1. Solving the
economic challenges
of population aging
in contemporary
Hong Kong
Members:
Alan, Au Wai Lun (51867690)
Kevin, Wong Tsz Wai (52569960)
Anthony, Chow Lai Yin (52621822)
Thomas, Lai Chung yam
(52569984)

2. Content
1. “Population aging” in Hong Kong
2. Causes of “Aging population”
3. Induced economic challenges of aging
population
 Social welfare expenditure
 Medical expenditure
 Impact on overall economic prospect
4. Solution?-----Conflicting views
5. Our suggestions

4. Definition of Population Aging
According to World Health Organization
(WHO):
1. When population aged 65 or above ≥ 7% of the total
population
2. When population aged 65 or above ≥ 14% of the total
population

5. Current Situation in HK
According to “The Profile of Older Persons, 2006”
published by Census and Statistics
Department:
“Over the past 45 years, the proportion of older persons
(aged 65 or above) in the total population rises from
2.8% in 1961 to 12.4% in 2006.”
Hyper-
Aging Aged
aged
society society
society

6. Future Demographic Trend in HK
Refer to the “Projection of Population Distribution”
and “Hong Kong Population Projection” published by
Census and Statistics Department:
“In 2019, population of older persons will jumped
from 890,000 in 2009 to 1,320,000 in 2019 (13% to
17.2%)”
“In 2039, the proportion of the population aged 65
and over is projected to rise markedly from 13% in
2009
to 28% in 2039”

8. Two main factors (1)
1. Low birth rate (1933 in 1981 to 987 in 2006)
 Delay in marriage (23.9 to 28.2)
 High divorce rate (0.4 to 2.5)
 High child-raising cost
 Changed mindset (family  individual)
 Industrial  financial
 Postponement of first birth (25.1 to 29.2)
 Increased woman participation in labour market
Source: Demographic Trends in Hong Kong 1981-2006

9. Two main factors (2)
2. Long life span (79.4 for men, 85.5 for women)
 Improved health care services
 Improved social welfare
 Improved social condition
Source: Demographic Trends in Hong Kong 1981-2006

11. Three Dimensions
1. Social Welfare expenditure
2. Medical expenditure
3. Impact on overall economic condition

12. Social welfare expenditure

13. Examples of social welfare for elderly
in HK
1. Community Support Services for the
Elderly
2. Residential Care Services for the Elderly
3. Old Age Allowance
4. Public Housing
5. Senior Citizen Residences Scheme

14. 2012–13 Government expenditure
for elderly
 Social welfare expenditure for 2012–13: $44
billion ,about 30% used for elderly
 Comparing 2012-13 Budget with 2010-11,
expenditure for Elderly services has increased
for -16%

15. Why expenditure increase?
 Make improvement of elderly services
 Allocate extra $900 million to improve quality of 250
district elderly community centers
 Additional 1,000 subsidized residential care places
 Public transport concessions for the elderly and
eligible people

16. Old Age Allowance and CSSA
 More than 10 billion is used
 In 2039, elderly population is about 28% of total
population
 Money for Comprehensive Social Security
Assistance(綜援) and Old Age Allowance

17. Housing Burden
 67% of total population of elderly live in public
housing in 2010
 Senior Citizen Residences Scheme is carried
out because of the increasing need of house.
 Land used for public housing
Gov. bear the construction cost
Government land selling income

18. Brief Summary
 The rate of growth of aging population keep
accelerating
 With the increasing need of social welfare, Old
Age Allowance, CSSA etc. the money used for
elderly will be doubled or tripled.
 The tax income may not afford the burden of
these needs.

