What baby boom? Data points to an ageing nation

O Changing demographics will have impact on Malaysia’s labour force and economy at large, say experts

KUALA LUMPUR: Just a year ago, when the first of the stricter movement curbs was imposed and people were mostly confined to their homes, expectations ran high on a possible baby boom in Malaysia. But a year later, the numbers are nowhere close to it.

In an unexpected turn of events, population projections from 2010-2040 by the Department of Statistics Malaysia (DOSM) revealed Malaysia may become an ageing nation by 2030 with people aged 60 years and over surpassing 15% of the population.

Both situations are causes for concern as the former would affect the country’s labour force and economy at large and the latter would require the government to dig deep into its coffer to support the increasing demand for healthcare and pension.

Chief Statistician Malaysia Datuk Seri Dr Mohd Uzir Mahidin said based on data obtained by DOSM, the number of new births in the country was not as significant as expected.

He said among the factors was the postponement of weddings due to Covid-19.

Sunway University economics professor Yeah Kim Leng said rising cost of living was another factor that prevents couples from having children.

He said the changing demographics will cause shifts in household consumption and savings patterns.

“An important implication is that we will have to confront the social and economic issues and challenges associated with population ageing sooner rather than later,” he said.

Yeah said the rise in Malaysia’s working age population (15-64) peaked in 2018 and 2019 and started to edge down in 2020.

This, he said, means the country’s demographic dividend or the economic growth potential arising from the expanding working-age population has begun to shrink as the share of dependents, especially those aged 65 and over rises steadily.

Mohd Uzir said if the rate of young population in the country decreased, it would lead to lower tax collection.

Coupled with lower fertility and birth rates, the slowdown in population growth will result in reduced labour supply.

Yeah said the slower population increase, especially in the working age group (16-64) has eased the influx of new entrants in the labour market.

“This helps to mitigate the rise in unemployment during an economic downturn as experienced currently. However, when economic activities pick up and full employment takes place, the country could face labour shortages that would constrain further economic growth,” he said.

It is already prevalent after the government restricted the hiring of foreign workers.

It is important that household income growth be above living cost increases. This becomes harder with the increase in the number of dependents. Higher tax reliefs based on the number of dependents could encourage working parents to consider having more children, Yeah suggested.– Bernama