There is a reason why Asian workers are resistant to change. They tend to be older, work in a job that can be easily automated, and in an economy where the pension funds are not enough.
These are some of the surprising findings of a recent Mercer study. Called “The Ageing and Automation Resilience Index,” it measured how well countries were able to take aging and job automation among older workers. It also looked at the retirement schemes to support job replacement. The study was conducted by Mercer and Marsh & McLennan Insights.
The conclusion was crystal clear. Asian countries are least prepared for societal aging and workplace automation.
Of the 20 major global economies studies, digital-savvy South Korea came at the bottom. China ranked at 18th and Japan at 17th. Among the Asian economies, Singapore ranked the highest at 13th.
In comparison, Denmark topped the list at number one. Australia and Sweden was ranked second and third.
The survey noted that governments and organizations around the world face similar pressures. Advancements in technology is putting low-skilled routine jobs at risk. The situation is made worse by an aging global population. Elderly populations are growing faster while working-age ones are shrinking.
But in Asia, the problem is more acute. The survey noted that jobs that can be automated are often held by those aged 50 and over. China paints a grave picture. It has older workers (aged 50+) in jobs where 76% of all tasks on average are automatable. While in Singapore, the difference in the average risk of automation between old and young workers is the highest.
The risk becomes greater as Asian economies tend to have strong workforce participation. Japan has a strong labor workforce participation at 75.4%, while China’s rate is 59.1%. But when looking at the labor workforce participation rate for those aged 65+, South Korea has the highest 31.7%. Singapore is equally high at 26.8%, while Japan and China were at 23.5% and 21.5% respectively.
With the average for all 20 economies at 14.7%, it means that automation can have a large impact on Asian economies. It means these economies need to find ways to reskill and support their aging workforce.
“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% of the population, [with] 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,” said Renee McGowan, chief executive officer for Asia, Mercer.
“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.”
Meanwhile, the safety net in terms of pension funds as a percentage of the GDP is very low in Asia. The global average was 51.9%, but in China it was 1.5%. Singapore was better at 31.2%, while Japan was at 28.6%. South Korea was also low at 10.9%.
McGowan urged companies and governments to take a closer look at supporting older workers.
“In addition to helping businesses support the financial security of aging 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 McGowan.