The
Aging Wonder of Asia
By Shyara
Bastiansz
Population aging
is transforming economies and societies around the globe. Sri Lanka has been
categorised as one of the fastest aging countries not only in the region, but
in the world (World Bank, 2008). The country has experienced a significant
demographic shift in the last two decades, with a significant decline in birth
and death rates. This shift in balance has changed the age structure of the
country; specifically, from young to old. In 2010, overall population growth
was 1%. With an overall dependency ratio of 51.3 percent and average life
expectancy of 75 years, this rate is expected to decrease further. At present, those above 60 years account for
only 8.7 of the population. However, demographic aging patterns predict that
this number will rise to as much as 30 percent by 2050.
A Ticking health-bomb
The growing
elderly population, presents a significant development issue; with imminent
socio-economic challenges. The Sri Lanka economy will be affected in many
areas, particularly with regard to income, health and the employment. An aging
population is a massive burden on the health care system of a country. Current
research shows that more Sri Lankans use medical services more readily, thereby
increasing the demand for resources and access to health care. This impact will
largely affect the public health sector, which although is the more
cost-effective option, is not necessarily the best, given its limited and inequitable
distribution of resources. Sri Lanka
currently spends 3.2% of its GDP on health (2012), an expense that has
increased rapidly from USD$20 million back in 1995 to over USD$80 million at
present. The absence of a health strategy to address population aging in Sri
Lanka will exponentially burden the national health system.
A
declining labour force
Labour force
participation is another aspect that will succumb to the weight of a ballooning
old population, with the impending exodus of a massive labour force from the
market, in the near future. For the economy, this means lower savings and
investments, resulting in the ultimate decline in growth. Timely measures can
minimize the impacts of this grim future prospect, by taking advantage of the current
demographic dividend (i.e. the proportion of working population is significantly
greater than the old and child dependents from 1991-2017), which is conducive
for accelerated economic growth. However, this window of opportunity is short-lived,
as old dependency rations are on the rise and will soon tip the scales. Unless
the elderly are fit and healthy to continue to work, past their retirement, or
have sufficient savings to support them, they pose a serious burden to the
economic growth of a developing country such as Sri Lanka. However,
inflexibilities in labour market legislation preclude employment opportunities
for the older population, who are capable of working past their mandatory
retirement age.
Pension
or... Suspension!
Sri Lanka is
noted to have one of the most comprehensive social security systems in South
Asia. In 2012 alone, the Government spent 111 billion rupees on pension
payments for over half a million public service retirees. Be that as it may,
excessive public expenditure as such can impose a severe strain on state
coffers. Experts believe that Government pensions will absorb as much as 20
percent of expenditure in the future. A restructuring of the employment life
span can ease the load off the current contributions. Although the mandatory
retirement age for public servants was increased to 60 in 2012, the average
life expectancy of 75 years supplicates for a higher age cap-off.
Retirement
benefits in Sri Lanka have also been criticized for being inadequate in terms
of supporting the needs of the elderly and its limited coverage. Only one third
of Sri Lanka’s labour force participates in pension schemes, excluding the informal
sector; which accounts for over 60 percent of the total workforce in the
country. Employees Provident Fund (EPF), Employees Trust Fund (ETF) and other
private schemes are most often inadequate as their returns on funds, and
expected annual real incomes from them are both inadequate and diminishing over
time (N. Sandaratne). Lower income levels together with welfare measures which
are financially unsustainable; make older citizens more vulnerable to poverty. The
gradual loss of family based support from extended families, as a result of
rapid urbanization, increases the risk factor further. This is a distinct
feature that separates Sri Lanka’s plight of an aging population, from that of
the OECD countries such as Japan and of Europe, who have reached this
demographic transition with high levels of income in place. As a result, they
are able to provide strong social security mechanisms to support their senior
citizens.
Sanctuary for
the old
A new global
index released in September 2014, to coincide with the UN day for old persons
(01st October), regards Sri Lanka as the best country in South Asia
for old people. Rated out of 96
countries, Sri Lanka measured the highest in terms of supporting their older
population over the age of 60. On more moderate terms, the country was placed
43rd in Help Age International's Global Age-Watch index, scoring
high in the enabling environment category (i.e. social connectedness, safety
and civic freedom indicators). This index ranks Norway as the best country in
the world for the elderly, while Afghanistan is considered the worst.
In
recent years, luxury community retirement has emerged as a niche market in Sri
Lanka, appealing to the expatriate retiree population residing in the US, UK
and Germany. This concept is promoted further through the ‘dream home visa programme’,
which requires a foreign national over 55 years, to make a one-time investment
of USD$15,000 in Sri Lanka.
Conclusion
Population
ageing is a universal phenomenon, but is particularly an ominous threat to Sri
Lanka. Our population is aging, and on an
accelerated pace at that, although the overall population size is expected to
stabilize by 2030. The Mahinda Chintana adds
"with regard to senior citizens: The policy objective of the Government is
to ensure better living environment and quality of life for these citizens.'' This
is far easier said than done. Policy makers are faced with the daunting tasks
of bringing about immediate changes in terms of coverage of retirement benefits
and adequate welfare measures, developing a robust health system that is able
to tackle the demands of an aging population and counter labour force declines.
