Managing the economic and social challenges of an ageing population

THE number of the oldest people in the world is rising significantly as a result of the population’s rapid ageing.

There is a lot of pressure on societies to adjust because of this demographic shift. The world is currently experiencing a significant demographic shift characterised by a rapidly ageing population.

This change is mostly the result of decreased birth rates and improvements in healthcare, which have led to an extraordinary increase in the percentage of older people in society.

By 2050, the population that is ageing is expected to have doubled. From 6% in 1990 to 9% in 2019, the proportion of elderly people increased, and it is predicted that this trend will continue until it reaches 16% by 2050.

As per the United Nations, a characteristic of an ageing population is an increasing proportion of elderly individuals. This group typically has fewer children and longer lifespans.

Due to the rapidly ageing population, fewer people of working age engage in the economy, which results in a skills shortage and makes it more challenging for businesses to fill places that are in high demand.

(Pic credit: NST)

If these vital jobs are not filled, the economy will suffer from decreased productivity, higher labour costs, postponed corporate expansion, and weakened global competitiveness.

Sometimes a lack of workers can lead to wage inflation, which starts a vicious cycle of rising prices and wages.

Malaysia will be regarded as an ageing country by 2035, with 5.6 million people, or 15% of the total population, being considered senior citizens.

According to data, the percentage of people over 65 rose from 5.6% in 2014 to 7.9% in 2022. The demographic composition of many nations has changed as a result of the ageing population in the twenty-first century, bringing about profound social changes.

Numerous problems and challenges confront all of the nation’s going through this demographic shift, such as higher dependency ratios, more strain on the healthcare, pension, and welfare systems, and a declining labour force.

Seniors in Malaysia face a variety of social and economic obstacles. First off, an ageing population usually means more healthcare needs, such as long-term care and age-related disease treatments, which puts a strain on the infrastructure and finances of the healthcare system.

Second, as the population ages, fewer people are of working age than are retired, which could result in a labour shortage and lower productivity.

Thirdly, the sustainability of pension schemes may be in jeopardy as a result of more retirees receiving pensions and fewer active workers making contributions to pension funds. As a result, reforms to ensure financial stability may be required.

Fourth, the economy may grow more slowly as a result of an ageing workforce and lower productivity among older workers.

Furthermore, a higher percentage of older people compared to people of working age raises dependency ratios the situation in which fewer workers support a higher number of retirees, thus putting strain on social welfare systems.

(Pic credit: Digest by the HEAD Foundation)

In addition, social isolation and loneliness can negatively impact an older person’s mental health and general well-being, especially if they don’t have family or social support.

In addition, elderly populations are more susceptible to financial exploitation, neglect, and physical or psychological abuse, which emphasises the need for protective measures and support services.

It is imperative to provide older adults with housing, transportation, and infrastructure that is accessible in order to support their independence and mobility.

In order to maintain an equitable distribution of opportunities and resources and to avoid intergenerational conflicts, it is crucial to strike a balance between the needs of younger and older generations. All facets of society must make a thorough and ongoing effort to address these issues in Malaysia.

The implementation of various strategies, including pension system reform, private savings promotion, healthcare system strengthening, enhanced elderly care services, social inclusion promotion, and development of an integrated ageing policy can assist Malaysia in effectively managing the economic and social consequences of an ageing population while maintaining a high standard of living for its senior citizens.

The author is a Research Fellow at the Ungku Aziz Centre for Development Studies (UAC), Universiti Malaya, and may be reached at uacds@um.edu.my.

The views expressed are solely of the author and do not necessarily reflect those of  MMKtT.

- Focus Malaysia