Shrinking workforce will dent East Asia’s economies

Significance

Persistently low fertility rates mean that the next decade will see ‘super-aged’ societies not just in China but also in other key East Asian economies, including Hong Kong, Japan, South Korea and Taiwan. Socio-economic shifts have lowered fertility rates and shrunk the workforce, while higher dependency ratios have increased debt burdens.

Impacts

• A greater use of robots is expected to reduce the impact of the ageing population on manufacturing production.
• East Asian businesses linked to services for young adults will shrink while businesses for the elderly, including healthcare, will grow.
• High property prices in the region could drop significantly in the long term as demand lessens due to a shrinking young population.
• East Asia will likely ease immigration rules to mitigate labour shortages, although a sudden influx could generate social conflict.
• Regional governments will urge firms to use high-tech measures to counter a shrinking workforce, demanding increased productivity.