Solving the economic

challenges of population aging in contemporary

Hong Kong

Members:Au Wai Lun

Wong Tsz WaiKevin

Thomas

Content

1. “Population aging” in Hong Kong2. Causes of “Aging population” 3. Induced economic challenges of

aging population Medical Social welfare The overall economic prospect

4. Solution?-----Conflicting views5. Our suggestions

Population aging in Hong Kong

Definition of Population Aging

According to World Health Organization (WHO):

1. When population aged 65 or above ≥ 7% of the total population

2. When population aged 65 or above ≥ 14% of the total population

Aging Society

Aged Society

Current Situation in HK

According to “The Profile of Older Persons, 2006” published by Census and Statistics Department:

“Over the past 45 years, the proportion of older persons (aged 65 or above) in the total population rises from 2.8% in 1961 to 12.4% in 2006.”

Aging society

Aged society

Hyper-aged

society

Future Population Trend in HK

Refer to the “Projection of Population Distribution” and “Hong Kong Population Projection” published by Census and Statistics Department:

“In 2019, population of older persons will jumped from 890,000 in 2009 to 1,320,000 in 2019 (13% to 17.2%)”

“In 2039, the proportion of the population aged 65 and over is projected to rise markedly from 13% in 2009to 28% in 2039”

Causes of Population aging in HK

Two main factors (1)1. Low birth rate

Higher divorce rate Higher child-raising cost Changed mindset (family individual) Extended first birth age Increased woman participation in labour market Lower infant mortality

Two main factors (2)2. Long life span

Improved health care services Improved social welfare Improved social condition

Induced economic challenges of population aging

Social welfare challenges

Medical and Health Services for elderly1. Community Support Services for the

Elderly2. Residential Care Services for the

Elderly3. Old Age Allowance4. Health Care Voucher5. Public Housing6. Senior Citizen Residences Scheme

2012–13 Government expenditure

Government expenditure for 2012–13: $44 billion ,about 30% used for elderly

Allocate $900 million to improve quality of 250 district elderly community centers

Additional 1,000 subsidized residential care places

Public transport concessions for the elderly and eligible people

Services for Elders

In the 2012-13 Buget, Financial provision for services for Elders has increased for 5%($170.8m to $ 179.4m)

Threes new services1. Enhanced Bought Place Scheme 2. Discharge Support Programme for

Elderly Patients3. The pilot scheme

Old Age Allowance HKD 1,090 /month Expenditure about 3.9 billions in

2008, 4.4 billions in 2014-15 in prediction

In 2033, 2.1 millions of elderly people, about 28% of total population

Money for Comprehensive Social Security Assistance and Old Age Allowance

Housing Burden

67% of total population of elderly live in public housing in 2010

Senior Citizen Residences Scheme is carried out because of the increasing need of house.

With the increasing land price, the economic challenge would be really hard for government

Brief Summary

The rate of increasing number of aging citizen keep accelerating

With the increasing need of Support Services , Old Age Allowance, Health Care Voucher, the money use for elderly may be doubled or tripled.

The tax may not afford the burden of these needs.

Medical Expenditure of Hospital Authority Reasons that population aging cause medical

expense increase

　　└ Chronic disease↑ 　　 └ In-patients Staying↑( 病人日數 ) Health Care Voucher

Expenditure of Hospital Authority

90% of incomes comes from government HKD39.9 billion 2011-2012 for Medical (17% of recurrent

Government expenditure, 27% in 2033)

Expenditure prediction 2011 - 2012 39.9 billion 2012 - 2013 45.0 billion (+8%) 2032 - 2033 186.6 billion (+367.6%)

Two main Expenditure (09-10) Staff costs (26.7 Billion, about 73%) Drugs + Medical supplies and equipment (HKD4.4 Billion,

About 12%)

Source: Hospital Authority Statistical Report

Reasons that population aging cause medical expense increase

• The amount of the drugs expands have obvious increase. (2012 – 2013 Inject $10 billion into the Samaritan Fund )

• About 90% of the old people rely on the public medical service (50% of Hospital Authority expense)

• 72% old people are Chronic Illness• Chronic disease

• Drugs Expensive (Samaritan Fund for Drug Items)

• Number of In-patients Staying about 50% is aged 65↑

• Old people have increased and will have a great increase in year 2019 (13% to 17.2%)

Health Care Voucher

Aims To provide financial assistance for the elderly to

choose the most suitable medical service. ($250@year, near 0.5 billion/year) (2012-1-1 $500@year, doubled)

Requirements Age 70↑, have HKSAR ID CardDefinite date From 09-1-1 to 11-12-31 (First trial) From 12-1-1 to 14-12-31 (Second trial)

Overall economic prospects

Burden on next generation

In 2033, the elderly (aged >65) will account for 27% of total population Cf. 13.2% currently

Source: Census and Statistics Department

Increase proportion of aged pop. ( retired) Increase burden of working pop.( nearly every 4 labours support 1 elderly ppl.)

