Of 20 major global economies, Asian countries are among the least prepared to combat the threats of societal ageing 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 ageing and job automation among older workers, as well as the strength of their local retirement system, to assess a country’s preparedness to manage ageing and automation.
Mitigating factors include higher older worker labor force participation, an adequate level of pension fund assets, favourable 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 ageing and automation challenges.
Globally, governments and organisations 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 ageing, 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 per cent) of all tasks are automatable.
- The difference in average risk of automation between old and young workers is largest in Singapore.
- Against an average of 66.2 per cent, Japan has a strong labor workforce participation rate at 75.4 per cent, while China’s rate for this cohort is 59.1 per cent.
- China (21.5 per cent), Japan (23.5 per cent), South Korea (31.7 per cent) and Singapore (26.8 per cent) have a very high labor workforce participation rate for those aged 65+ in comparison to the average (14.7 per cent).
- Against the average of 51.9 per cent, China (1.5 per cent), Japan (28.6 per cent), South Korea (10.9 per cent) and Singapore (31.2 per cent), 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 ageing 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 per cent 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.
“In addition to helping businesses support the financial security of ageing workers, governments must also find ways to boost pension fund assets to protect vulnerable members of the workforce from poverty in retirement.
“And, there is much that individuals can do to future-proof their job security and retirement wealth, from reskilling to integrating financial decision making with physical health and future career opportunities,” said Ms McGowan.
Ageing and Automation Resilience Index
- South Korea
Mercer delivers advice and technology-driven solutions that help organizations meet the health, wealth and career needs of a changing workforce. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan Companies (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people with 76,000 colleagues and annualized revenue approaching $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com.hk.