19. Medical Expenditure

20. Medical Expenditure
2 parts:
1. Expenditure of Hospital Authority
2. Reasons that population aging increases medical
expense └ Chronic disease
└ In-patients Staying (病人日數)

21. Expenditure of Hospital Authority
 90% of incomes comes from government
 HKD39.9 billion 2011-2012 for Medical (17% of recurrent Government
expenditure, 27% in 2033)
 Expenditure prediction
 2011 - 2012 39.9 billion
 2012 - 2013 45.0 billion (+8%)
 2032 - 2033 186.6 billion (+367.6%)
Two main Expenditure (09-10)
 Staff costs (26.7 Billion, about 73%)
 Drugs + Medical supplies and equipment (HKD4.4 Billion, About
12%)
Source: Hospital Authority Statistical Report

22. Why population aging increases medical
expense?
• About 90% of the old people rely on the public medical service
(50% of Hospital Authority expense)
• 72% old people are Chronic Illness
• Chronic disease
• Drugs Expensive (Samaritan Fund for Drug Items)
• Number of In-patients Staying about 50% is aged 65↑
• The amount of the drugs expenses have obvious increase.
(2012 – 2013 Inject $10 billion into the Samaritan Fund )
• Number of old people have increased and will have a great jump
in year 2019 (13% to 17.2%)

23. Impact on overall economic
prospects

24. Burden on next generation
 In 2033, the elderly (aged >65) will account for
27% of total population Cf. 13.2% currently
Source: Census and Statistics Department
 Increase proportion of aged pop. ( retired)
 Increase burden of working pop.
( nearly every 4 labours support 1 elderly ppl.)

25. Slow down in economic growth
 Gross domestic product (GDP) , a main
measure of level of production (econ. growth) of
a region.
Labour population in 1996, 2001 and 2006 - By Age Group
1996 2001 2006
Age No. % No. % No. %
15 - 24 462 885 14.5 444 244 12.9 433 746 12.1
25 - 34 1 011 015 31.8 953 725 27.7 912 351 25.5
35 - 44 910 170 28.6 1 066 020 31.0 999 188 28.0
45 - 54 504 866 15.9 701 551 20.4 878 393 24.6
55 - 64 232 173 7.3 218 462 6.4 288 960 8.1
65+ 61 388 1.9 53 990 1.6 59 746 1.7
Total 3 182 497 100.0 3 437 992 100.0 3 572 384 100.0
Source： Census and Statistics Department

26.  GDP growth greatly depend on working
population
 proportion of elderly people
 Relative in working population
 Slowdown in GDP growth
E.g. During 2025-2050, GDP growth in USA,
Japan and Europe is expected to fall by 1.5%,
0.6% and 0.5% respectively
source: John Mauldin – www.hjej.com

27. Shrinking tax revenue
 In 2007, salary tax account for 23% of total gov. income
 proportion of elderly source: Inland and Revenue
Department
 relative in working population
 in salary tax revenue

28. 人口金字塔
Population Pyramid
二零零一年年中
年齡組別 (基準) 二零一六年年中 年齡組別 二零三一年年中
Mid-2001 年齡組別 Mid-2031
Age group (Base) Age group Mid-2016 Age group
85+ 85+
85+ 男性 女性 男性 女性 男性 女性
Male Female 80-84 Male Female 80-84 Male Female
80-84
75-79 75-79
75-79
70-74 70-74
70-74
65-69 65-69
65-69
60-64 60-64
60-64
55-59 55-59
55-59
50-54 50-54
50-54
45-49 45-49
45-49
40-44 40-44
40-44
35-39 35-39
35-39
30-34 30-34
30-34
25-29 25-29
25-29
20-24 20-24
20-24
15-19 15-19
15-19
10-14 10-14
10-14
5-9 5-9
5-9
0-4 0-4
0-4
400 300 200 100 0 100 200 300 400 400 300 200 100 0 100 200 300 400 400 300 200 100 0 100 200 300 400
千人 千人 千人
Thousand persons Thousand persons Thousand persons
外籍家庭傭工
Foreign domestic helpers

