Finding Silver Linings in Greying Populations

The region’s success and prosperity have improved various aspects of welfare. But alongside this success comes a demographic reckoning: birth rates are falling, populations are ageing, and the region must now navigate the consequences of a shrinking workforce.

Just a few decades ago, governments were sounding the alarm on rapid population growth, urging people to have fewer children. Echoing the fears of economist Thomas Malthus, the main concern was that food production could not keep pace with an exploding population.

Today, the pendulum has swung in the opposite direction. Thanks to rising prosperity and better healthcare, people are living longer. In addition, technology has contributed to productivity gains and more women are participating in the economy. At the same time, birth rates are falling, some dramatically so. While agricultural productivity has also improved, population growth has slowed down or even reversed in some economies.

Look around and you may find telltale signs of a new reality. Couples are marrying later – or not at all. The “DINK” lifestyle (dual income, no kids) is increasingly common, and schools, once bustling, are closing their doors.

But, in the rural county of Yangpyeong, Korea, one elementary school found new purpose: admitting elderly women who had never received formal education. Grandmothers now study alongside young children, learning to read and write in classrooms that would otherwise have stood empty.

This reflects how far societies have come – and the new challenges they must now confront. The region’s success and prosperity have improved various aspects of welfare. For example, while women and girls just a few decades ago were confined to performing their familial duties and constrained by circumstances, they now have an increasing say in charting their paths.

But alongside this success comes a demographic reckoning: birth rates are falling, populations are ageing, and the region must now navigate the consequences of a shrinking workforce.

The demographic drag on growth

Currently three billion people strong, the APEC population is projected to shrink to 2.2 billion in 2100. This does not bode well for the labour force. With people at the centre of powering economic engines, a contracting and ageing workforce paints a worrying picture for sustained economic growth.

What about the productivity of an ageing workforce? On one hand, people tend to be more productive as they grow older and gain more work experience. On the other hand, there are concerns that it takes more effort for older workers to adapt to emerging technologies and fast-paced workplaces.

Financial markets may also feel the strain. Older people tend to be more risk-averse, with a stronger preference for liquidity and asset preservation over long-term investment. What does this mean for risky and innovative businesses? Lower start-up capital available for their projects, which could slow down innovation and funds flowing in the economy.

Governments, meanwhile, face a dual fiscal squeeze. As fewer people work and pay taxes, income tax revenues are set to decline. At the same time, healthcare spending and pension payments are expected to rise, driven by longer lifespans and rising post-retirement needs.

The need for economic prosperity

Demographic change is a reality; but so is the vast, often overlooked economic potential within existing populations. Around one billion people live with disabilities, yet they are only half as likely to be employed as those without. Just over half of women are in the labour force, compared to 80 percent of men. Many older working adults face issues in entering or staying in the labour market as well. These gaps highlight how large segments of society remain excluded from economic opportunities.

Everyone willing and able to learn and work should be given the opportunity to do so. For example, older working adults could benefit with enabling environments for this to happen. Installing wheelchair ramps, providing learning courses, and instilling positive mindset shifts around older workers are just some of the ways to do that. Actions like the availability of childcare services could contribute significantly to the greater participation of women in the economy. That way, everyone wins. Livelihoods are improved, and economic growth is propelled.

In a globalized, interconnected world, people also have the option to explore job opportunities across borders. Governments can enable smoother transitions through policies that provide safeguards and support systems to help individuals thrive.

Healthy ageing begins early

As the grandmothers of Yangpyeong returned to the classrooms, some found their studies interrupted by deteriorating health. How do we live healthy lives to pursue the things we want? Prevention is better than cure, and this applies to population healthcare as well.  

This starts with healthier living environments such as lush, green parks, clean air, and accessible public facilities. Early intervention through basic healthcare access remains essential to stop diseases before they progress. Equally important is investing in medical research, building clinical expertise, advancing healthcare technology, and training specialized teams to manage age-related with care and dignity in the later stages of life.

Diversifying and building a safety net

In an age marked by layoffs and pandemics and other disruptions, change is the only constant, and often unforgiving. What happens if you lose your job and face a medical emergency? Uncertain times call for more stability. That’s why social protection and insurance, backed by financial inclusion and literacy, are essential to build a safety net for rainy days.

At the same time, governments may need to rethink how they raise revenue. As ageing erodes the foundation of wage-based income taxes, alternative streams such as corporate income tax and property tax could help future-proof public finances. Studies suggest these are relatively more resilient to demographic shifts and offer a path to fiscal sustainability in a greying society.

A silver lining

Demographic shifts may be inevitable, but they are also manageable, if we prepare.

As societies adapt, more segments of the population can be brought into the economic fore. There is growing potential for healthcare to become more comprehensive and better equipped to treat, as well as prevent the progression of disease. At the same time, a new opportunity is emerging: the rise of a “silver economy”, as older adults make up a larger share of consumers. Where demand grows, supply follows – nimble micro, small, and medium enterprises are stepping in to meet these evolving needs, creating products and services tailored for ageing populations.

The silver economy is fuelling a wave of innovation across the region. Small and medium enterprises are developing age-friendly technologies— otherwise known as “agetech”—from smart home systems and mobility aids to advanced robotics. Urban planners are incorporating ageing-friendly infrastructure, blending automation with accessibility. Public-private partnerships, supported through APEC’s Healthy Aging Policy Dialogue and aligned with the region’s AI priorities, are key to scaling these innovations and meeting the needs of an ageing population.

Governments must strike a delicate balancing act by grappling with demographic change while safeguarding the hard-won gains of better health, education, and rising prosperity.

As demographic realities takes shape, we too must act through people-centred policies, forward looking reforms, and by taking demographic shifts in our stride.

For more information about this topic, read the policy brief "Addressing Demographic Change in the APEC Region."