The city should face the difficult issue of bringing in people into Hong Kong
By Raymond So
China Daily/Asia News Network
Last week, the Census and Statistics Department (CSD) released the latest population projections. If things stay the same, in 50 years' time, 36 per cent of Hong Kong's population will be aged 65 or above.
Iin three years' time, Hong Kong's working population will peak and start to fall. That means society is facing greater pressure in supporting the elderly.
The projections also show that the inverse dependency ratio will increase in the future. The current inverse dependency ratio of three-to-one will increase significantly to five-to-three in 50 years. This data reveals that we will face some major challenges in the future.
Frankly speaking, the problem of an aging population has existed for some time. The results of the population policy consultation launched by the government two years ago have already suggested we cannot turn a blind eye to the problem. Many ideas or suggestions have since been put forward by experts or opinion leaders. But many of these are not true solutions. Indeed, the best suggestion so far aims only at relieving the negative impact of an aging population.
The CSD's data should be interpreted carefully as a neutral estimate. Should the parameters change, the aging problem might become more serious and the assessment of the consequences more alarming. In short, the current estimates represent only a base case scenario, not a worst case scenario.
Many people think that the problem of an aging population can be solved with a universal retirement scheme. I disagree. Universal retirement protection is an ideal scheme, but merely giving old folk money will not solve the aging problem.
Pension money does give some relief to the elderly. But this is true only when the old people are still relatively healthy and can take care of themselves. The problem is that they will not stay healthy forever, and they eventually will need more medical services at an older age. Taking care of old people requires a lot more resources than just money. It requires many services, all of which need to be planned for ahead. For example, the need for nursing homes, medical clinics and associated service providers will be huge, albeit such needs will not rise right away.
When society is considering how to allocate resources to different sectors, people tend to focus on current needs. For example, if we have only one piece of land available for development, most likely it will be used to build more houses to meet the current housing demand. But, if the plot is used for housing instead of building nursing homes, society will someday be confronted with a shortage of nursing homes when demand rises. Such problems of insufficient planning always emerge because of society's tendency to prioritize current needs. Hence, I always stress that a universal retirement scheme is not the solution to an aging population.
Since money alone cannot fulfill the needs of an aging population, the solutions must come from some fundamental demographic changes. For example, will the future population be able to support the elderly? Only a sound demographic structure will ensure the population can support sufficient economic growth to meet the demands of elderly care. This means we need to face the difficult issue of bringing more people into Hong Kong.
The inconvenient truth is that the problem is complex and there is no simple solution. A universal retirement scheme is not the solution, but neither is the importation of labour. A comprehensive population policy is required.
* The author is dean of the School of Business at Hang Seng Management College.