Slow down in economic growth

Gross domestic product (GDP) , a main measure of level of production (econ. growth) of a region.

Labour population in 1996, 2001 and 2006 - By Age Group

Age1996 2001 2006

No. % No. % No. %15 - 24 462 885 14.5 444 244 12.9 433 746 12.125 - 34 1 011 015 31.8 953 725 27.7 912 351 25.535 - 44 910 170 28.6 1 066 020 31.0 999 188 28.045 - 54 504 866 15.9 701 551 20.4 878 393 24.655 - 64 232 173 7.3 218 462 6.4 288 960 8.165+ 61 388 1.9 53 990 1.6 59 746 1.7Total 3 182 497 100.0 3 437 992 100.0 3 572 384 100.0

Source：

Census and Statistics Department

GDP growth greatly depend on working population

proportion of elderly people Relative in working population Slowdown in GDP growth

E.g. During 2025-2050, GDP growth in USA, Japan and Europe is expected to fall by 1.5%, 0.6% and 0.5% respectively source: John Mauldin – www.hjej.com

Shrinking tax revenue

proportion of elderly relative in working population in salary tax revenue

人口金字塔 Population Pyramid

400 300

200

100

100

200

300

400 0

400 300

200

100

100

200

300

400 0

年齡組別 Age group

二零零一年年中 (基準)

Mid-2001 (Base)

千人 Thousand persons

年齡組別 Age group

二零一六年年中 Mid-2016

千人 Thousand persons

年齡組別 Age group

二零三一年年中 Mid-2031

千人 Thousand persons

男性 Male

女性 Female

男性 Male

女性 Female

85+

80-84

75-79

65-69

70-74

60-64

55-59

50-54

45-49

40-44

35-39

30-34

25-29

20-24

15-19

10-14

5-9

0-4

400 300

200

100

100

200

300

400 0

外籍家庭傭工 Foreign domestic helpers

男性 Male

女性 Female

85+

80-84

75-79

65-69

70-74

60-64

55-59

50-54

45-49

40-44

35-39

30-34

25-29

20-24

15-19

10-14

5-9

0-4

85+

80-84

75-79

65-69

70-74

60-64

55-59

50-54

45-49

40-44

35-39

30-34

25-29

20-24

15-19

10-14

5-9

0-4

Tax revenue as the base of public cost (e.g social welfare for the elderly, infrastructure…)

Example: ~ 90% operation cost of the public hospitals is subsidised by SAR government Source: Hospital Authority Statistical Report 2009

– 2010

aged population demand for long-term care service gov. expenditure

In the long run, gov. expenditure may keep falling short of its revenue

Solutions?-----

Conflicting views

1. Broaden the tax base by introducing GST

Purpose: to maintain budget balance and the quality of public elderly services

Government supports the idea

In 2006, Financial Secretary Henry Tang Ying Yen said “…….. the rapid ageing of Hong Kong's population will be accompanied by higher spending pressures on healthcare and services for the aged…….. the introduction of a GST (Goods and Service Tax) is a viable option for Hong Kong. This would secure the long-term sustainability of our revenue base and our capacity to meet public expenditure needs.”

