to US$880 billion, or about three times the GDP of Hong Kong.
Kleinman makes the point that medical services can be a tremendous employment generator. For example, it is estimated that 10million caregivers are required to look after the ageing population in China, whereas there are only 300,000 people working in this field, with only 100,000 professionally qualified.
There will be tremendous demand for health care services in Asia as the population ages. Many Asian economies have fewer than two hospital beds per 1,000 people, whereas the number of beds in Japan (with the most aged population) can be as high as 14per 1,000.
Most people would agree that health care costs in the advanced countries can be excessive. The good news is that technology and innovation can bring better health care at lower costs. Doctors using iPads can diagnose problems off-site, provided patients have their medical history and tests digitised. Indian hospitals can conduct innovative cataract and heart surgery at a fraction of the cost in advanced countries. Asian economies can upgrade their services, but it will take political will.
It is clear that we can no longer rely solely on the government to provide health care. As the population ages, the family and charities will increasingly provide volunteer services to take care of the elderly. Hospitals, home care and financial support will have to be redesigned so that society encourages a rebonding of family, rather than more older people living and ageing in loneliness.
Taking care of the old is no longer other people's problem. As Kleinman says, it is Asia's next big challenge and this generation's responsibility.
Andrew Sheng is president of the Fung Global Institute