'Experts' see the future as well as Madam Zodiac | South China Morning Post
  • Mon
  • Jan 26, 2015
  • Updated: 3:07pm
Jake's View
PUBLISHED : Thursday, 27 February, 2014, 1:32am
UPDATED : Thursday, 27 February, 2014, 6:15pm

'Experts' see the future as well as Madam Zodiac

Dismal government predictions of future demographics should be taken with a pinch of salt after previous estimates fell wide of the mark

BIO

Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.
 

"An ageing population will pose sustained challenges to public finances. The conclusions and recommendations of the Working Group have provided a scientific and objective basis for the community to better understand the issues, and consider rational and pragmatic options ahead … I hope the experts and scholars in the Working Group will continue to …"

John Tsang Chun-wah, 
Budget speech 2014

Will continue to … blah, blah, blah, and if you ask why I am so dismissive of these people it is because I wonder whether they can really call themselves experts.

For expertise on what the year 2041 will hold I recommend seeing a fortune teller. Madam Zodiac, who reads crystal balls and tarot cards, may be as ignorant of the future as anyone else but at least she doesn't tell you that her predictions are scientific and objective.

How can they be? I'll hazard a guess at the time of day that the sun rises at the spring equinox in 2041 but when it comes down to what percentage of Hong Kong's labour force will be employed or seeking employment that year and how this will affect social assistance spending on the aged, well, hello there, Madam Zodiac.

All that anyone can really do otherwise is guess at some trends and extrapolate them into the future. I used to play that game when I was a child. It's called Pin the Tail on the Donkey.

But I suspect that the "experts" in this Working Group picked the wrong trends even then. I think they significantly underestimate the labour force participation rate. It is certainly what they have done in the past.

The chart gives you the evidence. The red line shows you the actual recorded figure from 1993 to 2013. The blue line shows you what a Census and Statistics study in 2003 predicted it would be. Note how the actual figure has risen for the last three years to 61.2 per cent, when the 2003 study said it would now be only 57.3 per cent.

In demographics this is a gap as wide as the one to the moon. Note also how the 2003 study said it would plummet ever more steeply. But if at first you get it wrong, try, try, again, and the green line shows you the Census and Statistics study done again in 2013.

It makes a nod this time to that pick-up over the last three years but then dismisses it as an aberration and back we go to the high cliff dive, except that it is put off eight years into the future.

I think that what the experts have wrong in particular is the labour force participation by the aged, which is already much greater and rising faster than they had ever expected. Hong Kong is following Japan here, and in Japan the trend of later retirement is very noticeable.

I can understand how our government's civil servants might make the mistake. All of them are forced to retire at 60 and many of them seek to get away from their boredom even earlier.

But it is wrong to project their experience on the rest of the population. We no longer have many people forced to retire early because their jobs involve too much heavy lifting or because their health has been ruined by fumes, dust and other hazards in their workplaces. People now live longer and healthier.

And the evidence now indicates, with Japan pioneering the way, that they are happy to stay in the workforce much longer.

In short I very much doubt that the aged will pose as great a social assistance burden in the future as Mr Tsang fears. He worries too much. He often does.

jake.vanderkamp@scmp.com

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