High share of senior citizens a challenge for Malaysia

PETALING JAYA: The high share of ageing population poses a challenge for the country and could act as a depressant for economic growth with Malaysia's population aged 65 years and above, at 6.3% in 2017.
The increasing number of senior citizens are also expected to increase public expenditure as longer life expectancy, particularly of pensioners and their dependents, will increase pension payments.
In line with that, the current pension scheme may not be sustainable in the long run as it may pose as a larger financial burden to the government's fiscal position.
The Economic Outlook 2019 noted that with a demographic pattern as such, labour force participation will be lower.
Also, the lower fertility rate is also an indication that more women will be participating in the labour force.
"Even though Malaysia will face issues of ageing society by 2020, economic growth is expected to remain stable in the long run as a reduction on fertility rate implies women will be participating more in the labour market and thus contribute to higher labour productivity and economic growth," the economic report noted.
A 0.8% decrease in population as per the estimates of the Finance Ministry will result in lower employment an, in turn, leads to a negative deviation in real Gross Domestic Product by an average of 0.004 percentage points between 2018 and 2024.
This will then reduce household disposable income which in turn will reduce private consumption.
"In the longer run, if industries remain its labour intensity, the economy may not be able to shift to capital-driven growth. Therefore it is important for industries to adopt automation and mechanisation to remain competitive amid lower labour input," it said.
Among the measures recommended to mitigate the negative impacts are; increasing female labour participation to offset reduction in labour force; gradual retirement and re-employment opportunities for post-retirement aged workers; improving productivity; pension scheme reforms; elderly friendly environment and encouraging lifelong learning.
"Also, a thorough study on policies for the elderly with comprehensive data will help the government in dealing with challenges associated with ageing population. These policies should also focus on leveraging opportunities to benefit both current and future generations"
In this regard, the government will continuously engage with relevant stakeholders including the private sector, non-governmental organisation and communities to promote wellbeing and enhance older generations contribution to the nation development."
According to the World Health Organisation(WHO) an ageing society is one with a 7% or higher population aged 65 and above, while 14% and higher is known as aged society. At 21% and above the society is known as a super-aged society.
In Malaysia's case, Malaysians aged 14 years and below have decreased to 24.1% of the total population while those aged above 65, has increased to 6.3%, as at 2017.
By 2040, the gap between the young and older population will be narrowing with the share of the population aged below 14 years decreasing to 18.6% of the total population while the populations aged 65 years and above will reach 14.5%.
Malaysia will only take a mere 20 years to double its elderly population to become an aged society by 2040, in contrary to France which took 115 years.