According to internationally recognized standards, if people aged
60 and above account for 10 percent of the population of a country
or region, that community is considered an ageing society.
In
2000, one in every 10 Chinese was 60 years of age or older. Those
beyond 65 made up more than 7 percent of the national population.
This phenomenon is expected to continue for decades.
This is a sign that China is already an ageing society.
The increasing proportion of old people in the Chinese population
has profound economic implications for society and thus calls for
corresponding policies and measures.
Although the economic impacts are still not palpable, we have to
move fast to evaluate the situation and come up with appropriate
countermeasures.
First, such demographic development will affect the pattern of
labor supply.
As
the proportion of elderly people rises in the overall population,
the proportion of older workers will grow.
In
1999, among the active labor force, those aged 45 or more accounted
for 24 percent, up from 19 percent in 1990. It is projected that
the figure will soar to around 37 percent by 2040.
The paramount challenge for an ageing community is how to support
and care for these vulnerable people. This will affect the present
pattern of welfare for the elderly.
In
China, the tradition still prevails whereby old people are cared
for in the family home. But this tradition will face stronger
challenges in the near future without more complementary
measures.
The sharp decrease in the birth rate since the mid-1970s has
resulted in a huge number of one-child families. By around 2010,
the parents of these single children will be getting frail or
senile, and the children will have to support their parents.
As
senior citizens live longer, the extremely old will depend on their
daughters or sons, who will also become old.
Such changes will place considerable pressure on care in the family
home.
Moreover, the number of retired people is expanding rapidly and
expenditure on pensions is growing even more quickly.
In
1978, there was one retired person for every 30.3 employees. In
1999, the ratio had soared to one retired person for only 3.7
employees. If the current retirement ages remain unchanged at 55
for women and 60 for men, the ratio may climb further to one
retired person for 2.4 employees by 2030.
At
that time, the social-security fund for the elderly will be unable
to make ends meet.
An
ageing population also has potential implications for consumption
and savings patterns.
Based on the life-cycle theory, when the process of ageing reaches
a certain degree, the proclivity to save money will decrease and
people will be more inclined to consume. As families are one of the
major sources of capital accumulation, this tendency will somewhat
erode the supply of funds for manufacturing.
In
China today, however, people still tend to save for old age. The
penchant toward consumption among the elderly will be restrained to
some degree.
To
offset such negative effects, it is imperative to tackle the issue
from different perspectives.
First, the whole of society should foster a social environment that
champions respect and care for the old.
The elderly are still precious assets of society. They are still a
driving force behind social development.
In
the long term, any policy in favor of the aged will eventually
benefit the younger generation and the middle-aged.
In
addition, the legal system protecting senior citizens' interests
and rights should be perfected. It should cover such issues as the
payment and distribution of pension funds, fund management and
supervision, enterprises' responsibilities for retired employees,
individual endowment policies, and medical services for the
old.
Yet the basic prerequisite for dealing with the negative effects of
an ageing population lies in maintaining economic growth.
At
present, the major cause of the so-called social-security crisis in
some Western countries is not the expansion of the number of people
who rely on a pension. The real culprit is slow economic growth
coupled with high unemployment.
The cash pinch on social-security funds can be relieved by rapid
economic growth.
In
China, which is still a developing country, maintaining rapid and
steady economic growth is vital.
With abundant human resources and comparatively small social
burdens, the first decade of the 21st century is a golden time for
the country to get ready for the peak of the ageing population.
In
tapping human resources, training opportunities should also be
provided for the old and middle-aged.
Under China's special circumstances, care in the family home should
remain the basic mode of care for the elderly.
Such a tradition has been preserved throughout East Asia. Under the
huge pressure of an ageing population, even industrialized
countries have realized the flaws of solely relying on the
social-security system for elderly care and begun to encourage more
families to take part.
However, social services will gradually take responsibility for
many functions still carried out in the family home.
In
big cities, the combination of care in the family home and
community-based services will help the urban-based old to live with
ease and enjoy the love and care of both their family and
community.
However, the basic security umbrella for the old should still be a
social-endowment insurance network.
Based on the experience of developed countries, the government has
a responsibility to build a social-security system. But this alone
is inadequate to support the old.
A
multipolar security network -- including a government-operated
public pension fund, compulsory individual savings and a
complementary voluntary endowment policy -- will be the best
approach for an ageing society.
This will help to divert the risks of complete dependence on the
social-security fund and make the fund sustainable.
(The author is an assistant researcher with the Macroeconomics
Research Institute under the State Development Planning
Commission.)
(China
Daily March 28, 2002)