Ageing Northeast Asia

By Kathryn Froend

Our region is changing rapidly. Seismic geopolitical and economic shifts have put the Indo-Pacific centre stage for global affairs in the 21st century. This will continue to ring true as the region evolves further over the coming decades.

Looking forward, nowhere will change be felt more profoundly than the region’s transforming demographic landscape.

This year, China ceded its status as the world’s most populous country to India. Likewise, Southeast Asia is eyeing the potential dividends of its population boom.

Meanwhile, Northeast Asia is on the precipice of a population plunge.

Plummeting fertility rates and increased life span have created a perfect storm – population ageing and decline at a rate and scale unprecedented in human history.

The speed is such that, by 2030, more than one third of Northeast Asia’s population is expected to be aged 60 and over.

In order to keep a population stable and sustainable, the average birth rate needs to be at 2.1.

In Japan, where the birth rate remains at 1.3 and 28 per cent of its population are now over the age of 65, this crisis is becoming insurmountable. Last year, the population dropped by half a million. Earlier this year, Prime Minister Kishida publicly stated that Japan is on the brink of its ability to function as a society. As it stands, the nation has just a decade to reverse this decline.

The picture in South Korea is not that different, with the fertility rate sitting at a sombre 0.8 – the lowest in the world.

China, which enjoyed the greatest demographic dividend in history in the late 20th Century, is now facing a decline itself. Despite a swift reversal of the one-child policy, China’s fertility rate has fallen continuously for the past four decades. As of last year, it is believed the country’s population peak has been reached and has started to fall.  Already, it has the largest population of older people in the world, at 254 million. By 2040, approximately 402 million people will be over 60 – a group expected to be larger than the estimated size of the US’s total population at that time. By 2050, it will lose 200 million working-age adults. By the end of the century, some demographers predict China’s population will fall by 48 per cent.

Population decline is rarely the result of one issue. Rather, in the case of Northeast Asia, it is the consequence of a complex web of ongoing economic and social difficulties. Rising cost of living, people having children later in life, and entrenched gender stereotypes have all contributed to this growing problem.

The consequences of population decline are myriad.

Despite being the economic powerhouse of the region, Northeast Asia is facing a rising number of economic challenges as its population declines. Considerable increases in public expenditure – and subsequent tax hikes – will be required to support the ageing population. Widening socio-economic inequalities are already becoming an issue, with poverty disproportionately affecting older women.

As the population shrinks, so too does the available labour force and, inevitably, the economy itself. Estimates expect Japan’s workforce to fall 20 per cent by 2040. According to a Goldman Sachs report, by 2050, South Korea is projected to fall behind Egypt in economic performance.

As 3 out of 5 of Australia’s top trading partners, economic decline in Japan, South Korea or China will undoubtedly affect us.
The social consequences will also be challenging. Lack of age-friendly living environments, both in ‘hard’ infrastructure (transportation, building and product design, and assistive technologies) and ‘soft’ infrastructure (avenues for participation in social, political and economic life) is a looming issue.

Increased pressure on social welfare and healthcare services for aged people will likely see these industries buckle, leading to unmet needs in their long-term care. Already, there are cases of productive workers quitting in order to take care of an ageing relative. Conversely, loneliness in age is becoming a critical issue, as the younger generation is increasingly unable to take care of them.

Many Northeast Asian cultures revolve around filial piety, or deep respect for their elders. As these societies rapidly age and their ability to care for their old depletes, a moment of cultural reckoning is also likely on the horizon.
Attempts to reverse, or at least mitigate, this trend have largely been unsuccessful. Subsidies, allowances, committees and agencies have failed to reach the heart of the issue: many are looking for social change, not just economic.

As the demographic situation becomes increasingly dire, immigration may be the only solution – one that, in countries marked by histories of isolationism and ethnic homogeneity, will bring a different kind of sociocultural complexity.

These burgeoning internal demographic, political, social and economic crises are likely to have significant external effects – profound shifts in the economic heart and power nexus of the region.

Regardless, actions taken over the next decade will be vital to the demographic stability of the Indo-Pacific’s northern most quarters and, potentially, the stability of the region at large.

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