Crossroads of risk: The demographic megatrend

Countries getting old before they get rich, with less time to adjust policies.

The demographic megatrend

The pace of population ageing in Asia and the Pacific is the fastest globally. Countries are getting old before they get rich, with less time to adjust policies. This rapid pace is largely responsible for a projected increase in the region’s economic dependency ratio from 0.72 in 2020 to 0.90 in 2050, implying almost one dependent person per worker.

The populations of most countries in the Asia-Pacific region are still young, with a median age of 32.5 years. However, the opportunities to harness this demographic dividend are declining quickly. Several countries in Asia and the Pacific are still in a position to benefit if they act fast to establish inclusive, sustainable and comprehensive social protection systems while they still have a youthful population.

Burden on working-age population to support older persons increasing

Financially sustainable pension systems that provide adequate benefits are imperative in an aged society, to protect people in old age from poverty and alleviate pressure on informal social protection arrangements, which are often provided by (unpaid) family members. Consequently, pension systems also contribute to labour market mobility and support the effective operation of the economy.

Pace of ageing and share of the labour force actively contributing to a pension scheme

Source: ESCAP elaborations using data from the UN (2024), World Population Prospects 2024, available at https://population.un.org/wpp/ (accessed in May 2024) and from the ILO, World Social Protection Database, available at https://www.social-protection.org (accessed in May 2024).
Note: For aged society, OECD definition is used, an economy where the share of people aged 65+ is between 15% and 20% is categorized as an aged society. Countries where the share is above 20 per cent are referred to as super aged societies.

Women face unique challenges in an ageing population

Women outlive men, but the quality of those additional years can be low. The gap between life expectancy and healthy life expectancy at birth is larger for women relative to men, reaching on average a full decade of difference for women in 36 out of 44 countries with available data.

Despite women living longer, women often have less access to pensions and social security systems, leaving them financially more vulnerable in old age. In addition, with ageing populations the demand for informal (and partly unpaid) caregiving, predominantly provided by women, is expected to surge. The need to juggle care responsibilities with work can reduce labour force participation and increase financial dependence, leading to a higher probability of women experiencing poverty in old age.