KUALA LUMPUR: Malaysia is gaining from having a high population of working people and lower number of dependents, said Social Wellbeing Research Centre director Prof Datuk Dr Norma Mansor.
The working population of Malaysians age 16 to 64 has increased from 69.7% in 2018 to 70% in 2019.
With a smaller ratio of dependents, our working population enjoy a substantial share of economic growth as production exceeds consumption, Norma told theSun.
“The first demographic dividend is because of the low birth rate, which means that you have fewer people who are dependent on the productive population.
“However, the first demographic benefits end in 2030,” she added.
Demographic dividend is the economic growth from a change in the age structure of a country’s population, typically caused by a decline in fertility and mortality rates.
According to data released by the World Bank, our age dependency percentage in 2018 was 44%, compared with 95.71% in 1960. Age dependency percentage measures dependents (aged below 16 and above) against the working age population.
A higher value indicates that employed people have to support more non-working people, both young and old. Over the years, our age dependency ratio has dropped gradually with falling birthrates and longer life spans.
“The second demographic benefit is when you accumulate wealth,” said Norma.
“That’s where the policy towards getting people to save and grow richer is important.”
She also pointed out that this is the time the country is growing at a faster pace.
“Because when you have an ageing population, you have fewer people to support more elderly people. We have to look at the aggregate level as a nation,” she said.
“But if we are not rich in 10 years, then we are going to have a problem.”
To be an ageing nation by 2030 can be a challenge to us as we might not have enough to provide for all population, especially among senior citizens, Norma added.
Our population growth rate is falling due to a drop in fertility rates from four children in 1980 to 1.9 children in 2016, according to Deputy Women, Family and Community Development Minister Hannah Yeoh.
Statistics released by the Employees’ Provident Fund shows that 68% of active members who retire at age 55 do not have RM240,000 in their accounts, which is the recommended minimum needed for a monthly withdrawal of RM1,000 for 20 years post retirement.
As Malaysia becomes an aged nation, issues like long-term care, poverty and healthcare for the ageing become more important.
“These are the areas that need to be addressed to improve social protection system in solving inequality and poverty,” said Norma.
A policy is in place to encourage employers to hire those aged 60 and above, which requires employers to contribute only 4% of the employee’s salary for EPF, while no deductions will be made from the employee’s pay.
Effective January this year, the new minimum statutory rates for EPF contributions follow the government’s proposal during the tabling of Budget 2019 to encourage employees aged 60 and above to remain productive in the workforce.