As the average working Malaysian struggles with the rising cost of living, stagnant wages and low savings or none, a pertinent question to ask is: how will they cope when they retire?
The question becomes more frightening when one takes into account the increasing numbers of the elderly. What does the future hold for Malaysia after 2046, when those aged above 60 – the current retirement age – outnumber those below 15 years of age?
Government statistics indicate that the proportion of the elderly has been steadily increasing, from 5.4% of the population in 1970 to 8.0% in 2010.
By 2050, it is projected that the elderly will number 9.6 million, or 23.6% of the population.
Ageing populations are already posing challenges for a number of countries. For example, Singapore now has only 4.9 working adults for each citizen aged above 65. Less than 50 years ago, it had 13.5 working adults for each elderly citizen.
If the retirement age in Malaysia remains the same and life expectancy continues to increase, more people will be claiming pensions and fewer people will be working and paying taxes. This was pointed out to FMT by Ng Yeen Seen, who heads the Centre for Research, Advisory and Technology.
“Hopefully,” she said, “this will not lead to higher taxes for working Malaysians.”
She said higher taxes would discourage people from working hard, thereby affecting productivity.
She advocated raising the retirement age as a way of meeting the challenges posed by an ageing population. “This will allow people to contribute to the economy for a longer period.”
She also suggested promoting private sector pensions to add to the spending power of the elderly.
The Malaysian Employers Federation (MEF) said a smaller manpower pool might not be the biggest problem in a country with an ageing population because industries would opt for increased automation.
“The types of jobs needed in the future won’t be labour intensive,” said MEF executive director Shamsuddin Bardan. He cited a 2016 World Economic Forum report, which says as many as seven million jobs will cease to exist in leading economies by 2020 due to technological advancements.
The report also says 65% of children starting primary school in 2016 will end up working in jobs that don’t even exist yet.
“So, on one hand, we don’t need to be labour intensive but on the other hand, we have to make sure our education system can produce talents that are innovative, multi-skilled and highly adaptable to future market needs,” Shamsuddin said.
He also said the government should develop a master plan for the ageing population and leverage on the ability of the elderly to be economically active.
“In Singapore, companies are given incentives to hire workers who have passed their retirement age of 62. They are encouraged to work for at least another three years.”
He noted that Malaysia had yet to develop such a policy, saying this had resulted in a “waste of potential” among the elderly.
It is estimated that about 200,000 people retire from the Malaysian private sector every year.
Shamsuddin said Malaysia should emulate Thailand and Singapore, where the elderly are hired for simple jobs such as tending to the cleanliness of airports. He noted that young foreigners dominated such jobs in Malaysia.
“We should give employers incentives to hire retirees instead of foreign workers,” he said. “That way, retirees can also earn money to help them survive.”
source:::http://www.freemalaysiatoday.com
What will happen when more people claim pensions and fewer people earn taxable income?
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