1. Broaden the tax base

However, The Democratic Party( 民主黨 ), League of Social Democrats ( 社民連 ), the tourism and retailing sector all oppose the idea because

The living of citizens will become more difficult GST will degrade the business environment of HK

2. Encourage birth

2. Encourage birth The Democratic Party and The Family Planning

Association of Hong Kong do not support the idea

Member of The Democratic Party, Lo Chi Kwong said, “…….Population aging is an irreversible progress. Therefore, it is better for us to focus on solving the accompanied economic challenges rather than increasing the birth rate.” (Suggestions of The Democratic Party on population policy, 2006)

The Family Planning Association of Hong Kong: Having children or not is a personal decision Quality > Quantity

學者籲連串優惠鼓勵生育

學者和專業團體普遍認為單靠政府鼓勵市民生育作用不大，應提供全面優惠政策，包括大幅提高子女免稅額、提供全面託兒服務、延長產假等，讓父母安心照顧子女。 隨香港出生率低見0.94（每名婦女一生中生育0.94名子女），香港家庭計劃指導會家喻戶曉的「兩個夠晒數」經典口號，或已完成其歷史任務，面對逐漸浮現的人口老化危機，「生定唔生﹖」已經不再是個人選擇這麼簡單。為了掌握現今男女對生育的期望和理想，家計會特別舉辦標語創作比賽，不論是「擁抱香港，繼續生育」，還是「唔生仔，靠自己」，只要被視為切合今日需要，便有機會贏取冠軍萬元獎金。

過去三十年以「兩個夠晒數」為節育口號的家庭計畫指導會亦要適應轉變，由節育改為健康輔導，公開徵求反映市民生育意願的標語，藉此讓市民反思生育和人口發展的問題。

家計會即日起至下月六日舉行網上標語創作比賽。家計會發言人表示，七五年推行「兩個夠晒數」家庭計畫運動，是要紓緩人口急劇膨脹問題，但目前情況已經不同，希望透過標語創作及其後一系列運動，讓市民作出反思。查詢標語比賽詳情，可致電25722222。

對於政府鼓勵市民生育，社區組織協會主任何喜華指出，德國為鼓勵生育和製造就業機會，產假長達一年半，育有三名子女的家庭更獲巨額津貼，港府可以倣效。

香港稅務學會理事王銳強亦指目前子女免稅額對鼓勵市民生育的吸引力不大。他建議子女免稅額由目前每名子女三萬元，倍增至六萬元，減輕市民稅務負擔。

不過，香港大學社會社工及行政學系授周永新認為，市民擔心養育下一代支出十分高昂，單靠減稅亦難以刺激市民生育意欲，反而每年約有一萬名內地人士在港出生，但他們大部分返回內地定居，政府應想辦法令他們在港居住。

身兼家計會理事會委員的港大統計及精算系高級講師葉兆輝指出，現時香港的生育率已跌至只有0.94，可謂是全球生育率最低的地區，就連新加坡和日本，在加緊催谷生育後，生育率已升至1.2至1.3。葉兆輝坦言，香港的生育問題，「已經不再是個人選擇咁簡單」，要在社會責任中取一個平衡，「就如上班工作一樣，若每個人都說我有錢，不用工作，整個社會人人不上班，社會的經濟活動怎能推動呢﹖」

港大統計及精算學系高級講師葉兆輝亦對政府鼓勵生育的成效表示懷疑。他說，就算每對年輕夫婦生育三名子女，也只能將本地出生率由目前的零點八提高至一點二，遠低於理想中的二點一。

香港人力資源管理學會外務總監吳克儉表示，出生率低和人口老化，均嚴重影響本港未來人力資源，但除鼓勵生育，人口素質亦很重要，政府應加快和簡化審批內地及外地專才來港的程序。

行政會議成員兼立法會議員陳智思亦指出，香港出生率偏低，加上人口逐漸老化，十至十五年後本港勞動人口會出現短缺，政府應放寬輸入內地專才。他說，隨 本港與內地文化及經濟日漸融合，當局長遠宜摒棄限制兩地人流自由往來的政策，讓有條件的專才來港發展。他認為，若未來數年持單程證來港的內地人士持續下跌，當局可調整名額數量。

陳智思以紐約及倫敦為例，指該兩個城市都不會設置邊界將人流「綁死」，有能力者會繼續住在城市，中產及退休人士則遷往生活水平較低的郊區。他說，不少本地人擔心內地專才來港「搶飯碗」，但其實輸入專才反而可製造更多就業機會。

3. Extend the retirement age

4. 設立全民退休保障計劃

Medical reform

5. Attract youthful immigrants

Purpose: young population, maintain or even enhance quality of workforce market competitiveness

Gov. support the idea: first introduced Quality Migrant Admission Scheme in 2006, further modification has been made in 2007 Nicole Alpert: a research associate for The Lion Rock Institute

1. “The Lion Rock study makes an important point: ``For resource-poor city- states like Hong Kong, Singapore, Dubai and Shenzhen, human resources are probably the only resource that can render their economic growth sustainable.”

