Author: Sampat Mishra, Posterity Consulting
The third edition of the Voice of Asia series titled ‘Demographics fuelling Asia's shifting balance of power’ was released today. The report aims to highlight the fast changing demographic trends in Asia, with most of the countries in the region grappling with an ageing population, and an imminent workforce shortage. However, India is among a handful of South Asian countries that sits on a demographic gold mine. India has a median population age of 27.3 years compared to that of 35 years for China and around 47 years for Japan. It is estimated that India has around 390 million millennials and about 440 million in the Gen-Z cohort. About 12 million people are added to the working age population every year. Demographic growth is significant as it is intrinsically linked to economic growth and therefore, cannot be ignored.
"India will account for more than half of the increase in Asia’s workforce in the coming decade, but this isn’t just a story of more workers: these new workers will be much better trained and educated than the existing Indian workforce, and there will be rising economic potential coming alongside that, thanks to an increased share of women in the workforce, as well as an increased ability and interest in working for longer. The consequences for businesses are huge."
However, in order for India to reap the dividends of its demographic potential, it has to first equip its workforce with the necessary skills to contribute to the national economy. “With the invasion of machines and improvement in robotics, India needs to pay special attention to skilling and reskilling its workforce with a focus on the changing nature of today’s jobs. In recent years, India has taken proactive steps to deal with the disruptions in the job market with the ‘Skill India’ initiative being one of them. That said, it needs to be a continuing process of upgrading skills in a rapidly changing environment.”
Much like India, Indonesia and the Philippines have also witnessed a steady growth in their working age population. With more and more young men and women joining the workforce every year, a new economic order backed by positive demographic growth has come into play.
While India and some Southeast Asian economies are seeing an increase in their working age population, most of Asia's nations are ageing, and while this creates emerging challenges, ageing populations will also generate a growth cluster of new business opportunities.
Three big accelerators drive the industry opportunities in an ageing Asia, with each building on the other are as follows:
”As is already increasingly evident in Japan, the surge in ageing-related opportunities will be evident well beyond health care. Rapid ageing in the Japanese population has changed the needs of people and the way businesses satisfy them. There has been increasing demand in sectors such as nursing, consumer goods for the elderly, age-appropriate housing and social infrastructure, as well as asset management and insurance,” notes Tsuyoshi Oyama, Deloitte Japan Economist.
Similar to Japan, much of China’s economic growth can be attributed to the abundant human capital they once had. As their workforce ages, China has acknowledged the need to increase their workforce, thus abolishing its one-child policy. Both China and Japan, sensing an impending crisis, are offering incentives to young mothers to have more than one child. However, this cannot resolve the issue alone.
To manage ageing populations, the report recommends the following measures to deal with rising shortages in workforce and pre-empt the advese effects:
India, with its abundant human resources, increasing foreign investments and rising disposable incomes, is on its way to becoming a global economic power. However, India needs to take a proactive approach to prepare its workforce for the changing needs of the market, thereby creating a new highly skilled workforce for the ageing world.