Ageing population may lead to financial burden on gov’t

Macau’s gradually ageing population is leading to a larger financial burden for the government, say analysts.

Earlier this year, the International Monetary Fund (IMF) predicted that the SAR’s social spending would grow as a result of the ageing population and social pressures. Among other medium- term risks, the IMF warned that Macau might struggle to keep up with the mounting social welfare costs incurred by the ageing population.

This is reflected in the ageing ratio, a way to gauge the ageing population by calculating the proportion of the elderly population to the youth population (aged 0-14). The ageing ratio increased from 26.7% in 1996 to 33.6% in 2001, and surged further to 46.3% in 2006.

Last year, the proportion of elderly population (aged 65 and over) grew slightly by 0.6 percentage points year-on-year to 11.1%. The ageing ratio rose by 1.1 percentage points year-on-year to 84.1%, representing an increase for the 22nd consecutive year.
The data shows that ageing was more pronounced among the local population, with the elderly population increasing by 7.5% year-on year to 74,100.

Meanwhile, the adult population (aged 15-64) decreased by 0.5% to 386,000. The elderly dependency ratio for the local population was 19.2%, indicating that about five adults supported one elderly person.

According to the 2019 policy address by Chief Executive Chui Sai On, the government is working on enhancing software and infrastructure for community support services so as to support the senior citizens.

To overcome the challenges of an ageing society, the government has pledged to increase the number of subsidized places in homes for the elderly to 2,400.

It also proposed implementing a tax incentive where the government would increase the basic allowance of personal income tax for the elderly to MOP198,000 to encourage employment of residents above 65.

According to an economist at the University of Macau, if this trend continues, the financial burden of providing various supports will also increase.

Assistant professor of economics at University of Macau, Fung Kwan, said, “the government will have a larger financial burden on providing various supports to the elderly people such as medical facilities and housing.”

With the decrease in the city’s adult population, the professor also noted that labor supply will shrink and that a shortage is foreseeable.

“[There will] likely be a larger demand for non-local workers,” he added.

However, the demand may not be welcomed by the SAR, which enforces protections for certain locals-only professions. The difficulties of acquiring non-local labor remains a significant challenge for businesses in Macau. 

Data from the Statistics and Census Bureau shows that in 2006, the bureau had already stated that the prolonged life expectancy and the decrease in the number of newborns in the past few years had brought about an ageing population. LV