We’re used to thinking about the APAC region as one of boundless economic potential. And indeed, growing incomes and growing populations have fuelled a powerful engine of wealth-creation over the last few decades. This has fed the growth of both MNC and homegrown brands, which in turn has sustained the marketing and communications industry that serves them.
With board rooms the world over now depending on Asia’s ‘young’, vibrant economies to enhance (or save) their bottom lines in coming years, it’s difficult to wrap our heads around the idea of an impending crisis that could bring it all to a halt. But such a crisis does exist, and it’s neatly encapsulated by a single fact: one in four people in the region will be 60 years old or older by 2050.
Want more facts? The number of older persons in the region is headed from 535 million in 2015 to 1.3 billion in 2050. China already has more elderly people than all of the countries in the EU put together.
While some are further along than others, this demographic transition will impact most countries in the region, the Philippines being a notable exception. In Australia, almost 20% of the population will be 65 or older by 2030. Malaysia’s 65+ cohort will increase from 4.9% in 2010 to 16.3% in 2050 according to the UN. In Japan, the poster-child for an ageing population, nearly a third of its population will be in this group by 2030.
Many people and companies see opportunities in these demographic trends, and they’re right. As older people begin to constitute a larger portion of the consumer population, their combined spending power will become more attractive. Companies that learn how to capitalise on this, and companies that come into being in order to capitalise, will prosper. As a side effect, a marketing industry that for too long has been overly obsessed with young people will learn some new tricks — and a new level of respect
for the ‘silvers’.
But make no mistake: The longer-term outlook is not shiny. For example, look at the ratio of working-age people to retirement-age people. In China at the moment, there are six working people for every senior. By 2050, that number drops to two. In Singapore, the number is set to hit 2.8 by 2030 and 1.7 by 2050. In 2010, it was 8.2.
Because of improving health, retirement ages are sure to rise as people are able to continue working, but that won’t mitigate the increased burden the workforce will be asked to shoulder to support its elders.
Two complicating factors. First, the crisis is coming on fast. It took France 115 years to transition from “ageing” (measured as 7% of the population being 65 or older) to “aged” (14%). South Korea did it in 18, hitting the mark this year. Second, Asia’s governments, in general, are by no means prepared. For example, in India, only 7.4% of the working-age population enjoys pension coverage according to Mercer. And of the countries that do have universal retirement-fund programmes, most of the schemes provide a low level of income to retired persons. As this pension gap hits, it could be highly de-stabilising, politically speaking.
The International Monetary Fund (IMF) has summed up the situation this way: “Some countries in Asia are getting old before becoming rich”. And as any individual who has failed to plan for their golden years can tell you, that translates to difficulties ahead.