29.  Tax revenue is the base of public cost (e.g social
welfare for the elderly, infrastructure…)
Example: ~ 90% operation cost of the public
hospitals is subsidised by SAR
government (Source: Hospital Authority Statistical Report 2009 – 2010)
 aged population  demand for long-term
care service  gov. expenditure
 proportion of ederly  gov. tax income
 In the long run, gov. expenditure may keep
falling short of its revenue

31. 1. Broaden the tax base by
introducing GST
Purpose: to maintain budget balance and the quality of
public elderly services
Government supports the idea
 In 2006, Financial Secretary Henry Tang Ying Yen said “……..
the rapid ageing of Hong Kong's population will be accompanied by
higher spending pressures on healthcare and services for the aged……..
the introduction of a GST (Goods and Service Tax) is a viable option for
Hong Kong. This would secure the long-term sustainability of our
revenue base and our capacity to meet public expenditure needs.”

32. 1. Broaden the tax base by
introducing GST
However, The Democratic Party(民主黨), League of Social
Democrats (社民連), the tourism and retailing sector all
oppose the idea because
- The living of citizens will become more difficult
- GST will degrade the business environment of HK

33. 2. Boost fertility rate
Purpose: to lower the proportion of elderly ppl. in Hong
Kong and secure future labour force
Government supports the idea
 According to an interview with The Financial Times in June,
2007 “……..Chief Executive Donald Tsang has called on Hong Kong
couples to step up reproduction - at an astonishing rate of three
children per family……..Tsang also set out his vision of Hong Kong as a
city of 10 million people that rivals London and New York as an
international financial center.”
 Since 2006, the child allowance has increased from $4,0000 to
$63000 in 2012 (Source: Inland Revenue Department)

34. 2. Boost fertility rate
 The Democratic Party and The Family Planning
Association of Hong Kong do not support the idea
 Member of The Democratic Party, Lo Chi Kwong said,
“…….Population aging is an irreversible progress. Therefore, it is
more rational to focus on solving the accompanied economic
challenges than to increase the birth rate.” (Source: Suggestions of The
Democratic Party on population policy, 2006)
 The Family Planning Association of Hong Kong:
 It is a personal decision to have children or not
 Quality > Quantity

35. 3. Universal Retirement Pensions(URP)
Purpose: Working group and the government put
money into a pool collectively, which will be used as
pensions
Government does not support the idea
Secretary for Health, Welfare and Food Chow Yat-ngok said in a
Legislative Council Discussion in 2006
” ……with rapid population aging, Universal Retirement
Pensions is not a viable option for Hong Kong…….it will cause
unfairness to the 2 million workers who currently participating
MPF(強積金)…….the business environment of Hong Kong will
be profoundly damaged…….The government has much
reservation on the feasibility of Universal Retirement Pensions.”

36. 3. Universal Retirement Pensions(URP)
 The business sector also strongly opposes the
idea
 Affect their own interest
 Resource is limited, should be given to those in need,
not indiscriminately
 The Lion Rock Institute (獅子山學會)
 Elderly support is family responsibility, not society
responsibility
 URP places high pressure on younger generation
 URP is not sustainable as working force keep
dropping

37. 3. Universal Retirement Pensions(URP)
 However, many grassroots organizations (eg. the Alliance for
Universal Pensions), Hong Kong Federation of Trade
Unions(工聯會), The Democratic Party(民主黨), League of
Social Democrats (社民連), Hong Kong Confederation of
Trade Union (職工盟) etc. all strongly support the idea
 MPF’s return is very susceptible to the economic condition
 A large group of workers are excluded from MPF
 Everyone’s responsibility to take care elderly people

38. 4. Medical reform
 Purpose: To reduce the medical expenditure of the
government by means of “Voluntary Medical Insurance
Scheme” (自願性醫療保險計劃)
 Government supports the idea
 More people will choose private hospital relieve the
pressure and expenditure of public hospital
 The Insurance sector also supports the idea
 More income
 Government provides subsidy to the insurance sector

