The Declining Birthrate and the Aging Population in the East Asian Region

7/31/2019 The Declining Birthrate and the Aging Population in the East Asian Region

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including nursing care services, life worth living, participation in communityactivities, and the advocacy of the rights of the elderly in the respectiveregions.

to Tables

Korea to Become Most Aged Society in OECD in2050

By Lee Hyo-sikStaff Reporter

South Korea will become the most aged society amongadvanced economies in 2050, with nearly four out of every

10 Koreans being aged 65 or over due to low birthratesand the rapidly aging population.

The nation's population is expected to begin declining from2018 and by 2050, there will be 6.41 million fewer peoplein the country than now.

According to the National Statistical Office (NSO) Friday,people over 65 years of age will account for 38.2 percentof Korea's population in 2050, making it the most agedsociety among the 30 member economies of theOrganization for Economic Cooperation and Development(OECD).

The nation currently ranks 27th in the population-agingindex among the OECD countries, with 11 percent of itspopulation aged 65 or older. Japan tops the list with 22.6percent, followed by Germany with 20.5 percent and Italywith 20.4 percent.

But Asia's fourth largest economy is projected outpace Japan (37.8 percent), Italy (33.3 percent) and Germany(32.5 percent) by 2050. Korea's median age will increaseto 56.7 years then from the current 37.3 years, with theaverage Korean expected to live for 79.1 years, higherthan the world average of 67.6 years.

With more senior citizens and fewer babies here, workersaged 15-64 will have to support more elderly. Currently,every 100 Korean workers provide for 15 senior citizens,lower than the average 24 among OECD membercountries. But 100 employees will have to look after 72 in

2050, much higher than the predicted OECD average of 45.

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With Korean women having fewer babies, the country'spopulation is projected to shrink by 13.1 percent, or 6.41million, to 42.34 million in 2050 from this year. Currently,it is the 26th most populous nation in the world but itsranking is expected to fall to 46th in 40 years time.

Among 35 countries projected to lose citizens during the2009 to 2050 period, Korea's population will decline at thefourth steepest pace. Japan's population is forecast to drop20.1 percent over the next 40 years, followed by Polandwith 15.9 percent and Germany, 14.2 percent.

Korea's population decrease is largely attributable to theworld's lowest birthrate. The nation's birthrate, or theaverage number of babies expected per woman aged 15-49, is projected to stand at 1.13 during the 2005 to 2010period, lower than the OECD average of 1.64.

``Korea's rapid population aging, paired with a lowbirthrate, is weakening its economic vitality. It will dampendomestic consumption and create a labor shortage,leading to an era of low economic growth, unless thenation takes drastic steps to raise the birthrate, improvethe use of public resources and encourage more womenand senior citizens to participate in economic activities,''

an NSO official said.He said the government should nurture new growthengines, shift the nation's economic structure to be moreefficient and less labor-intensive, and bring in more foreignworkers to achieve sustainable expansion, adding thepublic and private sectors should join hands to increasethe birthrate and encouragemore women to participate inthe economy.

Meanwhile, the worldpopulation will likely reach 9.15billion in 2050 from the current6.83 billion. India is expected tooutpace China and become theworld's most populous nation,with its population jumping to1.61 billion from 1.12 billion.

[email protected]

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Opportunity of Korea's aging population

By Laurent Rotival

In Korea, we are not alone in grappling with theimplications of a rapidly aging society. Century life spansare becoming increasingly common and the aspiration fora continued quality of life is equally strong. We are facinga promising new chapter in our evolution where theoutlook to multiple additional decades of meaningful andproductive life beyond our sixties is a reality.

Recently, the Royal Bank of Scotland (RBS) released areport stating that Koreas progress toward an agedsociety is the fastest in the world. They predicted that, by2045, the average labor age in Korea would reach 50years, establishing Korea as having the oldest workforce inthe world ahead of Japan. Furthermore, the outlook for anextended lifespan, compounded with one of the worldslowest birth rates, sets the aging of the overall populationat a pace to become a so-called super aged society like

Japan by 2025. Unaddressed, this will lead to significant

future challenges for individuals, families, communitiesand the nation. On the health front, with longevity, theprobability of chronic diseases increases significantly withparticular incidences of cardiovascular, cancer andneurological complications. Economically, thisdemographic shift leads to national insurance fundingchallenges mainly driven by labor shortages derived froman increased imbalance in the young-to-elderly workerdependency ratio.

Fortunately, this isn't unprecedented and Korea's neighbor

is a good place to look to for lessons learned and the bestpractices. Japan has been facing similar demographicchallenges and they have shown that, in addition todeveloping an infrastructure to care for elders, they havecapitalized on the economic opportunity to serve thelifestyle needs of this growing segment. Japans elderlyhave become less dependent on care and many elderlypeople continue to lead active lives with only minorassistance. With these trends, the market opportunity in

Japan is in helping seniors live the lives they want to lead,not simply catering for those with severe disabilities.

Capitalizing on this market opportunity, however, requires

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innovation across many sectors. One compelling examplehas been GE Healthcare Japan's Silver to Gold initiative.Its objective is to build a healthcare infrastructurespecifically optimized for Japan's super-aged society. This,under the umbrella of GEs healthymagination initiative,is about delivering better health for more people. Silver toGold is specifically about focusing on the most neededareas of care for aging populations. To name a few, liver,MSK, and Alzheimer diseases and providing integratedsolutions across medical imaging, information technology,life sciences and diagnostic enhancing technologies forhealthcare professionals, clinics and hospitals. The marketopportunities in Japan are significant and the impactacross the quality of care, its economic value and accessare very exciting.

