The combined effects of slowing labor-force growth and aging populations could undermine the pension systems and broader economic prospects of many developed countries, according to a recent study by the World Economic Forum (WEF).
The study was conducted in partnership with Watson Wyatt Worldwide, a UK-based consulting firm in human capital and financial management.
"Economic output is determined by labor force growth and productivity rates," Richard Samans, managing director of the WEF's Institute for Partnership and Governance, said in a statement. "In countries with significant projected labor shortages, the supply of goods and services may not meet demand and standards of living."
Among the remedies governments and business have at their disposal are increased immigration, capital deepening, technology investment and enticing additional workers into the labor force, the study said.
While some societies are reluctant to allow significant immigration because of the domestic implications, extending the working period for older workers and encouraging more women and younger workers into the work place can also increase the labor force, the study suggested.
However, the consequence of growing retiree populations in the developed world is that the cost of retirement systems will significantly increase. This makes questions on whether pension systems should be "funded" or financed on a "pay-as-you-go" basis, and how changes in living standards are allocated across segments of society, supremely important.
Taiwan, though not suffering a shortage of labor, may soon face problems as its society ages.
As of last November, the dependency ratio -- the ratio of dependent young and elderly, aged below 14 and above 65, to the adult population -- was more than 13 percent, according to figures from the Directorate General of Budget Accounting and Statistics. It predicted the dependency ratio would reach 25 percent by 2013.
The problem is exacerbated by the nation's low fertility rate, which is expected to be 0.99 percent during the same period, according to the agency.
However, comparatively low medical and welfare expenditures will help to ease the burden on workers. Non-governmental and non-profit organizations, if fully developed, can join hands with the government in caring for the elderly, according to a report last week, which was co-authored by Michael Chen (陳孝平), president of the Chen Hsiu Luan Foundation for Education (陳秀鑾教育基金會), and Doris Lin (林依瑩), adviser to the Eden Foundation for Social Welfare (伊甸社會福利基金會).
The government should take a lead in formulating policies for the elderly, Chen and Lin suggested. Otherwise, state coffers will empty and communities will be deprived of room for growth, they warned.
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