Equitable Ageing: Seizing the Longevity Dividend

Equitable Ageing: Seizing the Longevity Dividend Sebastian Riomalo (riomaloclavijo@unfpa.org) Economic Analyst on Population and Development UNFPA China, May 2015

Structure I. Context: China s population dynamics and implications II. China s elderly in figures III. Equitable Ageing: Seizing the Longevity Dividend IV.The Private Sector s Contribution V. Conclusion

SECTION I CONTEXT: CHINA S POPULATION DYNAMICS AND IMPLICATIONS

Population & Development In China and globally, population dynamics have a cross-cutting influence on development But no inevitable consequences only provide opportunities and challenges Policies (and stakeholders) are the ones ensuring sustainable development if tailored in time to population dynamics and local contexts

China s Economy 3 decades of unprecedented economic growth and increasing living standards In PPP, largest economy in the world (2015) yet middle-income country - GDP p.c. USD 12,000 (2013) Need to move towards consumption-led growth Reduced poverty (15%), but large development inequalities remain -- Gini coef. = 0.47 (2013) Average level of national public debt - 55% of GDP (2014)

Overlook of China s Population Dynamics (70s - ) China has gone through a demographic transition caused by a lower fertility rate and longer life expectancy During this time, labour force temporarily grows more rapidly than the dependent population on it (Lee& Mason 2006) Demographic Dividend A new phase is now starting: Population ageing i.e. an increasingly larger share of China s population is aged 60+

China s Population Dynamics: From DD to Population Ageing Fig. Share of elderly people as percentage of total Fig. Dependency Ratio: from 9:1 workers per old-age person to 3 to 1 Source: World Population Prospects, the 2012 Revision, United Nations, DESA

China s Demographic Dividend China was highly successful in seizing the DD: from 1975 to 2013, DD contributed about 15-25% of economic growth (Cai, & Wang 2012; Mason 2013) But this was not an automatic gain China succeeded because its demographic change was fast, but also because it had the right policies in place: fostered an employment-oriented economy encouraged development of a private sector increased labour productivity

China is not alone - ageing is happening all around the Globe Source: UNDESA, Population Ageing and Development 2012

But China s population ageing is particular in some ways Largest in the world: 123m people aged 65+ in 2013; 235m estimated in 2030 and 331m in 2050 One of the fastest: Between 2005 and 2020, 105 million new elderly people (6 m per/y) Getting old before getting rich: More than 15% of population aged 60+ and GDP per capita of USD $12,000 (PPP)

Challenges of population ageing Reduced workforce and reduced tax contributions Increased healthcare and social needs and costs Increased inequality Slower economic growth Reduced government s capacity to respond to other social needs

Opportunities of population ageing Extended contributions of experienced workers Increased private consumption and productivity Increased social cohesion Increased enjoyment of old age New and Strenghtened silver markets

SECTION II CHINA S ELDERLY IN FIGURES

The general picture China s population by age group Fig. Changing Age Groups in time Absolute and relative increase of the elderly population, and of the oldest old More than one in three persons will be aged 60+ in 2050

By gender Fig. Sex Ratio (male per 100 female) Most older persons are women more so among the oldest old Source: World Population Prospects, the 2012 Revision, United Nations, DESA

By urban/rural divide Fig. Proportion at older ages (60+) by Urban/Rural 8.9 8 8.2 7.1 7.3 6.5 Total Female Male 16.7 17.5 16 13.5 14.3 12.8 More elderly people living in rural areas in relative terms and increasing In 2010, 65% of the elderly lived in rural areas Rural Urban Rural Urban 1980 2015 Source: World Population Prospects, the 2012 Revision, United Nations, DESA

By Income Fig. Consumption and Income Poverty Rates by age group Rural poverty rate is high and there is a big difference in income between urban/rural Fig. Elderly Poverty Rates according to different definitions of Per Capita Income and Expenditures Older people have higher expenditures and poverty rates than younger cohorts Source: CHARLS (2013)

By ability and labour status Women need more help with daily activities; help needed rises quickly with age after 70 Fig. Share of Persons who need help with Daily Activities, by Gender and Age group Employment rates decrease relatively quickly after 65, but do not fade out; rural remains higher Fig. Employment Rate by Age Group and Urban/Rural Source: CHARLS (2013)

Per Cent By health status 60.00 50.00 Fig. Elderly s Health Self-Assessment But, Large fraction of the elderly have physical limitations 40.00 30.00 20.00 10.00 - Healthy Basic Health Not healthy, but independe nt Dependent Total 43.82 39.33 13.90 2.95 Male 48.22 36.90 12.37 2.52 Female 39.64 41.64 15.36 3.35 Fig. Physical Health Status of the Elderly by gender 82% of the elderly claim to have basic health, but only 44% are healthy Source: National Bureau of Statistics, 6 th Census (2010) Source: CHARLS (2013)

By Public Transfers and relevant population groups 12,000 10,000 Fig. Total Public Transfers by Age and Residence (Per capita CNY) 12,000 Fig. Total Public Transfers by Age and Gender (Per Capita CNY) 18,000 16,000 Fig. Total Public Transfers by Age and Income Quartiles (Per Capita CNY) 8,000 10,000 14,000 12,000 6,000 8,000 10,000 4,000 2,000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Age Urban Rural 6,000 4,000 2,000 0 0 5 1015202530354045505560657075808590 Male Female Total Public Transfers favour more advantaged groups such as men, urban residents and high income individuals 8,000 6,000 4,000 2,000 0 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Quartile 1 Age Quartile 2 Quartile 3 Quartile 4 Source: Shen, Lee, Wang (2014)

