Impact of Ageing on Social Security and Pension Systems in Asia

As Asian countries strive to sustain their international competitiveness and growth momentum during the current global economic crisis, their task is complicated by the challenges posed by rapidly ageing populations. The need for addressing these challenges has been evident at least since the 1997-98 Asian economic crises. But these efforts were not sustained in most Asian countries as swift and robust economic recovery reinforced the notion that pursuit of high economic growth should take precedence over strengthening social security and pension systems.

The current global crisis has two major implications for meeting the challenges arising from rapid population ageing. First, unlike the 1997-98 Asian crisis, the current global crisis is expected to lower the medium-term growth rate of most Asian countries as compared to the projections before the 2008 global crisis. It is generally recognized that the single most important macroeconomic variable that can potentially provide economic security for both the young and the old is the trend rate of economic growth. Its impact on social protection would be stronger if the growth in Asian countries is widely shared among different regions and groups, and if livelihood generation per unit of GDP is strong.