In Korea, we have tailored this healthymagination strategy,under the banner of Connected Corea. Our commitment isto mobilize our resources and talents to solve thechallenges presented by the accelerated aging of ourKorean society. At the patient level, based on thepredominant diseases experienced in Korea, our toppriorities are liver, breast, Alzheimer and cardiovasculardiseases.

Like Japan, aging shouldnt be a problem but an

opportunity, and we are confident that, Korea, with itstalent, vision, and globally respected clinical institutions isideally suited to lead the way nationally and globally.

In close collaboration with our Korean partners acrossclinical, government, insurance and technologystakeholders, our goal is to help deliver a more sustainableKorean healthcare delivery system that maintains its costefficiency while continuing todeliver world-class quality andaccess.

We are in this together and welook forward to continuing to bea key partner in transformingour societies so that we canlead longer, fuller and moremeaningful lives while turningthe silver industry to gold.

Laurent Rotival is President &

CEO of GE Healthcare Korea.

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Chinas Achilles heel

A comparison with America reveals a deep flaw in Chinas model of growth

Apr 21st 2012 | from the print edition

LIKE the hero of The Iliad, China can seem invincible. In 2010 it overtookAmerica in terms of manufactured output, energy use and car sales. Its militaryspending has been growing in nominal terms by an average of 16% each yearfor the past 20 years. According to the IMF, China will overtake America as theworld's largest economy (at purchasing-power parity) in 2017. But when Thetis,Achilles's mother, dipped her baby in the river Styx to give him the gift of invulnerability, she had to hold him somewhere. Alongside the other manyproblems it faces, China too has its deadly point of unseen weakness:demography.

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In this section Chinas Achilles heel New homes for the old

Reprints

Over the past 30 years, China's total fertility ratethe number of children awoman can expect to have during her lifetimehas fallen from 2.6, well abovethe rate needed to hold a population steady, to 1.56, well below that rate (see

table). Because very low fertility can become self-reinforcing, with children of one-child families wanting only one child themselves, China now probably facesa long period of ultra-low fertility, regardless of what happens to its one-childpolicy.

The government has made small adjustments to the policy (notably by allowingan only child who is married to another only child to have more than one child)and may adapt it further. But for now it is firmly in place, and very low fertilityrates still prevail, especially in the richest parts of the country. Shanghaireported fertility of just 0.6 in 2010probably the lowest level anywhere in the

world. According to the UN's population division, the nationwide fertility ratewill continue to decline, reaching 1.51 in 2015-20. In contrast, America'sfertility rate is 2.08 and rising.

The difference between 1.56 and 2.08 does not sound large. But over the longterm it has a huge impact on society. Between now and 2050 China'spopulation will fall slightly, from 1.34 billion in 2010 to just under 1.3 billion in2050. This assumes that fertility starts to recover. If it stays low, the populationwill dip below 1 billion by 2060. In contrast, America's population is set to riseby 30% in the next 40 years. China will hit its peak population in 2026. No oneknows when America will hit its population peak.

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The differences between the two countries are even more striking if you look attheir average ages. In 1980 China's median (the age at which half thepopulation is younger, half older) was 22. That is characteristic of a youngdeveloping country. It is now 34.5, more like a rich country and not verydifferent from America's, which is 37. But China is ageing at an unprecedentedpace. Because fewer children are being born as larger generations of adults aregetting older, its median age will rise to 49 by 2050, nearly nine years morethan America at that point. Some cities will be older still. The ShanghaiPopulation and Family Planning Committee says that more than a third of thecity's population will be over 60 by 2020.

This trend will have profound financial and social consequences. Mostobviously, it means China will have a bulge of pensioners before it hasdeveloped the means of looking after them. Unlike the rest of the developedworld, China will grow old before it gets rich. Currently, 8.2% of China's totalpopulation is over 65. The equivalent figure in America is 13%. By 2050,China's share will be 26%, higher than in America.

In the traditional Chinese family, children, especially sons, look after theirparents (though this is now changingsee story on next page). But rapidageing also means China faces what is called the 4-2-1 phenomenon: eachonly child is responsible for two parents and four grandparents. Even with highsavings rates, it seems unlikely that the younger generation will be able orwilling to afford such a burden. So most elderly Chinese will be obliged to relyheavily on social-security pensions.

China set up a national pensions fund in 2000, but only about 365m peoplehave a formal pension. And the system is in crisis. The country's unfundedpension liability is roughly 150% of GDP. Almost half the (separate) pensionfunds run by provinces are in the red, and local governments have sometimesreneged on payments.

But that is only part of a wider problem. Between 2010 and 2050 China'sworkforce will shrink as a share of the population by 11 percentage points,from 72% to 61%a huge contraction, even allowing for the fact that theworkforce share is exceptionally large now. That means China's old-agedependency ratio (which compares the number of people over 65 with thoseaged 15 to 64) will soar. At the moment the ratio is 11roughly half America'slevel of 20. But by 2050, China's old-age ratio will have risen fourfold to 42,surpassing America's. Even more strikingly, by 2050, the number of peoplecoming towards the end of their working lives (ie, those in their 50s) will haverisen by more than 10%. The number of those just setting out (those in theirearly 20s, who are usually the best educated and most productive members of society) will have halved.

Help wanted

The shift spells the end of China as the world's factory. The apparently endlessstream of cheap labour is starting to run dry. Despite pools of underemployed

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The Declining Birthrate and the Aging Population in the East Asian Region