39. 4. Medical reform
 However, the Society for Community Organization, The
Democratic Party, the Lion Rock Institute, the Neighborhood
& Worker's Service Centre and a portion of citizens all
oppose the idea
 Main source of pressure of public hospital is chronic
disease patients, but their insurance payment is very high
 The quality of public hospital will be worsened lower
class suffer
 Government should lower the salary of admin. staff
instead of ask citizens to buy insurance (eg. 4 billion is
used as staff cost, only 3 billion is used to buy drugs)

40. Quality Migrants Admission Scheme
 http://www.youtube.com/watch?v=R6n8ig7
bvao

41. 5. Attract youthful immigrants
Purpose: young population, maintain or even enhance
quality of workforce  market
competitiveness
 Gov. supports the idea:
first introduced Quality Migrant Admission Scheme in
2006, further modification has been made in 2007
 Nicole Alpert: a research associate for The Lion Rock Institute
1. “The Lion Rock study makes an important point: ``For resource-poor city-
states like Hong Kong, Singapore, Dubai and Shenzhen, human resources are
probably the only resource that can render their economic growth sustainable.”
2. “Even with immigration, we cannot “escape” an aging population and its
transformation of society - migrants age too - but open immigration policies will

42. Opposing views
 Mr. Ma Kwok-ming, Lingnan University part time lecturer
Immigration of mainland talents  more intense competition among
work force
 Helen Chan Wing-mui, Assistant Director of Immigration
“We want to protect our local graduates, not increase competition for them.”
 Leslie Kwoh, The Standard
“Illustrating the disadvantages of such an arrangement, however, the
scheme has come under fire in recent months for allowing thousands of foreign
workers to come into Australia at below-market rates while many local
graduates still struggle to find work.”

43. 6. Babies of non-local parents
 Purpose: Solve population aging in the long run
 Government: Automatically giving babies of non-local parents
permanent residency
 A spokesman for the Labour and Welfare Bureau: By 2018,
Hong Kong will have about 300,000 postwar baby boomers
who have retired. Many of these vacancies will not be filled as
the city's birth rate has been decreasing at an increasingly
alarming speed since the 1970s.
 A government manpower study: Hong Kong's workforce will be
too small to power its economic growth by 2018 because of an
ageing population,

44. 6. Babies of non-local parents
 Citizens: oppose the idea
 Non-local parents are not tax payers but they
occupy the resources of Hong Kong Citizens
 Chance of Babies of non-local parents taking
their parents to HK after they grow up
 Non-local parents usually take their babies back
to Mainland, no contribution to HK

46. Our suggestions
1) Proper Allocation of resources
2) Flexible retirement age
3) Import foreign medical staff
4) Increase availability of tertiary education
5) Provide more incentives to encourage
parenthood
6) Enhance open immigration policy

47. 1. Proper Allocation of resources
 Joyous Living scheme  waste of resources
 Target customers : Rich elderly
 Over ten thousand management expenses per
month
 The Hospital Authority: Spend more money on
salary than on drugs
 More resources should be put on medical and
social welfare sector

48. 2. Flexible retirement age
70
Labour Force Participation Rate
64.3
62.8 61.4
60
50
percentage
40
30
20
14.1
9.8
10 7.2
0
1991 1996 2001
Older Persons Whole Population
Source: Elderly Commission

49. 2. Flexible retirement age
 USA - being gradually raised to 67 years
old
 Japan – 69 years old
 Korea - 67 years old
 Flexible or part-time work arrangements
for older persons
 Retire age depends on work type
 Would not block the advancement of
younger workers, while retaining valuable
insight and expertise for the employer

50. 3. Import foreign medical staff
 Follow our Asian neighbour – Singapore
 import more foreign medical servants (e.g.
nurses, health assistants or even doctors)
 Reduce burden of local medical staff in
public hospitals
 Maintain quality of public medical service
 Lower the risk of medical accident

51. 4. Increase availability of tertiary
education
 Availability of government-funded tertiary
education programmes ( esp. degree prog.)
 Maintain and enhance competitiveness of local workforce
amid contemporary knowledge-based economy
 Offset the economic influence of population aging (eg. GDP)
 Well- educated labours are essential human resources in
H.K. !!!

