Young work force to be a boon to investment-led growth

Posted on August 08, 2014

THE PHILIPPINES will enjoy having a large, young work force through 2030 even as many countries are expected to deal with greying populations over the next few decades, Moody’s Investors Service yesterday said.

Applicants line up to apply for jobs in government positions during an Independence Day job fair held in Luneta. -- BW File Photo
In a report titled “Population Aging Will Dampen Economic Growth over the Next Two Decades,” Moody’s said population aging is not anymore confined to just the developed world, but is also visible in emerging economies such as Argentina, Brazil, Chile, China, Russia, Thailand, and Turkey.

This phenomenon, the debt watcher said, is expected to slow growth for most countries worldwide.

The report assessed 112 countries, of which 68 were classified as “aging” by next year. Of the 68, 34 would be “aged” and five would be “super-aged.”

The United Nations said an “aging” society is one in which the elderly -- those aged 65 and above -- account for at least 7% of the population. An “aged” society is one in which the elderly make up at least 14% of the population, while a society that has more than 20% elderly is considered “super-aged.”

Germany, Italy, and Japan are already seen as “super-aged” societies. They are expected to be joined by Finland and Greece next year, and by 11 more countries -- including the United Kingdom, the Netherlands, France, and Canada -- by 2025. By 2030, there will be a total of 34 super-aged economies.

Meanwhile, in 25 years, there will be a total of 28 “aging” economies, Moody’s said, while 27 will be “aged.”

Moody’s said that while Europe and North America will remain the greyest regions, East Asian economies -- particularly China, Hong Kong, Japan, and South Korea -- will soon face severe aging pressures.

Only 23 economies, including the Philippines, are expected to have populations whose elderly constitute below 7% of the population until 2030.

The report showed that the percentage of old people in the overall Filipino population is seen at 4.1% in 2015, 4.9% by 2020, 5.6% by 2025, and 6.3% by 2030.

This, according to National Competitiveness Council private sector co-chair Guillermo M. Luz, will sustain the Philippines attractiveness as a “very good investment site well beyond 2030.”

“Having a young and educated work force, brought about by reforms in education, will make Filipinos very competitive compared to its peers in Southeast Asia,” Mr. Luz said yesterday.

While its report did not cover the impact of changing demographics on sovereign credit, the global debt watcher said it “lays out the groundwork for such an analysis by providing an overview of aging pressures across countries and by reviewing the direct effects of aging on future economic growth.”

Moody’s noted that the unprecedented pace of aging will have a “significant negative effect” on economic growth over the next two decades globally.

To counter this threat, Moody’s said reforms to improve labor participation, immigration, and financial inflows should be put in place to partially mitigate the potential negative impact of an aging population on economic growth in the medium-term.

Over the long term, innovation and technological progress are also expected to dampen the effects of rapid demographic decline. -- Daryll Edisonn D. Saclag