Only then will Sri Lanka astutely overcome the dramatic impacts of population
aging, in the not so distant future.
References
2008, Sri Lanka Addressing the Needs of an Aging
Population, Human Development Unit South Asia Region, World Bank (Report
No. 43396-LK)
Global Age-Watch Index Insight Report, Help Age International,
2014
Population aging and health expenditure 2001- 2101, Institute of Health Policy (IHP)
Labour and social trends in Sri Lanka 2011- Ministry of Labour and Labour
Relations, Department of Census and Statistics, 2012
This article clearly highlights the economic aspects of ageing population in Sri Lanka.
ReplyDeleteI would like to focus more on author's views on Sri Lanka being a sanctuary for old, specifically the migrants or expatriates. One could argue that the economic burden of ageing migrants who have become nationals of other countries and who have not contributed to the Sri Lankan economy since they left Sri Lanka is greater than Sri Lankan national in a pay-back sense. I personally know about 2 such families who are UK nationals and who are planning to return to Sri Lanka after their retirement. All their economic activities have only contributed to the UK economy. Now that they are planning to spend the rest of their lives in Sri Lanka, they are going to consume the limited resources available to the aging population in the country. They will definitely be able to live under better healthcare and other facilities than an average Sri Lankan due to their economic status.
Niche market for health care provision to such permanent returnees might push the average health care costs up as the returnees will still agree to pay high prices for better health care facilities. Average aging population might suffer from this. This will also drag the inequality levels of Sri Lanka higher in terms of healthcare and well being aspects. Therefore, while inviting our families living abroad to spend the winters of their lives in their homeland, the responsible parties should also think carefully of the advantages and disadvantages of such incidences on the average aging population.
Marian Fernando
MDS 28
Besides of what author explains, in one hand dramatic rise in life expectancy is considering as one of the great achievements of the twentieth century. But increased life expectancy combined with declining birth rates has caused cost of an ageing population as you explained correctly. Some of demographic researchers argue it is because of the fixed retirement age of 55-60. If life expectancy increases and situation continued, we need to pay attention to rearrange some retirement policies or move towards more sensible policy is to allow some increase in the retirement age. Most of the workers between 55- 60 ages still have capacities to engage in works but research studies on capabilities and suitable types of works may have to investigated further before revising policies. Man or a woman in age of 40-50 is not similar to a person who was before 30-40 years. Juvenility of people seems quiet more lengthy that past. Some of developed countries like US have already made tentative steps to increase the retirement age and increase private sector pensions. These kinds of policies will be able to manage ageing population some extent ageing population more and so it could be something we can happy rather than thinking this as a burden.
ReplyDeleteW.P.U.K.Perera
MDS – 20 (2014/2015)
This as advantage or reason to fear depends on health and mobility of an ageing population. If medical care and related policies, services help people to live longer, but with poor mobility, there will be less chance to work. If people live longer and physically active the disadvantages of ageing population will be less. If we consider increase and declines of each age category we may sometimes be able to find increasing youth also as a problem. A declining birth rate also means a smaller number of young people. This will in one hand save the government money on education and also they pay little in any of taxes. Immigration sometimes will be a way to resolve the impact of an ageing population because immigration is often from younger people. But policies should have to intervene on balancing this otherwise ageing people will be also lose their protections after retirements since no one is there to look after them. Increase the importance of the private sector in providing pensions and health care is essential in solving care sector problems. But this may also be able to cause increased inequality if people can’t afford private pensions. In this case, pensions that are targeted on low incomes and those who do not have a private pension to be also promoted. This helps to reduce inequality and reduce the total cost of pensions. As a negative point, it will act as a big incentive for people not to save and avoid getting a private pension. For that governments need to make it mandatory for firms to provide a private pension and as a return provide more appropriate tax breaks for private pensions can be provided by government. Balance by a policy changes are therefore need at first to overcome negative impacts of ageing population.
ReplyDeleteL.P.Gangabada
MSD - 10
Although the country has several socio- security systems as the EPF, ETF, private pension schemes and pension scheme for public servants, these do not adequately cover the expenditure needs of the elderly at retirement. These benefits are estimated to cover only 51% of the workforce. The remaining workers are in the unorganized or informal sector, and have to rely largely on their savings or participation in several new pension schemes for informal workers, as pensions for farmers, fishermen and the self employed.
ReplyDeleteThe pension schemes would have to pay out monthly pension over a longer period of time. This issue is particularly significant for the public service pension scheme. The issue of viability of the government pension scheme does not arise, as the payments are not paid out of a pension fund, the cost on the annual budget would tend to escalate as retirees live for longer periods. There are however, serious implications of ageing on the public finances of the country. At present, government pensions absorb 10% of current expenditure, and account for 20% of the budget deficit. This will distort the public investment and economic growth in future.