52. 5. Provide more incentives to
encourage parenthood
 Offer more economic lure to encourage citizens to
give birth to babies
 One-off tax allowance of new born babies family
 Continuous and direct subsidy for children-raising
 Lengthen maternal leave (eg. 10 weeks to 24
weeks)
 Setting up babies care centers… etc.
 Fertility rate

53. 6. Enhance open immigration policy
 Now operating base on a “point system” (分數制)
 Focus on attracting relatively young workforce from
worldwide
 By focusing on age limit –introduce bonus points in
15-30 age category
 By offering incentives to young immigrants-e.g.
housing allowance,
 Encourage them to settle down ( Morgan as an
successful case)

54. Universal Retirement Pension
 Good intention
 Will not be implemented
 It involves wealth redistribution
 Against Hong Kong’s political ideology:
neo-liberalism
 Social trend: Individualized
 Too many uncertainties

55. Conclusion
 Hong Kong is not a welfare state
 All solutions are economically driven
 Solving population aging is only the
presenting goal
 Underlying goal maintain
competitiveness and economic growth

56. Reference
 http://www.bycensus2006.gov.hk/tc/data/data3/statistical_tables/index_tc.htm#C1
 http://www.ird.gov.hk/dar/2009-10/table/tc/revenue.pdf

 http://www.hkcss.org.hk/60/souvenir_bk/p90-123.pdf

 http://www.britannica.com.ezproxy.cityu.edu.hk/EBchecked/topic/246647/gross-domestic-
product-GDP/
 http://www.elderlycommission.gov.hk/cn/library/

 Youtube:
 http://www.youtube.com/watch?v=mMWHNhGo7j4
 http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index_tc.jsp?charsetID=
2&tableID=002&subjectID=1 (2011 pop.)
 http://www.censtatd.gov.hk/major_projects/2001_population_census/key_statistics_of_the_
2001_population_census/index_tc.jsp
 http://www.censtatd.gov.hk/hong_kong_statistics/statistical_tables/index.jsp?charsetID=1&t
ableID=008&subjectID=2 ( labour participation)

57. Reference
 http://www.swd.gov.hk/tc/index/site_pubsvc/page_socsecu/sub_stati
stics/
 http://oklink.org.hk/index.php?option=com_content&view=article&id=
75&Itemid=120
 http://www.lwb.gov.hk/chi/legco/14012009_2.htm
 http://www.swd.gov.hk/tc/index/site_pubpress/page_speeches/sub_s
peech2010k/
 http://specials.mingpao.com/cfm/News.cfm?SpecialsID=166&Page=
1&News=ae8a006515d34065ceaca26776995143ebee00cf7c90414
ba7ba8a48
 http://news.sina.com.hk/news/2/1/1/2032100/1.html

58. Reference
 http://www.swd.gov.hk/doc/finance/2011-12%20COR_Printed_SWD_Chi.pdf
 http://www.swd.gov.hk/tc/index/site_pubsvc/page_elderly/
 http://www.budget.gov.hk/2012/chi/highlights1.html
 http://www.swd.gov.hk/tc/index/site_pubsvc/page_socsecu/sub_ssallowance/
 http://www.swd.gov.hk/tc/index/site_pubsvc/page_socsecu/sub_socialsecurity/
 http://www.budget.gov.hk/2012/eng/pdf/head170.pdf
 http://www.hkhs.com/sen_20040903/chi/cheerful_court/news/news_tko.htm
 http://www.swd.gov.hk/tc/index/site_pubsvc/page_elderly/sub_residentia/id_enhancedbo/
 http://www.swd.gov.hk/tc/index/site_pubsvc/page_socsecu/sub_socialsecurity/#SSAla