Aging Vietnam to put the brakes on economic growth

By    October 4, 2016 | 11:37 pm PT
Aging Vietnam to put the brakes on economic growth
A woman wearing traditional conical hat pushes her bicycle past a restaurant. Photo by Reuters
Pensioners are living out their final years in sickness and without social welfare.

According to government figures, Vietnam currently has a total population of 93 million, and 10.5 percent of the population is 60 or over - that's 9.8 million people.

It is forecast in the next 50 years, Vietnam will have 10 million more in that age group.

The United Nations considers a country to be aging when 7 percent of its population is aged 65 or over - the threshold used to be 10 percent of a population being 60 years old or over.

Aging is happing faster than expected

Chung, at the age of 77, lives with her 74-year-old sister in a shabby house on the outskirts of Hanoi. Both women are living out their final years in poor health and financial difficulties.

More and more Vietnamese senior citizens like Chung and her sister are being left behind in their villages as their children go out to the cities to earn a living.

The two old women spend half of their combined monthly income of about VND6 million ($270) on medical services. They have no health insurance.

Vietnam’s aging population has two distinguishing features.

Firstly, the aging process has happened at a much faster rate than expected.

Vietnam was expected to benefit from its golden population over a 30-year period from 2010 to 2040 with more economically active people, defined as those aged between 15 and 60, than economically inactive people. However, due to a lower birthrate and longer life expectancy, the country is aging rapidly, and the working-age population is shrinking at pace.

The working-age population will shrink so quickly that by 2030, one in six Vietnamese will be over 60, and by 2060, one in four will be 60 or older, government figures show.

According to the United Nations Development Program, Vietnam’s working-age population has increased about 50 percent in the past 100 years, but its population aged 60 or older has soared by 300 percent.

“What took between 60 and 100 years in Europe and North America is set to take only two or three decades in many Asia-Pacific countries, including in Vietnam,” said Bakhodir Burkhanov, UNDP deputy country director in Vietnam.

Vietnam’s demographic window is about to close as its ageing process is forecast to take only 15 years. Official statistics show that Vietnam’s population aged 60 or over has steadily increased to the current 10.5 percent from 9 percent in 2009, 8.1 percent in 1999, 7.2 percent in 1989 and 6.9 percent in 1979.

Secondly, Vietnam’s population has aged before it has become rich or moderately rich.

“Vietnam is one of a few countries in the world in which the population has aged before becoming rich," said Nguyen Trong Dam, deputy labor minister, referring to mounting constraints on the social welfare system and health care services when it comes to any potential solutions to take care of elderly people.

It is estimated 20 percent of Vietnamese senior citizens aged 60 or older are currently living under the poverty line, according to the UNDP in Vietnam, and one third of them are still working in labor-intensive jobs with low and unstable incomes.

About 70 percent of them don’t have savings accounts and 62.6 percent of seniors are financially insecure without monthly pensions or social welfare benefits.

Besides, Vietnamese elders are living longer, but they are spending more time sick, said deputy minister Dam.

The world’s average life expectancy has increased by 21 years over the past 50 years while the life expectancy in Vietnam has soared by 33 years to an average of 75.6.

However, the General Office for Population and Family Planning has calculated the country’s healthy life expectancy at 60 years. That means the proportion of time Vietnamese senior citizens are living with health problems is estimated at around 15 years. And 95 percent of them are living with non-infectious conditions such as diabetes, high blood pressure, strokes, osteoporosis and respiratory diseases.

The window for action is limited

According to the UNDP, if Vietnam fails to create jobs, develop social security and improve quality of life before aging sets in, it will risk instability in the near future.

The aging process might end the country’s fast economic growth, which has been above 5 percent on average since 1999, and the Southeast Asian country’s growth is mainly fuelled by exports which rely heavily on cheap and abundant labor.

In the near term, the UNDP suggests Vietnam should boost productivity by lifting the mandatory retirement age, retaining more senior people in the labor force.

Michael Herrmann, senior adviser on economics and manager of the Innovation Fund at the United Nations Population Fund (UNFPA), put forward three solutions at a recent workshop on the impacts of an ageing population. He advised the government to consider a policy change that will make Vietnamese stay in their jobs longer, invest more in human resources, especially in women, and fortify the country’s social welfare safety net.

The deputy labor minister said given the limited budget and resources, the government’s window for action is limited.

The labor ministry has tried and failed a few times to call for the state retirement age to be lifted to 62 for men and 57 for women.

“We need to lift the retirement age,” said Nguyen Huu Dung, a senior advisor to the labor ministry, who is concerned about how to take advantage of the senior workforce without denying young people jobs.

Countries in Asia and the Pacific are home to more than half of the population aged 60 or older in the world, numbering up to 533 million people, said Lubna Baqi, the deputy director for the UNFPA's Asia and the Pacific Regional Office.

The number of older people in the region is expected to jump to nearly 1.3 billion by 2050, representing two thirds of the world’s population aged over 60. Asia's population is ageing faster than anywhere else in the world, said a study, warning the swelling ranks of the elderly will cost the region $20 trillion in healthcare by 2030.

Related news:

>Retirement could be a long way off for aging Vietnamese workers

>Vietnam's aging workforce on the road to retirement

>Vietnamese people pay unhealthy price for longer life

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