This year, as the economic downturn has begun to clamp down, the American and European governments have spent hundreds of billions of dollars to stimulate their economies. Soon, however, a far greater financial strain might take hold as these countries face the challenge of aging populations. In Taiwan, however, this challenge might reach crisis proportions. By 2050 it is estimated that the working population will only outnumber the non-working by a mere 1.5 to 1. The island has no choice but to plan and manage resources to meet these challenges.
According to the Taipei-based China Times, Taiwan’s government will face its biggest financial demands in dealing with “the gray collar generation.” Taiwan’s aging population will be depleting its labor pension fund and health insurance, while a continuing low birth rate will make it impossible to replenish these funds. The extended longevity of Taiwan’s population, coupled with proportionally fewer young people, will gradually cause a severe imbalance in the island’s age demographics.
The paper cites two requirements for an enjoyable retirement - good health and sufficient funds. The latter is usually dependent on the labor insurance pension for retirement income and the former on Taiwan’s universal health insurance. However, both pools of funds are in trouble, with the pension funds in the red and perhaps bankrupt within 18 years, and universal healthcare also awash in red ink to the tune of NT$50 billion (US$1.5 billion), a level not sustainable at the current rates. So unless the government starts to tackle these problems with appropriate measures, the consequences for the quality of life for Taiwan’s growing population of seniors could be dire.
Taiwan is not the only country facing a disparately large aged population. Japan is in the same boat. With an average life expectancy of 83 years, Japanese rank near the top in longevity. Currently, in excess of 22 percent of Japanese are 65 or older. Their medical care and pension expenses have become the greatest burden for the Japanese government. At present, over 10 percent of Taiwan’s population is 65 or older. But, according to the Council for Economic Planning and Development (CEPD), that ratio will almost triple by 2050. At that point, Taiwan will have the dubious honor of having the second oldest population after Japan.
Currently, Japan has three workers (aged 15-64) for every one over 65. It is forecasted to be 1.5 to 1 by 2050. While that ratio in Taiwan is currently 7 to 1, that is 7 workers to 1 retired senior; by 2050 it will come closer to matching Japan’s ratio of 1.5 to 1. This disparately large senior population will affect how Taiwanese live, do business and will inevitably shift the government’s focus.
According to the London-based Economist magazine, as the baby boom generation starts to retire and collect their pensions in the next 20 years, labor shortages will be the consequence, coupled with the slowing of economic growth. Faced with an insufficient labor pool, companies must begin to take advantage and develop the talents of seniors. Many employers remain prejudiced against older workers because older people are often perceived as slower on the uptake and less comfortable with new technology.
To cope with the aging societies, American and European countries have started to extend retirement ages to 67 or 68. The Economist suggests a retirement age of 70 may be needed. The current legal retirement age is 65 in Taiwan. It is estimated that at least NT$10 million (US$310,000) is needed for someone who retires at 60 and lives up to 80 without labor insurance pension support in Taiwan. However, studies by the Ministry of Interior have shown that seniors with savings and pensions accounting for less than 30 percent of their retirement income depend on their children for financial support. The China Times urges the government to take necessary steps to deal with the forthcoming financial crisis brought on by an ageing society, including extending the retirement age.
- The Press Division of the Taipei Economic and Cultural Office (TECO) in San Francisco represents the Government Information Office (GIO), Executive Yuan, Republic of China (Taiwan). GIO maintains nine Press Divisions in the United States, including the San Francisco office. The Press Divisions are in charge of promoting Taiwan's public relations and cultural exchanges. This blog is updated by the Press Division, TECO in San Francisco.
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