Of 20 major global economies, Asian countries are among the least prepared to combat the threats of societal aging and workplace automation, according to a new study from Mercer and Marsh & McLennan Insights.
The Ageing and Automation Resilience Index analyses the mitigating factors a country has in place to tackle the challenges of aging and job automation among older workers, as well as the strength of their local retirement system, to assess a country’s preparedness to manage aging and automation.
Mitigating factors include higher older worker labor force participation, an adequate level of pension fund assets, favorable socio-economic conditions, and appropriate policy and legal conditions.
South Korea (20) ranks at the bottom of the list, with China (18) and Japan (17) not far behind. Of the four Asian countries included in the Ageing and Automation Resilience Index (AARI), Singapore (13) ranks the highest. Denmark (1), Australia (2) and Sweden (3) are the most resilient countries to aging and automation challenges.
Globally, governments and organizations are experiencing a time of significant disruption. Technological advancements are increasingly putting low-skilled routine jobs at risk of automation – jobs that older workers aged 50 and over are often employed in.
At the same time, populations around the world are aging, with elderly populations growing and working-age populations shrinking.
The report’s results were based on several factors, including:
- Older workers (those aged 50+) in China are doing work where, on average, more than three-quarters (76 percent) of all tasks are automatable.
- The difference in the average risk of automation between old and young workers is largest in Singapore.
- Against an average of 66.2 percent, Japan has a strong labor workforce participation rate at 75.4 percent, while China’s rate for this cohort is 59.1 percent.
- China (21.5 percent), Japan (23.5 percent), South Korea (31.7 percent) and Singapore (26.8 percent) have a very high labor workforce participation rate for those aged 65+ in comparison to the average (14.7 percent).
- Against the average of 51.9 percent, China (1.5 percent), Japan (28.6 percent), South Korea (10.9 percent) and Singapore (31.2 percent), have very low assets in pension funds as a percentage of their GDP.
Mercer’s CEO Asia Renee McGowan said the index demonstrated that individuals, as well as government and corporate structures in Asia, need to be more prepared for the rapid societal aging and technological advancements that are particularly apparent in Asia.
“We are fast approaching the most significant generational tipping point in history. By 2030, Japan will become the world’s first ‘ultra-aged’ nation, with those aged 65 and over accounting for more than 28 percent of the population, while Hong Kong, South Korea and Taiwan’s elderly cohort making up more than one in four people.
“But, older workers are now more than ever faced with the risk of losing their jobs to automation, endangering their ability to finance their longevity. “While there has been progress, there’s a lot of work to be done. Businesses need to better leverage their experienced workforce, with people more willing and able to work past the age of 65,” said McGowan.