2. “Even with immigration, we cannot “escape” an aging population and its transformation of society - migrants age too - but open immigration policies will help us make these changes more comfortably.”

Opposing views Mr. Ma Kwok-ming, Lingnan University part time lecturer

Immigration of mainland talents more intense competition among work force Helen Chan Wing-mui, Assistant Director of Immigration

“We want to protect our local graduates, not increase competition for them.”

Leslie Kwoh, The Standard

“Illustrating the disadvantages of such an arrangement, however, the scheme has come under fire in recent months for allowing thousands of foreign workers to come into Australia at below-market rates while many local graduates still struggle to find work.”

Universal Retirement Protection

Offender: government -- 現時偏向反對 (2008) 以下為 Secretary for Health, Welfare and Food York

Chow Yat-ngok四月二十六日在立法會會議上就「全民退休保障」動議辯論的發言 (partial): 全民退休計劃經驗證明是有一定的原則及持續的問題，需要考慮是否可以維持。我們對這個建議有很大的保留，政府亦不會貿貿然推行全民退休保障，對這課題，我希望議員小心處理。

學者 (城市大學副教授，博士 --曾淵滄 , Dept of Economics HKUST 雷鼎鳴 Francis T Lui)

Supporter: Alliance for Universal Pensions ， League of People

Power Albert Wai-yip Chan ， League of Social Democrats Kwok-hung Leung…

http://www.info.gov.hk/gia/general/200604/26/P200604260315.htm

http://www.takungpao.com/opinion/takungpao/2011-04-29/762779-2.html

http://francis-lui.blogspot.com/2011/04/blog-post.html

http://www.inmediahk.net/taxonomy/term/500644/0

Our suggestions

1) Import foreign medical staff2) Increase places of tertiary education3) Provide more incentives to

encourage parenthood4) Encourage retirement in Mainland

China5) Enhance open immigration policy6) Well allocation of resources

1. Import foreign medical staff

Follow our Asian neighbour – Singapore

import of foreign medical servants (e.g. nurses, health assistants or even doctors)

Reduce burden of local medical staff in public hospitals Maintain quality of public medical service

2. Increase places of tertiary education

places of government-funded tertiary education programmes ( esp. degree prog.)

Maintain and enhance competitiveness of local workforce amid contemporary knowledge-based economy Well- educated labours are essential

human resources in H.K. !!!

3. Provide more incentives to encourage parenthood

Offer more economic lure to encourage citizens to give birth to babies

one-off tax allowance of new born babies family

continuous subsidy for children-raising

setting up babies care centers… etc.

Fertility rate

5. Enhance open immigration policy

Focus on attracting relatively young workforce from worldwide

By focusing on age limit – let say introduce bonus points in 15-30 age category

By offering incentives to young immigrants-e.g. housing allowance,

Encourage them to settle down ( Morgan as an successful case)

Babies of non-local parents Government: Automatically giving babies of non-

local parents permanent residency

A spokesman for the Labour and Welfare Bureau: By 2018, Hong Kong will have about 300,000 postwar baby boomers who have retired. Many of these vacancies will not be filled as the city's birth rate has been decreasing at an increasingly alarming speed since the 1970s.

A government manpower study: Hong Kong's workforce will be too small to power its economic growth by 2018 because of an ageing population,

Babies of non-local parents Citizens: oppose the idea Non-local parents are not tax payer but

they Occupy the resources of Hong Kong Citizens

Culture conflict between Citizens and people from mainland China

Chance of Babies of non-local parents taking their parents to come to HK in many years later

Well Allocation of resources

Joyous Living scheme waste of resources

Provide its residents with a relaxed ambience, continuing professional healthcare and skilled care services

Target customers : Rich elderly Over ten thousand management

expenses / per month More resources should be used for

helping the poor old people.

14.1

9.87.2

64.3 62.8 61.4

0

10

20

30

40

50

60

70

1991 1996 2001

perc

enta

ge

Older Persons Whole Population

Labour Force Participation Rate

Source: Elderly Commission

Extend the retirement age Extend the entire age from 65 to 70

Extend the retirement age

USA - being gradually raised to 67 years old

Japan – 69 years old Korea - 67 years old Flexible or part-time work arrangements

for older persons Retire age depends on work type Would not block the advancement of

younger workers, while retaining valuable insight and expertise for the employer