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  • Writer's pictureBait Al-Amanah

Ageing East Asia needs social security support.

Updated: Apr 10, 2023

By Benedict Weerasena, Research Director of Bait Al Amanah.

Photo Credit: Free Malaysia Today

Population ageing will be an increasingly pressing issue in the coming decades as Malaysia transitions from an ‘ageing nation’ in 2020 to an ‘aged nation’ by 2044 when those aged 65 and above exceed 14% of the total population.

In the past decades, the EAP region reaped the benefits of the demographic dividend, which is economic growth that results from changes to a country’s age structure, due to the shift from people living short lives and having large families to living longer lives and having smaller families. However, this demographic dividend is coming to an end. The transition in age pyramids, where a larger ageing population will need to be supported by a smaller young population will have significant implications for economic growth in the near future.

An ageing population will affect trends in consumption, savings and capital formation, investment in human resources, public expenditure and revenue, intergenerational inequality, poverty and the sustainability of publicly funded pensions and also healthcare systems.

On the policy recommendations, Malaysia should consider establishing a universal social insurance pension scheme which aims to provide basic old-age income security. This would also cover those who are not in the labour force, those working in informal jobs or even in the gig economy.

Beyond these efforts, Malaysia should also seize the opportunities that come with an ageing population in the region. These include maximizing the potential of the aged-care sector and retirement homes, enhancing elderly healthcare and improving the senior tourism ecosystem. Moreover, we should look to incentivising flexible employment opportunities to harness the productive potential of older workers, especially those who cannot afford to retire.

*Excerpts of this statement were published in an interview with Free Malaysia Today.

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