In about three decades, the elderly would be the highest proportion of the Sri Lankan population. Among them the oldest elderly, i.e. those who are 75+ years would be the most prominent. At first glance, future demographic conditions may appear too distant to affect today’s economic concerns. Then again, today’s working age population is the elderly in the coming years. Hence, Sri Lanka should have adequate policies and institutions to deal with the problems of an ageing population.

economicsOld age support systems
Old age support systems currently available in Sri Lanka cover only a small proportion of the work force. Even though the contribution of agriculture, fishing and other self-employment is prominent in Sri Lankan economy, these workers lack retirement benefits. The contribution of the informal sector to the economy is around 60 per cent as at 2013. Thus, there is a need to develop security nets to support them in their old age.

It is necessary to cover the informal sector by pension schemes, but the scheme must be made fiscally sustainable prior to expanding the coverage. Proper administration and regulation are essential. An effective income security scheme should be designed, especially for destitute elders who are not covered by formal schemes. Similarly, the government has to consider high administrative costs involved in the provision of wide coverage, as a large number is dispersed in agriculture,
self – employment and casual sectors.

Labour force
Current population projections show a shrinking of the Sri Lankan labour force from 2036 onwards. This draws our attention to improve labour inputs to maintain growth. The reduction in labour force could be compensated by three ways: increasing retirement age, labour productivity and female labour participation in the economy.

♦  Rather than employers having a negative attitude towards the aged, they should be deemed valuable. Wages should not be too high for older workers as it would discourage employers to hire them. However, during the process of retaining older workers, youth should not be left out of employment. It is recommended to extend the retirement age to 65 as most of the elderly are active after retirement at present. Phased retirement and increased flexibility of employment, especially for employees with a long service record, are measures taken elsewhere in the world that could be followed in Sri Lanka, too.
♦  As labour force productivity is not only determined by quantity of workers but also by quality, there has to be increased investments in human capital amidst low fertility which narrows replacement of existing workers. Projections state that the quality of the labour force is likely to increase in the future. Jobs which require less physical work need to be expanded for the elderly to be productively engaged in the labour market. Although retired, some older workers would still be willing to work in the labour market, but not full time for which part time jobs should be available.

♦  There would be a significant change   in female labour participation and occupational structure due to reversal of gender balance in coming decades. Therefore, suitable jobs for educated young women must be created. Industries favouring female workers should be promoted, there has to be an attitudinal shift regarding employing females, part – time employment opportunities could be increased so that females do not miss out household chores, and flexible working arrangements should be in place to allow female re-entry to work force after child bearing.  However, rise in female labour participation rates would reduce the number of caregivers at homes to care for the elderly, which again demands attention of government to provide the latter with institutional living arrangements.

Health expenditure
Ageing has a clear impact on healthcare expenditure, but it is not the most important factor according to projections. Overall system productivity and strengthening the public sector are more important from a policy focus. Sri Lankan healthcare system has focused largely on maternal and child health over the past, but has shifted its focus on the elderly in recent times. It should cater more to needs of the elderly like increasing availability of healthcare professionals in geriatric care and making basic health needs of the elderly affordable to majority of the elderly. To avoid future burden of diseases, Sri Lanka must have effective health promotion and disease prevention programmes.

Summing up
Overall, it is important for Sri Lanka to pursue policies supportive of rapid economic growth which would enable increased incomes to finance higher living standards in future, when the aged become a significant proportion of the population. Political commitment to reforms and greater awareness among the public regarding these issues that were discussed in my previous article, are crucial when implementing policies.

Policies on ageing cannot be implemented alone without considering their effects on other macroeconomic variables. Hence, it is important to assess other public policies not directly related to ageing, for their impact on or interaction with an ageing Sri Lanka. Policymakers should never take a reactive and a passive approach to ageing. Over the years, Sri Lanka has been sluggish in considering ageing as a policy priority. Population concerns must be incorporated in national development agendas in order to allow for “graceful ageing” in Sri Lanka.