An elderly Sri Lankan man sits under posters on a street in Colombo. (File photo CNN)
"Sri Lanka as a developing country will have a shorter time period than developed countries which underwent this phenomenon a few decades ago."
Aging affects both the supply and demand sides of an economy.
Aging will affect labour supply, productivity, and capital, which determine economic growth, while reducing demand for goods and services.
With an increasingly elderly population, savings will decline, resulting in a reduction in investments since less savings create less capital, and eventually a decline in economic growth, the report said.
Fiscal pressure on government will worsen the situation with the decline in the labour force caused by aging, shrinking the tax base of the government, as it reduces the number of tax payers.
This would come at a time when more funds are needed to look after the needs of the elderly.
The government needs to pay more attention to the social security of the elderly through pension schemes, insurance schemes, bank facilities focused on the elderly, and health schemes, the report said. [rc]
© Lanka Business Online.
July 23, 2009
SRI LANKA: Aging population presents risks, opportunities
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PITA KOTTE, Sri Lanka / LankaBusinessOnline / July 23, 2009
Sri Lanka's rapidly aging population could be a big burden in future but also provides a window of opportunity - a time of massive productive labour force and low dependents, a report said.
Sri Lanka is the fastest aging country in south Asia, with the elderly population posing many challenges, according to a report by the Labour Ministry.
An aging population will likely result in a decline in the labour force, reducing labour supply and productivity and at the same time reducing demand for goods and services as they will earn less.
Looking after an aging population, especially as their health care costs increase, will place a bigger financial burden on the state and family, at a time when government tax revenues fall with the decline in the labour force.
But the report said the phenomenon also provides a "window of opportunity" and that there were positive effects of aging.
With the population aging - when the percentage of people belonging to the 60 years and above age group is increasing - the average age of the work force is likely to increase.
This is believed to result in an increase in the productivity of the labour force.
Population aging results in a decline in child dependency and an increase in the old dependency, the report said.
"There will be a period with a massive workforce and a relatively smaller old and child population," it said.
"This can be an era for economic development and acceleration. The decline in dependency will increase savings and may direct more funds towards investment. The challenge here is that this opportunity will not last long."
The report said Sri Lankan policy makers should not fail to spot this "demographic bonus".
"If Sri Lanka misses this opportunity, she has to face the burden of aging without economic advantages which could have been obtained by population aging."
The percentage of people in the over 60 age group increased from 6.3 percent in 1971 to 9.2 percent in 2001 and was estimated by the United Nations at 11 percent in 2008
By 2031, 21.9 percent of the people will be over 60 years or one out of four will be an aged citizen, the labour ministry report said.
"Thus it is obvious that there is a relatively hefty shift in the age structure in a short period of time," it said.
An elderly Sri Lankan man sits under posters on a street in Colombo. (File photo CNN)
"Sri Lanka as a developing country will have a shorter time period than developed countries which underwent this phenomenon a few decades ago."
Aging affects both the supply and demand sides of an economy.
Aging will affect labour supply, productivity, and capital, which determine economic growth, while reducing demand for goods and services.
With an increasingly elderly population, savings will decline, resulting in a reduction in investments since less savings create less capital, and eventually a decline in economic growth, the report said.
Fiscal pressure on government will worsen the situation with the decline in the labour force caused by aging, shrinking the tax base of the government, as it reduces the number of tax payers.
This would come at a time when more funds are needed to look after the needs of the elderly.
The government needs to pay more attention to the social security of the elderly through pension schemes, insurance schemes, bank facilities focused on the elderly, and health schemes, the report said. [rc]
© Lanka Business Online.
An elderly Sri Lankan man sits under posters on a street in Colombo. (File photo CNN)
"Sri Lanka as a developing country will have a shorter time period than developed countries which underwent this phenomenon a few decades ago."
Aging affects both the supply and demand sides of an economy.
Aging will affect labour supply, productivity, and capital, which determine economic growth, while reducing demand for goods and services.
With an increasingly elderly population, savings will decline, resulting in a reduction in investments since less savings create less capital, and eventually a decline in economic growth, the report said.
Fiscal pressure on government will worsen the situation with the decline in the labour force caused by aging, shrinking the tax base of the government, as it reduces the number of tax payers.
This would come at a time when more funds are needed to look after the needs of the elderly.
The government needs to pay more attention to the social security of the elderly through pension schemes, insurance schemes, bank facilities focused on the elderly, and health schemes, the report said. [rc]
© Lanka Business Online.
