Hong Kong faces the challenge of an ageing population and shrinking workforce
Author: Kate Whitehead | Date: 24 Aug 2016
Vast majority of HR professionals believe raising the retirement age could solve manpower shortage
Hong Kong is not alone in facing the twin challenges of an ageing population and a shrinking workforce, but it needs to start taking the issue seriously if it is to avoid some serious challenges ahead, say local academics.
“These things don’t happen suddenly – you forecast it. Private organisations should be looking at this issue seriously: go to the database, see the age profile and do some analysis,” said Dr Jamie Cheung, programme director of the masters of human resources management at Hong Kong Baptist University.
Hong Kong government statistics show that by 2018 the labour force participation rate will begin dropping from its current rate of about 75 per cent to a projected 70 per cent in 2031. The city also has one of the world’s lowest birth rates - about 1.11 per woman of childbearing age, well below the replacement rate of 2.1.
“Unless there is a sudden change of policy regarding importing labour, this kind of forecast is very reliable. Now is the time to act,” said Dr Cheung.
The government did act last year, increasing the retirement age for newly hired civil servants from 60 to 65. A recent poll by the Hong Kong Institute of Human Resource Management found that 80 per cent of Hong Kong HR professionals believe raising the retirement age could help solve the city’s manpower shortage.
David Li, President of the Hong Kong Institute of Human Resource Management, says the government has set an example he expects organisations in the public and private sector to follow.
“Organisations can consider implementing flexible working measures, such as job sharing and part-time work, for employees who have reached retirement and would like to continue to work. This can help companies retain experienced employees who can take on a mentor or consultant role while relieving manpower shortages,” said Mr Li.
But the issue of revised contracts for those beyond the standard retirement age can be a thorny one. Dr Cheung said that often employees are asked to sign short-term contacts where the terms aren’t as favourable as their previous package.
“Usually the contracts are for just one year and are re-evaluated at the end of that year. And the terms aren’t as good, for example the medical cover might not be as good,” she said.
Professor Randy Chiu, director of the Centre for Human Resources at Hong Kong Baptist University, said there are some stereotypes about older workers that need to be challenged.
“Some people think baby boomers are not as assertive, not as quick or as familiar with new technology and that they don’t have the physical strength to face the pressure and challenges of work, but that isn’t true,” said Professor Chiu.
He says many older employees are well educated, experienced and in good health and have much to contribute. He expects many large multinationals and major “hongs” (large local businesses) to follow the government precedent, but conceded it would take time to effect change.
Dr Cheung noted that Hong Kong is lagging behind its neighbours, many of which have already legislated an increased retirement age. Taiwan pushed its mandatory retirement age for workers from 60 to 65 in 2008. Singapore replaced its Retirement Age Act with the Retirement and Re-employment Act in 2012, which keeps the minimum retirement age at 62 but requires employers to offer re-employment for those who turn 62 up to the age of 65.
“If companies don’t act now, they will feel the impact soon, within five to 10 years,” said Dr Cheung.