Ageing problem looms large for the economy

PUBLISHED : Monday, 18 October, 2010, 12:00am
UPDATED : Monday, 18 October, 2010, 12:00am

Demographics, demographers like to say, is destiny. And ours is looking dimmer. About the time the next chief executive takes over from Donald Tsang Yam-kuen in 2012, the number of people not in work is set to begin rapidly outpacing the workforce. This will reflect an ageing population, not economic conditions. But it is a trend that could shackle our economy. Tsang didn't tackle it in his penultimate policy address. Officials said he did not want to 'saddle' his successor. Whoever that it, it is likely he or she would not have minded an initiative, given the many other issues looming over the city's long-term future.

Asked whether he was forward-looking enough, Tsang focused on delivery of past policy pledges. It is good for politicians to keep promises, but that does not rule out expectations of vision when a problem looms large. To be sure, he gave a nod to ageing, by increasing provision for care of the elderly, asking a committee to look into helping retirees resettle on the mainland, and the impact of mainland children born here returning to live and study. But that will not do, even by the government's own estimates of the 'dependency ratio'. These show the number of over-65s per 1,000 people aged 15-64 will double from 337 last year to 625 by 2039. When employment status is taken into account, the picture looks much worse.

A study by University of Hong Kong professor Paul Yip Siu-fai - a government adviser - says that by 2036, 1,000 economically productive people will have to support 1,500 inactive ones. Yip's dependency ratio is the one used for population policy by Britain and the US, which share with us the ageing problem common to advanced economies. To put the rapid greying of Hong Kong into perspective, the US expects it will still have more economically productive than inactive people in six years.

Yip's study came out before the policy address, but has not prompted any action. He says lack of it will have a detrimental effect on the city's economy and other social issues. In fact, it is integral to them. Take the role of the city's low birth rate in population ageing. How much of a factor is the cost of housing and of raising and educating children in a young couples' minds before they have one child, let alone the two-plus per couple needed for population replacement? Are worries about the polluted environment their children will grow up in an issue?

Other policies relevant to an ageing society include health-care reform, retirement policy and family-friendly tax and spending policies that address growing inequality. We could make a start with measures that have worked elsewhere. They include more flexible retirement policies and working hours for older employees, a five-day week, more day-care centres and job security for nursing mothers.

The gap between rich and poor does not help the ageing problem. Tsang tried to address public resentment with a HK$10 billion Community Care Fund to be financed equally by the government and business. In a city that has prospered from self-reliance and a can-do spirit, charity is always welcome, but measures that help people move ahead on their own - such as a living minimum wage - are better.

And while it is certainly good that tycoons have donated to the fund; they, and the elite of Hong Kong, would have left a better social and economic legacy by pushing for more visionary leadership towards a more dynamic society with healthier demographics.