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Taiwan must address the challenges of an ageing society
Publication Date : 14-10-2013
Elderly people now account for 11.2 per cent of Taiwan's population, according to a recent report from the Taiwan Healthcare Reform Foundation . The document, which identifies Taiwan as one of the most rapidly ageing societies, should serve as a stark reminder to various government agencies of the potentially huge economic costs that lie ahead for the nation; costs that will only be exacerbated by a declining birth rate.
Not only are new policies required to foster population growth, including better child birth policies and subsidies, but better incentives are also needed to attract and retain blue- and white-collar migrant workers to offset any shortages in labor.
Few understand the true toll of a declining birth rate and shrinking workforce in coming years. A recent report by the Council for Economic Planning and Development (CEPD) also predicts that four in every 10 people will be age 65 or older by the year 2060. Meanwhile, the working population (age 15-64) is set to decline from 2015 after reaching a high of over 17.3 million.
Equally alarming, the old-age dependency ratio, which measures the number of elderly people as a share of those of working age, climbed last year to 15 per cent nearing the 19.7 per cent of the young-age ratio, which measures the number of younger dependents as a share of the working-age population. By 2016, the report says that the old-age dependency ratio will surpass the young-age dependency ratio, meaning elderly people will outnumber unemployed youth.
Over time, these figures show that there will be too few people to care for elderly Taiwanese in the future, as well as fill the manufacturing jobs that drive the economy and even grow food to feed the country. This problem could become a major headache for the government in the future as the ageing of society is also combined with the country's low birth rates.
So far, authorities have been working on increasing the amount of day care centers and expanding child allowances. It's a good start. What we also need to do is change the work culture in Taiwan and promote a better work-life balance for parents. By reducing the amount of time that couples spend in the office, they could be more inclined to raise children.
Lowering the cost of education, improving services in nurseries for toddlers, giving financial assistance for higher education for families with more than one child, as well as offering better health coverage for women could also help address Taiwan's declining birth rate. But there is no silver bullet to this problem.
According to the noted French economist Jacques Attali, policies geared toward affecting demography need to adopt a long-term and stable approach based on such factors as housing, kindergarten and the promotion of children as a good image for society.
Giving incentives to women to have children alone is not enough, we need to give parents time to be with their children and compensate the spouse that is dedicating time and energy outside the home to raising kids. We might need 10 years to see results, but if people do not receive any incentives to stay at home, or if nobody wants to raise children and the cost of pregnancy is not covered by health care, there won't be any incentives to have children anymore. And then what?
What does it mean for Taiwan's economy? Keep in mind that a shrinking, ageing population likely means a shrinking economy. There will be fewer skilled people entering the job market and fewer people able to save money. Unless Taiwan transforms into an immigration powerhouse that vies for educated migrants from around the world, the deficiency will translate into less money for loans and investment and, as a consequence, make it harder for companies to develop and create new jobs for young people.
An ageing population is the greatest obstacle to innovation and economic competitiveness.