Aging Working Force: Raising Retirement Age
Introduction
Recently, the birth rate is decreasing rapidly in Hong Kong. We are facing an ageing population problem and the labor force structure is imbalance. What’s more, the government’s retirement plan is a failure as it does not provide enough financial assistance to them, both by publicly and privately managed plan. The elderly cannot afford the living after retirement by their private savings and insurance.
We strongly suggest the government to set a clear regulation and extending the retirement age to remedy the problem. We will investigate other countries which are facing the same ageing problem and their decisions on extending the retirement age. Furthermore, there are lots of other ways to solve the problem. We will discuss three of them and compare the benefits and drawbacks on each alternative.
Reason of the proposal
Hong Kong has one of the world’s lowest birth rates—0.9 per woman of child-bearing age, far below the replacement rate of 2.1. The city's elderly dependency ratio is set to rise from 161 per 1,000 in 2003 to 428 per 1,000 in 2033. That means more elderly dependents will have to be supported by a smaller working population. Look in the past; we could see that there is a trend of increasing dependency ratio. According to the report of demographic trends in Hong Kong, the Elderly dependency ratio is increasing rapidly from 97 to 168 during 1981 to 2006. The median age is increasing from 26.3 to 39.6. However, the percentage of Aged 0–14 is decreasing from 24.6 to 13.7. These figures suggest that the population is aging, together with a low birth rate the dependency is increasing in Hong Kong which creates a burden to the working force.
In Figure X (Appendix 1), we can see that the longest bars of the graph is group 45-54, which has a population of 1400000. After 20 years this group of people will be supported by the people in the categories with shorter bars of which the gap in between is quite big. The difference between the population of the age group of 45-54 and 15-24 is nearly 350000. That means after twenty years, it will be harder for the major working labor force income to support the elderly living. Also, in the coming future, we believe that the shape of the graph will become an up-side-down triangle instead of a bell shape because of the low birth rate and death rate. This indicates that the dependency ratio i.e. pressure on the working force will be higher.
However, we believe that the grey population can provide productivity to the society as well. From the data of labor force, we can see that the age group of 45-64 is growing from 32%to 38% from 2005 to 2010. Also, the labor force participation rate of age group 45-64 and 65 or above is increasing these years. This indicates the elder workers are becoming more important to Hong Kong’s development, i.e. arising retirement age should be able to encourage a higher GDP as well. Figure y (Appendix 2) shows that the GDP is increasing in a slow manner. We believed that one reason would be lack of working force to boost up the figures. This would definitely affect the development on technology and other aspects such as education and social. From the survey of the government, we can see that nearly 90% of persons in the target group view that the stability of performance of relatively elder employees is stable and does not have any difference as compared to those of other ages. They even think that elder employees have higher performance on the concentration on work. Furthermore, nearly 40% of persons in the target group perceived that working experience is the main criterion considered by employers in employment related issues while only around 6% of them think that age is a main criterion in employment related issues. The majority have a belief that age does not affect employees’ performances. Therefore, raising the retirement age can help solving the problem of high dependency ratio and provide extra productivity to the society and hence contribute to higher GDP.
Individual Perspective
Loophole of Elderly Retirement Policies introduced by Government
Ageing population with low birth rate is not the issue only happens in Hong