Ageing: impact on companies in Asia

The world’s population as a whole is ageing – and this is true of the Asia region. Today Asia accounts for one-half of the world’s older population. By 2050 this is set to increase to two-thirds. By every measure, Japan has the oldest population - not just in Asia, but globally. Hong Kong and Singapore are not far behind with ageing populations on a par with Europe where the challenge of the ageing population is widely recognised and hotly debated. With the highest median ages, longest life expectancy rates and among the lowest fertility rates in the region, Japan, Hong Kong and Singapore are already facing the immediate challenges of declining populations and talent shortages.

Median age in Asia
The age of a country’s population can also be assessed by looking at the median age. According to this measure Japan, Hong Kong and Singapore have the oldest populations in Asia, with median ages of 44.7 years, 41.9 years and 40.6 years respectively. This is comparable to the median age in Europe and is well above the median age of approximately 29 years across the world and the wider Asia region.

Key causes of ageing population
In looking at the issue of the ageing population, it is important to understand why we are experiencing this unprecedented phenomenon. There are two key causes for an ageing population: longer life expectancy and lower fertility rates (the official term for the fact that people are having fewer children). Thanks to advances in health care and improved nutrition people are now living longer than ever before. Average life expectancy worldwide has risen by about 37% in the last fifty years, from 49.5 years in 1960 to 67.6 years today - and current life expectancy in developed countries is much higher. Meanwhile better family planning, improved opportunities for women and changing lifestyles mean that fewer women are choosing to have children – the fertility rate worldwide has dropped from 4.91 children per women fifty years ago to 2.56 today. So it is interesting to examine these two measures in the different countries across Asia.

Life expectancy rates in Asia
Japan, Hong Kong and Singapore have the longest life expectancy rates at 82.7 years, 82.2 years and 80.3 years respectively. Interestingly, these are longer than the UK (79.4 years), the US (79.2 years) and Europe as a whole (75.1 years).

Fertility rates in Asia
In terms of fertility rates, many countries in Asia are experiencing a shrinking population because of flat, if not declining, birth rates. A minimum replacement rate of 2.1 is required to maintain populations at current levels, but we can see that many countries in Asia, in particular Hong Kong are well below this.

Government response
This shift in the population structure has enormous implications for governments, non-governmental organisations (NGOs), business and families, as well as for the older people themselves. Whilst this global phenomenon has long been recognised and discussed, governments around the world are really only just beginning to respond to the challenges. The more proactive are recognising the need to develop specific strategies and are crafting new policies, improving infrastructure and developing programmes to enable older citizens to lead active and productive lives. This includes developing initiatives to keep older workers in productive employment for longer such as abandoning mandatory retirement ages and introducing flexible retirement policies.

Corporate response
The impact on business – the way companies operate and the markets they serve, will be huge. Yet to date the majority of companies have been slow to respond. Few companies have formalised strategies that take into account the ageing of the population, either in terms of their customer base or employee base. Only a select number of companies have recognised that as the percentage of younger workers declines, older employees represent a more important component of the workforce than ever before and therefore introducing policies and programmes to reflect this.

Today, for a whole variety of reasons, the majority of employers still prefer to recruit younger workers. Various factors influence markets to discriminate against older workers, for example, higher insurance costs and pension fund payments, higher salaries – not to mention negative perceptions about ability and the lack of legal protection to protect the rights of the elderly.  Age discriminatory practices can be hard to detect or deal with, as many ageist attitudes have become institutionalised to the extent that they are deemed acceptable. Yet the prevalence of age discrimination in the workplace, particularly in terms of human resource policies and processes that reveal a bias against older employees, is potentially limiting business performance and preventing older employees from contributing fully.

To remain competitive, all organisations need to prepare for the shift in the age of the population. This means creating age diverse workplaces that encourage and enable older employees to stay in the workplace and contribute to the growth of the company for longer. Largely through the work of independent and non-governmental organisations around the world, examples of best practice are beginning to emerge – particularly in the UK and the US, but also gradually in Asia too. These examples point to a number of initiatives that companies can adopt to create a more favourable working environment for older employees – from conducting an age profile analysis and reviewing policies and processes to ensure they are age neutral, through to steps to ensure an age-friendly culture, offering alternative working arrangements and introducing more flexible retirement policies.

A new report by Community Business, Ageing: Impact on Companies in Asia will be published in April 2010.  This report highlights some of the characteristics of the ageing population specific to five key countries in Asia, namely: The People’s Republic of China (China), Hong Kong Special Administrative Region (Hong Kong), India, Japan and Singapore and explores some of the work-related issues, including the prevalence of age discrimination in Asia. With reference to experience and best practice from around the world, it recommends initiatives companies in Asia can introduce to create age diverse workplaces with a particular focus on creating inclusive workplaces for older employees.

The report concludes that building a diverse workforce, made up of a mix of generations, including a fair representation of those in the older age brackets is not purely about being a socially responsible employer and providing equal opportunity for all. Ultimately it is about responding to the changing environment in which companies operate and best positioning the company to take advantage of the opportunities presented by the greying marketplace. Few companies can afford to ignore the growth potential of this huge market – particularly in Asia.

Ageing: Impact on Companies in Asia will be launched on 9 April 2010 in Hong Kong. To register for this event, please visit: www.communitybusiness.org

By Kate Vernon, Acting CEO & Head of International, Community Business