Therefore I suggest that, an extension of the retirement age to 65 years would place less strain on current contributions, could increase retirement benefits and would reduce the period during which retirement benefits would be needed to support retirees.
S.M.K.Weliwita
MDS 18
Sri Lanka still in far behind by comparing the existing situation in Japan. Japan’s aging and shrinking population is a cause for concern in both Japan and the Asia-Pacific region as a whole. There are currently more than 50,000 people in Japan who are one hundred years old or older. The Japanese population is aging faster than that of any other country in the world because of migration patterns, birth rates, and health. These demographic changes will no doubt have implications for Japan’s economy, geopolitical standing, and energy use.
ReplyDeleteK.A.W.Fernando
2014/MDS/08
Low & middle income countries are ageing at a much faster rate than richer countries, especially in Asia. We need to introduce new policies to address social isolation of elders, in order to get them participated for much meaningful healthy ageing, Social participation through catalyzing the elder clubs & societies etc are important as those stratergies are are low cost, sustainable and still they have a lot to contribute for social development.
ReplyDelete- Sumudu Hewawasam (2014 / MDS / 16)
A fascinating discussion which touches the salient points. Thank you Shyara for this interesting commentary.
ReplyDeleteThe following is my initial reaction without the benefit of much thought or back check.
It is a beautiful paradox really. On one end you have an ageing population, which is the cause of increased life expectancy and declining birth rates, which as you articulate affects the economy, social welfare system, burdens public finances, health care systems and so on. On the other end of the spectrum, I see an opportunity. An opportunity to foster an enabling environment to ensure our senior citizens, who would have a wealth of experience and can be an asset to the economy, are in a position to contribute positively to the state and society in their twilight years. To this end, I see an important and complementary role being played by both the state and private sector. In short, this will include, creating new market opportunities and niches which embrace these groups who are an important pool of expertise. Measures should be taken to make retirement a bit more flexible or phased (as practically possible) so as to ensure employment, retainment and reemployment. Senior citizens would have skills sets that are not to be found in younger generation which is of value and so should be identified, retained and directed productively. Best practices need to be identified that will help create an inclusive working environment for our senior citizens based on their added value.
Thisantha Ameresekere (2014/MDS/21)
Population ageing poses significant challenges to Sri Lanka’s health system, and will require the development of new thinking, The government needs to pay more attention to the social security of the elderly through pension schemes, insurance schemes, bank facilities focused on the elderly, and health schemes.
ReplyDeleteManjula Rajapaksha (2014/MDS/15)
The author explores the importance of addressing the ageing population well. It is a delicate topic in Sri Lanka, however very much needed. The best example of someone ageing well is the Senior Bush, former President of the USA who went skydiving at age 90. The issue with Sri Lankans is that a mentality of life ending around the age 50 prevails, therefore no hobbies nor activities that boost energy and creativity are made leading to them being lethargic and unhealthy while regular exercise for the body and the mind is not done. Therefore to ensure that an ageing population does not lead to a major burden on the treasury and the people, it is imperative that people are made to cultivate better lifestyles, for their future and the country's.
ReplyDeleteRegards,
A.P Abeyrathne MDS/2014/26
This is a well relevant topic. Actually I also see this as a problem of only few countries and it depends on the general perception. As an example, for countries like Japan, this is not a problem. They believe that expertise builds up with growing ages.
ReplyDeleteSince developing nations like ours do believe this as a problem, should make concerns to evade adverse consequences arriving. I see higher migration is also contributed to worsen the scenario as immigrants are in general younger. This up lifts the retiree to worker ration which in turn causes higher cash outflow and lower cash inflow in the money circulation. Ultimately this affects the economy.
Sandunika Lekamwasam
No. 17 (MDS 2014/15)
Population aging is coming to treat to Srilanka. The average life expectancy is 75 years inSrilanka. Srilankans are more healthy from ancient time of Srilanka. I think reson for that, We had good indeginious medicine & food security with good food culture. Present situation is anther one.
ReplyDeleteThe article mentioned overall population growth was 1% with overall dependancy ratio is 51.3% in Srilanka. Labourforce is going to decrease, this is hidden problem. Economic policy makers should be thought that. They should try to balance and manage this situation with Socio-Economic angle. Shyara analyzed it with many sub areas. I learnt more things and improve my knowledge another side economic development from your article.
Sisira Ekanayaka
2014/MDS/06
This article explaining future crisis in elderly population and how it will affect to the srilanka economy. It is my view in this article should try to better explain that how can involve to economic activities in elderly people.
ReplyDeleteTHAVARASA THARSHAN
2014/MDS/22
Aging population is a vast problem in the world. Sri Lanka also has to face this. I agree with the increasing of retirement age and introducing private sector pension schemes. Although we cannot control aging we can still maintain healthy life style. So I think if we have healthy senior citizen they could work for more years which would also reduce health cost. It is essential to raise awareness of healthy life style.
ReplyDeleteM.J. Fernando
MDS/ 12