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Ginseng for graying
Asia
By Alan Boyd
SYDNEY -
Growth dynamos Japan, Taiwan, Hong Kong, Singapore,
North Korea and Thailand may have to overcome a historic
resistance to permanent migration to stave off economic
stagnation as low fertility rates create critical labor
shortages.
The latest United Nations population
data confirm that births in all six countries remain
below replacement levels - and that some other East
Asian states, including China, Indonesia and Vietnam,
are heading the same way. With life expectancy now
exceeding 70 years, a phenomenal gain of 30 years since
1950, and child morbidity down by 80% in the same
period, the Southeast Asian portion of the region is
expected to have an annual population increase of only
0.8% in the period 1995-2015.
This contrasts
with fertility rates of 1.6% in the previous two decades
and 2.1% in 1955-75, when the replacement level - now
about 2% - was last realized. Singapore has had the most
marked decrease, with a reduction from 6.4 to 1.4 births
per childbearing woman since 1950.
In Northeast
Asia, there will be a net decline from 2020, though some
countries have already been strongly affected. Hong
Kong's fertility rate slipped to only 1.2 in 2000, Japan
registered 1.4 births and South Korea 1.5. Japan is
expected in 2010 to become the first Asian country to
experience a net population decrease, with 30% of its
people aged over 65 by 2025. Thailand and South Korea
will start losing ground in 2015, and even China is
likely to become static in 2025-30, when 300 million
people, or one-fifth of the population, will be 60 or
older and there will be almost as many pensioners as
teenagers.
Political economist Professor
Nicholas Eberstadt, of the American Enterprise
Institute, forecast in a study released this year that
China would suffer far more than Japan from the
resultant imbalances in labor and health care. "To put
the matter bluntly, Japan became rich before it became
old; China will do things the other way around," he
said, noting that the Chinese lack a viable pension
scheme and have undermined the extended family through
their one-child policy.
Smaller populations can
reap an economic dividend in that they allow governments
to divert resources away from costly public services.
The East Asian economic growth surge of the 1990s has
been partly attributed to the success of birth-control
programs that encouraged smaller family units. However,
the flip side is smaller production forces and an
increasing burden on health care as the massive legion
of gray hairs reaches retirement. The United Nations
Economic and Social Commission for Asia and the Pacific
(UNESCAP) warned in March that social networks are
generally inadequate to meet this challenge.
East Asia invested a modest 4.9% of gross
domestic product (GDP) in health care and even less in
pensions and other aged services in 2000 even though
governments are being forced to shoulder more
responsibility as families become smaller. This was a
negligible 0.1% more than the combined budgets of the
less-developed countries of South Asia.
Cambodia
(11.8% of GDP) and Japan (8%) were the only states that
approached the health care investment levels of more
advanced countries. Among the states with low fertility,
Indonesia allocated 2.4% of GDP, Thailand 3.7%,
Singapore 3.9%, Vietnam 5.1% and China 5.5%.
Social-security nets are being developed in the
northern part of the region but there are wide
disparities in Southeast Asia. Malaysia and Brunei set
aside less than 1% of their health budgets for social
welfare in 2001 and Indonesia 7.5%, while Thailand spent
26.8% of its funding on these services, Singapore 24.5%
and the Philippines 17.2%.
Only Singapore, with
a mandatory pension scheme, has managed to attract
significant private investment in health. Elsewhere, as
little as 2% of populations have any insurance cover,
and there is limited focus on labor benefits. Labor
markets have been adjusting since the mid-1980s to
smaller workforces. Malaysia, Thailand, Singapore and
Brunei, all rely to varying degrees upon imported
workers, both legal and clandestine, usually for
unpopular "dirty" or low-cost processing industries.
There has also been a high degree of labor
integration, with Thailand, the Philippines, India,
China, Bangladesh, Myanmar and Indonesia helping to
supply the workforces that kept East Asia's factories
humming during the early-1990s boom. The International
Labor Organization (ILO) calculated that there were at
least 1.4 million foreign workers in Malaysia in 2002
and 900,000 in Thailand, half of whom had crossed
illegally from Indonesia, Myanmar or southern China.
Paradoxically, the Philippines and Thailand
supplied 866,000 and 193,000 workers respectively for
offshore labor markets in 2001, contributing to a net
drain of skilled labor that will be difficult to sustain
as fertility rates drop. One outcome in the Philippines
has been a chronic shortage of health workers, with 70%
of the 7,000 nursing graduates leaving annually for
higher-paying offshore positions. There are more than
30,000 unfilled posts in rural areas, severely hampering
health services.
Commercial and political
self-interest will make it difficult to bring these
workers home: Thailand earned US$1.5 billion from
declared foreign-currency remittances in 2001 and the
Philippines $6 billion. It appears more likely that the
region will have to reappraise its xenophobic attitude
toward permanent migration, which has never figured
highly in development strategies. Convinced that it
should, the UN published a hotly debated paper last year
on the concept of replacement migration, defined as the
number of international migrants that would be required
to prevent declines in the total population, workforce
and support ratios.
Net migration to Singapore
is forecast to drop to zero by 2030, after an average
intake of 50,000 a year in 2000-05. A campaign to lure
skilled workers from Hong Kong ahead of the territory's
handover to China in 1997 had only limited success. Net
migration to Thailand is expected to decline to 4,000 a
year between 2025 and 2050, down from 6,000 per year in
2000-25. And many of these new arrivals will be retirees
attracted by a government-run investment scheme.
Based on UN studies, Japan needs 17 million
migrants between 1995 and 2050 to prevent its population
declining after a peak of 127.5 million is reached in
2005. Current projections suggest there will be a total
of 2.7 million migrants in that period. "To put the
projection scenarios in perspective, it may be noted
that in early 2001, there were about 1.6 million
foreigners living in Japan. Of that, 636,000 were
permanent residents. So about 1 million were temporary
residents," said Jerrold W Huguet, an analyst with the
Journal of Population Research. "In 2001, there were
670,000 foreign workers in Japan, of whom 252,000, or
nearly 40%, were unauthorized."
South Korea,
another country that traditionally has been less than
welcoming to outsiders, is forecast by the UN to
register zero net migration by 2025, after accepting
100,000 arrivals between 1995 and 2000. The working
population is expected to continue increasing to a peak
of 36.6 million in 2020, but a total of 6.4 million
migrants, or 214,000 a year, will be needed between 2020
and 2050 to maintain this strength.
China,
currently a substantial source of outward migration,
would need 20.5 million migrants over a period of 25
years, equivalent to 820,000 new arrivals annually, to
maintain its working population. Singapore would require
a total of 413,000 migrants between 2025 and 2050 to
maintain its working population at 4.3 million,
comprising 10% of the population. The current proportion
of foreigners is only 5%. In Taiwan, 476,000 migrants
would be required between 2035 and 2050, or nearly
32,000 annually, to prevent a population decline from
the projected peak of 25.72 million in 2035.
Whether any of these economies will be willing
to absorb - or even be capable of absorbing - such large
numbers of new arrivals is questionable. Migration has
been variously rejected in the past as a security risk,
a harbinger of infectious diseases and a potential
source of ethnic conflicts. Some economists view
migration as only one part of a complex response that
will also have to encourage more reliance on technology
and an improved use of existing labor resources.
"Permanent immigration could prevent populations
from declining but is not a feasible solution to
counteract the effects of population aging," Huguet
argued in a recent paper. "The concept of replacement
migration ... does not provide a long-term solution to
the issue of population aging because the migrants
themselves will also age and begin to retire perhaps 40
years after entering."
(Copyright 2004 Asia
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