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Abstract
Hong Kong, like other countries with developed economies, is experiencing significant population ageing. The shift in the population age structure results from a combination of decreasing mortality rates and prolonged low fertility rates. This paper investigates the economic impact of changes in a population's age structure. We forecast on sex-specific labour force participation rates (LFPRs) and the economic dependency ratio (EDR) using different scenarios. Our results show that the below-unity level for the EDR—prevalent since 1996—will exceed unity in 2015 and rise steeply thereafter. By 2036, the projected EDR will reach an unprecedented high of 1.4, where every three economically-inactive persons will be supported by two economically-active persons in Hong Kong. This projection not only reflects a significant age shift towards the older end of the age spectrum, but is also driven by declining LFPRs among men.
Acknowledgements
An earlier version of this research paper was presented at the International Conference on ‘Demographic Window and Healthy Aging: Socio-economic Challenges and Opportunities’, 10–11 May 2004, Beijing, China. The authors would like to thank the participants for the useful comments received. The authors are also grateful to the anonymous reviewers for their helpful and constructive comments on the manuscript.
Notes
1. The total dependency ratio is the sum of the population aged 0–14 and aged 65 and above, divided by the total population aged 15–64.
2. DR=(100 – WAP)/WAP, WAP = the relative share of the working age population (Vallin 2005).
3. In accordance with the conceptual framework recommended by the International Labour Organization (ILO), individuals in the population can be divided into two main groups according to their economic activity status, namely, the economically-active population and the economically-inactive population. The economically-active population, also known as the labour force, comprises the employed population and the unemployed population. The employed population consists of those persons aged 15 and above who have been at work for pay or profit during the seven days before enumeration or who have had formal job attachments. Among the employed population, a group of underemployed persons can be differentiated for further analysis. The underemployed population comprises those employed persons who have involuntarily worked less than 35 hours during the seven days before enumeration and have sought additional work during the 30 days before enumeration, or have not sought additional work but have been available for additional work during the seven days before enumeration (HKCSD Citation2009h).
4. The labour force refers to the land-based (i.e. non-marine labour), non-institutional population aged 15 and above who satisfy the criteria for inclusion in the employed population or the unemployed population. The labour force participation rate refers to the proportion of the labour force in the land-based, non-institutional population aged 15 and above (HKCSD Citation2005a).
5. According to the HKCSD (Citation2006), the economically-inactive population comprises persons who do not have a job and have not been at work during the seven days before the enumeration, excluding persons who have been on leave or holiday during the seven-day period and persons who are unemployed. Persons such as homemakers, retired individuals, people with disabilities, and students are included in the inactive population. The economically-active population comprises the working population and can be further distinguished by employment status as employee, employer, self-employed, unpaid family worker or unemployed. In this study, the concept of labour force participation is interchangeable with that of the economically-active population.
6. The results of the baseline scenario, i.e. scenario 1, closely resemble those of scenario 2. The difference is an average of –0.1 percentage points over the whole projected period.
7. Details on the first and second time variants, i.e. scenarios 3 and 4, can be provided on request.
8. By using the baseline scenario, i.e. scenario 1, the projected female LFPR will be 42.8 per cent by 2036. For women, the difference between scenarios 1 and 2 is 0.9 percentage points, on average, over the whole period. The difference between scenarios 2 and 5 is 3.3 percentage points, on average, over the whole projected period.
9. The results presented here are based on the third time variant scenario, i.e. scenario 5. For scenarios 1 to 3, the period with a below-unity level for the EDR will close by 2016. The timing of this closure closely resembles that between scenarios 4 and 5.
10. The projected sizes of the economically-active and economically-inactive populations are based on the third time variant model.
11. The TFR stayed at its highest level of 5.17 births per woman in 1961. The TFR of Hong Kong remained relatively high in the 1960s and 1970s. Within a span of 15 years, by 1976, it had fallen to 2.48 births per woman. It broke the below-replacement level in 1980 (HKCSD Citation2009a; Yip et al. 2008). By 2008, the TFR fell to 1.055 (HKCSD Citation2009a).
12. The average annual population growth rate has fallen significantly from a near high of 3.3 per cent in the period 1976–1981 to a low of 0.4 per cent in the period 2001–2006 (HKCSD Citation2006). According to the latest statistics, Hong Kong's population was 7,008,900 by the end of 2008, and the annual growth rate had returned to the level of 0.8 per cent in the same year (HKCSD Citation2009a).
13. The projected level of labour force participation is based on the third time variant model.
14. The labour force includes all persons classified as employed or unemployed, in accordance with the definition by the Bureau of Labor Statistics (Citation2008).
15. By contrast, the proportion of the working population in financing, insurance, real estate and business services has increased by 6.4 percentage points, going from 10.6 per cent in 1991 to 17.0 per cent in 2006.
16. Eligible elderly will each be given five vouchers worth HK$50 annually. These can be used to subsidise the primary care services they buy from the private sector, including those from Western medical practitioners, registered Chinese medical practitioners, dentists, chiropractors, registered and enrolled nurses, physiotherapists, occupational therapists, radiographers and medical laboratory technologists. No pre-registration is required as the vouchers will be issued and used through the eHealth System.
17. The overall trend of unemployment rate in Hong Kong over the last 30 years appears to have been somewhat like a roller-coaster ride. It decreased from a moderate level of 3.2 per cent in 1985 to a low of 1.1 per cent in 1989, and then rose again to 4.7 per cent in 1998, reaching a maximum of 7.9 per cent in 2003, after which it declined again in the last few years, with a rebound occurring recently (HKCSD Citation2003b, 2009b). By the first quarter of 2009, the seasonally adjusted unemployment rate reached 5.0 per cent, with about 171,999 unemployed workers (HKCSD Citation2009b). Particularly, the unemployment rates in the manufacturing and construction industries stood at relatively high levels of 7.1 per cent and 12.5 per cent, respectively, in 1999. Both industries reached maximum unemployment rates in 2003, at 7.7 per cent and 19.0 per cent, respectively (HKCSD Citation2009c). Some of these increases could be explained by several important events that took place in Hong Kong, such as the handover of sovereignty in 1997, the SARS epidemic in 2003 and the global financial ‘tsunami’ in 2009, but some could also be explained by the fact that the economy of Hong Kong has undergone significant changes since the 1990s. The Hong Kong economy has not only been affected by changes in the age-structure of the population, but also by the right kind of policy environment (HKCSD Citation2008a).