The Malaysian Insight

EXPERTS fear the government is not doing enough to mitigate the effects of Malaysia becoming an aging society in 15 years. 

They said delaying the retirement age is one way to deal with the challenges that come when 7% of the population is 65 or older – the global definition for an aging society. 

An aged nation is when 14% of its population is in that age group.

Currently, 9.5% of Malaysians are aged 60 and above, according to a 2016 study by the United Nations Economic and Social Commission for Asia and the Pacific (Unescap). 

Lee Heng Guie of the Socio-Economic Research Centre (SERC) said experienced older workers can continue to contribute to the country and economy.

Extending the retirement age also won’t worsen youth unemployment, which currently stands at 10.3%, he said.

A re-employment policy can be implemented by private enterprises where those reaching retirement age can either have their contracts extended or given new ones.

“You can let skilled retirees train young people. Sixty-year-old retirees can continue to work until they are 62 or 65. It will not affect young people’s promotion opportunities,” Lee told The Malaysian Insight.

Malaysia set the mandatory retirement age at 60 in 2013 but the Malaysian Trades Union Congress has proposed that this be extended to 65 to help increase senior citizens’ savings.  

“The number of legal and illegal foreign workers in the country is between five and six million. If young people can take up these jobs, there wouldn’t be a need for foreign workers,” said Lee, SERC’s executive director.

“We should also encourage young people to start small businesses, where you don’t need high levels of investment,” Lee said, adding that programmes to help them do this are being offered by the Malaysia Global Innovation and Creative Centre (MaGIC) and Malaysian Digital Economy Corporation (MDEC).

But Prime Minister Dr Mahathir Mohamad has shot down the MTUC idea.

Before that, Youth and Sports Minister Syed Saddiq Syed Abdul Rahman said raising the retirement age would increase youth unemployment, as there would be fewer vacancies.

Economist Associate Prof Wong Chin Yoong of Universiti Tunku Abdul Rahman said companies should create a balanced work force comprising those aged 60 and above and youth. 

“Some companies will rehire retired employees for one or two years but there are also some employees who are unwilling to accept such offers.”

Also, positions vacated by retiring employees might not be filled by younger workers as their scope of work is different.

“Even if retirement is delayed, it won’t hinder promotion opportunities for younger workers.”

Challenges ahead  

Dr Amjad Rabi, a senior social policy expert at Unicef in Malaysia, once described Malaysia as one of the world’s most rapidly aging societies.

The United States and the United Kingdom took 70 and 45 years respectively to become aging societies while the Philippines took 35 years to reach that level. Malaysia is becoming an aging country in only 25 years.

Aging has a profound impact on society and the economy as older people’s consumption patterns are lower and different than younger adults and children.

As senior citizens make up a bigger proportion of the population, their lower consumption patterns will affect economic growth. 

Also, because they don’t work, senior citizens may require more aid which has to be either borne by the government or their families.

The elderly also do not pay taxes and the country will have to deal with a large group of its citizens who don’t contribute to the public coffers but who have to rely on welfare aid.

The government must also think about its 1.6 million civil servants all of whom will draw on a pension when they retire, said Lee.

To deal with these challenges, the government needs to think of new systems for healthcare, encouraging new births and reforming pensions.

Despite this, Malaysian governments, whether Barisan Nasional or Pakatan Harapan, have not taken measures to prepare for the scenario, said Lee.

“The government has not seen the problem of aging for the time being. Conversely, the Singapore government provides subsidies for senior citizens and encourages the elderly to learn new technologies.

“While the government focuses on revitalising the economy and assisting low-income groups, we hope relevant departments can also take steps to prepare for an aging society.”

Wong of Utar said since the problem of aging may be felt in 10 to 15 years, the government is putting off dealing with it but is focusing on national finance.

Hidden opportunities    

Wong said the government must consider a new tax system to meet these long-term challenges.

“Because the consumption-based tax system has been eliminated, the government should focus on a new tax system, otherwise the tax burden will increase over the years.”

As life expectancy increases, the country has to also ensure its healthcare system is able to serve a large population of the elderly, said Wong.  

“Does the country have enough medical capacity to deal with an aging society? Medical expenses will only rise and insurance companies will adjust their premiums every few years.

“The problem of high medical expenses in private hospitals is something the government must consider. We must also consider how to plan a living environment suitable for the elderly.”

An aging society also has some benefits which can boost economic growth and even help youth.

Wong said one benefit of a late retirement age is that the period of time for young people to buy property can be extended to 60 years.

 “Because of the economic slowdown, many young people’s salary is not enough to purchase their own property before the age of 30. If the retirement age is extended, the mortgage loan period can be extended to 60 years.”

An aging society will also spur the healthcare and housing sectors, said Wong, and these will lead to more jobs for youth. – September 10, 2019.