China and the AgeWatch Index Source: HelpAge International, Global AgeWatch Index 2014 Insight report

China s position in the 2014 AgeWatch Index China was 48 th out of 96 countries right in the middle China performs better on Capability and Enabling environments; not so well in Health status and Income security Source: HelpAge International, Global AgeWatch Index 2014 Insight report

Overall Large differences in share and status of senior citizens across income, urban/rural, and gender dimensions Mixed results on the elderly s health: half of them are in good health but the other half has large physical limitations Income security and health of the elderly are major weaknesses in overall assessment of their wellbeing Larger share of elderly people are within more vulnerable groups Vulnerable groups face lower wellbeing and receive much lower benefits through public transfers and But public transfers in China are uneven between generations and skewed in favour of the elderly

SECTION III EQUITABLE AGEING: SEIZING THE LONGEVITY DIVIDEND

What is Equitable Ageing? 1-4 framework One Guideline Policies and stakeholders should pursue greater equity in ageing within and between generations to enhance the elderly and society s overall wellbeing Two Goals Meeting the basic needs of people throughout their life course Ensuring people s equal access to opportunities of wellbeing enhancement as they age Three Notions Cross-cutting implications for development Not only about the elderly Equity in ageing fosters sustainable and inclusive development Four Dimensions Generational Social Gender Geographical

Basic needs and Wellbeing What do we understand by the elderly s wellbeing? Physical Security Economic Housing Health Access to quality Healthcare Healthy Ageing Participation in Society Empowerment Lifelong Learning Age-Friendly Environments

Equitable ageing policies in China Security (Economic) Rural social pension: minimum of CNY 55 monthly; covers 48% of people aged 60+ and costs 0.11% of GDP Spill-overs: < living standards for all; < economic growth; > overall inequality; empowered younger cohorts Health (Access) Urban Basic Medical Insurance; 89.4% of older urban residents covered (2011) Spill-overs: > poverty; < household consumption; better health systems Empowerment (Participation) Silver-age Action program: senior intellectuals aid less-developed regions; 3m volunteers up to 2010 Spill-overs: > regional and generational inequity; < economic productivity; < social cohesion

(Some) Benefits of Equitable Ageing for Development Physical < Economic growth Security Economic Rural Pension < Empowerment of younger Cohorts Health Housing Access to quality Healthcare Healthy Ageing UBMI < Living Standards for all > Overall Inequality Lifelong Learning > Public Costs Empowerment Participation in Society Silver-age < Efficiency & Quality of Health Systems Age-Friendly Environments < Social Cohesion & Intergenerational solidarity Examples Benefits

So what is the Longevity Dividend? More sustainable development Population Ageing Equitable Ageing Longevity Dividend More inclusive development

SECTION IV THE PRIVATE SECTORS CONTRIBUTION TO EQUITABLE AGEING

Private Sector is needed to cater to the elderly Government can not cope on its own due to strained fiscal budgets and pace and degree of ageing Cooperation among all relevant stakeholders is needed Private sector, international and grassroots organisations, research institutes Private sector needs to do what it knows best Quickly identify unsatisfied needs and market opportunities Find solutions to these needs at an affordable price Make the lives of customers better and easier

Private sector should. Tailor products to the vastly different realities of old people: Attend all segments of the market Equity s Four dimensions Develop all potential industries Key areas of wellbeing Work with other relevant actors Devise win-win partnerships to truly understand and address the needs of the elderly Strive to fill the gaps of public policies Treat the elderly as experienced and active members of society See the overall impact of their business on other generations

Return on Investment, if done right If your product truly understands and address senior citizens needs, Financial Secure a stable and profitable business Expand your business prospects within China and abroad Have a more experienced and healthier labour force Social Improve the lives of many Empower younger cohorts Increase efficiency of health and retirement services Contribute to sustainable and inclusive development

SECTION V CONCLUSIONS

Conclusions (I) At the macro-level, population ageing in China Has cross-cutting implications on all fields of development -- but the impact s nature is not unequivocal Provides opportunities for and challenges to development Has an impact on all current and future generations At the individual level, ageing in China Has remarkably different impact on people s wellbeing Conditional on their gender, social status, generation, and geography This creates differentiated needs and capacity to attend to these Women, low-income people and rural residents are in greater risk of not enjoying their late years at their fullest

Conclusions (II) Policies and relevant actors should respond effectively to ageing Government, international organisations, private sector, communities, and families all play a role Due to ageing s complexity, cooperation amongst these is a must Equitable ageing has large positive spillovers for development and should guide policies and actor The private sector, in particular, should cooperate with other actors to understand all segments of the markets The potential financial and social returns are immense Equitable ageing will ensure more sustainable and inclusive development in the years to come

China s Demographic Dividend is fading out let s start seizing the Longevity one

Sebastian Riomalo (riomaloclavijo@unfpa.org) Economic Analyst, UNFPA China More info: www.unfpa.cn UNFPA global ageing report: Ageing in the twenty-first century: a celebration and a challenge