AGEING POPULATION IN HONG KONG
Population ageing in Hong Kong: challenges and opportunities
- ‘Population ageing’ is a pervasive, profound and enduring tide sweeping across the globe.
- Hong Kong is no exception. Whereas many people may still perceive population ageing as a long-term and distant subject, the consultation document released on 24 October 2013 by the Steering Committee on Population Policy (SCPP) revealed that our population would age at a faster pace than previously expected. In just a few years’ time, our workforce would embark on a persistent decline. Under a “do-nothing” scenario, population ageing could entail profound implications to our socio-economic development ...view middle of the document...
Why is our population ageing so fast?
In short, two major forces are at play. First, our families are having fewer children. Our fertility rate is among the lowest in the world, with the total fertility rate at only 1.3 in 2012,
far below the replacement level of 2.1, i.e. the number of births that women need to produce for a population to replace itself. Second, thanks to medical advancement and better nutrition, our people live longer. In 2012, men and women born in Hong Kong are expected to live 81 and 86 years respectively, also among the longest in the world. The trends of low fertility and increasing longevity are likely to prevail, thus leading to a drastic shift in age structure of our population in the coming three decades.
Implications of ageing population on our economy and society
I. Lower economic growth with a shrinking labour force
The most immediate and direct consequence of population ageing is the dwindling labour force, as more people retire while fewer younger people enter the labour market. With the post-war baby-boomers approaching retirement age, total labour force is projected to peak in 2018 and then look set to decline persistently until the early 2030s, before stabilizing somewhat thereafter (Chart 3). This unwelcome development is particularly worrisome, as currently, manpower shortage is already evident in some sectors, including construction, retail, catering, and elderly care services.
From the supply side point of view, our workforce has indeed been instrumental in support of the development and transformation towards a knowledge-based economy. Over the past two decades, Hong Kong’s economy has grown by an average of around 4% in real terms per annum. Of this, around 1 percentage point was due to the growth in labour force, while the other 3 percentage points came from productivity growth. With a rapidly shrinking labour force after 2018, it would be difficult to maintain the same rate of economic growth as in the past, unless productivity growth could be significantly enhanced. Meanwhile, the ‘demographic dividend’ is disappearing fast and is expected to turn negative in the coming years, thereby posing a drag on our economic growth potential.
From the demand side point of view, overseas experience shows that when more and more people retire, the aggregate savings rate will fall, and the growth in capital accumulation and hence investment will then slow. All these combined could also translate into a visibly slower economic growth and fewer job opportunities, thereby undermining economic vitality and competitiveness over time.
II. Net migration as the main driver for future population growth
Due to a secular decline in birth rates, the contribution of natural increase (number of births minus deaths) to our total population growth has been diminishing. As such, it would not be at all surprising that as our population ages, the number of deaths would eventually outgrow the number of...