 Aloha, I'm Karina Lyons, Vice President and Director of Research at the East West Centre and host of East West Centre Insights. The centre is a cutting edge research and capacity building institution and we're based right here in Hawaii and our mission is to forge a deeper understanding and connection between the East and the West. So every two weeks here on this show, a Tuesday at 2pm Hawaii time, I have a conversation with an East West Centre expert or a guest from our global network and we talk about critical issues to the Asia-Pacific region. So check us out at EastWestCenter.org slash Insights. So today our guest is Dr. Senghop Lee and he's a senior fellow at the East West Centre and professor and chair of the economics department at the University of Hawaii at Mānoa. Senghop, he earned his PhD from Michigan State University and his master's from the National, I practice this sorry, Senghop, from the Seoul National University in Korea. His research focuses on population ageing and social welfare issues. He has published numerous articles including 11 books on population ageing and the labour market with an emphasis on South Korea and other economies in Asia. So today we'll be talking about the impact of ageing on Asian societies. Senghop, thanks for joining us today. Thank you for inviting me. So I should warn you, I'm not an economist and that's going to be a parent. So go easy on me today, okay? All right, so what most people do actually know about Asian societies is that they're ageing rapidly. So could you please set the scene for us and tell us why these trends matter for Asian futures? Okay, yes, Asia is ageing very fast. The share of the older population in Asia is rising very rapidly and Asia is at the forefront of the global phenomenon of population ageing. So by 2036, 14% of the region's population will be older than 65. The share in 2012 was 7%, which means it takes less than 25 years in Asia for the share of the older people to double. So the transition took much longer in the other advanced economies. So it took 40 to 50 years in Germany and the UK and 70 years in the United States, 85 years in Sweden and over 110 years in France. So however, it takes only 25 years for Asia to make the share of the older population double. So population ageing matters so much for Asia in large part due to the this speed and scale. Asia is the most populated region of the world, accounting for 60% of the whole world population. So population ageing is due to increasing life expectancy and declines in fertility. In some Asian countries, the fertility decline is so fast, it's just unprecedented. So well, the rising life expectancy is a positive development. You know, everybody actually want to live longer. And also rapid demand of transition can also lead to rapid economic growth. However, very rapid population ageing can pose a serious threat to many economies which are already losing, including vitality. Right. Yeah. And Asian countries have some advantages and disadvantages. Disadvantages are many developing Asian economies do not have like fully developed pension or health care systems, which provide the economic and health security to the elderly. Okay. Yeah. And the biggest advantage for Asia actually is the, you know, the two sides of the same token that it's still easier to develop and change the public systems than in Europe or U.S. Because in Europe or U.S., the vested interest around the status quo has often been a major obstacle to any policy adjustment. So yeah, I mean, this is a, I mean, there are many advantages, but I think this kind of, you know, easiness to change the system and develop the system is the biggest advantage. Okay. So the, gosh, there's a lot in that. And you mentioned a lot of challenges, but what are some of the main demographic challenges for ageing societies in Asia? You mentioned facility issues and, you know, a whole bunch of stuff. But for somebody who's not a subject matter expert, for example, what are the top three main challenges facing Asian economies of ageing? So ageing populations present the fundamental challenges to policymakers. One is how to develop systems that provide the economic security to the elderly. But at the same time, how to sustain strong economic growth. So this is, this actually is a seemingly a conflict, right? So, you know, because of older people are quite much more than they produce. But at the same time, so you actually want to provide the economy security to the elderly, but can you sustain strong economic growth because strong economic growth actually needs, I mean, high skilled, more younger people. So these are the major challenges. Right. And the other countries like, you know, the advanced countries will reach when they get old. But the Asia is getting older before they get rich, except right. So that's the major challenges. Yeah, I've read that quite a lot. And so what's the answer? What are some of your policy recommendations for decision makers in these countries? Okay, this is, as I mentioned, because on average, workers produce much more than children or older people, you know, having a lot of workers in the population can increase the nation's production, increase the savings and lead to higher investment in health and education, which in turn will result in higher productivity. But in as they get older, the proportion of the population at working age is already starting to decline in many countries. And the older population is increasing rapidly. So the trend toward the population aging implies that each worker will have to suffer to more and more retirees, both within families and under public pension and healthcare systems. So there are several policy options. Let me just name four today, because we have a limited time. The first is to increase contribution by workers. So we need to bring older people who are not working or unemployed back into the labor market. Yes, and utilizing women's workforce is equally important as the labor force participation of women in Asia is generally lower than those of men. And the promoting investment in human capital to make workers more productive is another way of increasing contribution by workers. So again, the number is we have to increase the contribution by workers in, you know, in terms of numbers and also in terms of productivity. Okay, so just to give people context then, so you mentioned women in particular, but are there any other groups in society that you're thinking of when you're when you're suggesting policy makers that we increase the productivity rates? Right, so promoting investment in human capital for children is also very important. But in terms of like, you know, the policy priority, I mean, this is what many people say is we have to bring older people and also especially in Asia, the women's labor force participation rate is quite low in many countries. So we have to, that's actually two priority. But you are right. I mean, promoting investment in human capital for children is important. But promoting investment in human capital is is important for any countries, not just for Asian countries. So that's what I'm saying, you know, what is the most important in terms of aging society? So we have to increase the contribution by workers, which is target older keeper and also utilizing women's workforce. Okay, I feel like you're putting me on notice. But right, that was that was policy recommendation number one. And what was some of the other ones he had in mind? Okay, second, we need to control the cost of aging. Population aging can be very costly to an Asian. I mean, this is proven to be the case in the United States. So and here in Hawaii, everywhere in the United States, I don't think the US health care system or health care cost is the idea, right, the European countries as well. So actually, that's the advantage in Asian countries, because still they are, they are, you know, cost of aging is relatively low because they haven't developed this public system, but it's rising very rapidly. And the third one is Asian countries need to improve public support for seniors. So it sounds contradictory, but that's true. The public sector plays a much smaller modest role in Asia compared to the other countries with a similar income level. So this is a tricky part. The sound approaches to, to maintain economic growth and providing economic security for the elderly and in Asia would be the right balance, right, balance between promoting public support and savings. So, so not just pensions, also a parallel effort to promote savings and savings of individuals. Okay, right, right. That's very important. And like I said, you know, intelligent people can learn, you know, from mistakes, what other people actually make. So they can learn from other countries' experiences. Some countries actually already went through and it's hard to change the system, but they are starting, they are developing the system. So they should find the right balance between, you know, public support and savings. Last is, I mean, there are many items, many things, but you know, like just the last item, our policy is that Asia needs to improve gender-work-life balance. Okay. I'm listening. Yeah, you know, actually, I, I mean, with my experience on the right line, I'm taking care of here and I cook for lunch, but that's not enough. Fortility rate has dropped to very low levels in many Asian countries. Because childbearing is a heavy burden for women who have children in Asia. So, you know, I can probably come back to this issue about gender issues later. But yeah, we'll definitely circle back because that that seems like there are, I'm fascinated to know why and I'm more than one reason. But right at the beginning, you also touched on some, some of the positive aspects of demographic trends. And something I've read about recently is this idea of a demographic dividend. So perhaps you could tell us a little bit about that. Oh, yes. So population change can lead to very different outcomes. Because Asia is very heterogeneous. That means some countries are still developing, some countries are advanced. But in developing Asian countries, the young working Asian population is still going, like India, Indonesia. So which can have a very direct and favorable impact on economic growth, leading to so-called demographic dividend, because again, workers, young workers produce more than children or older people through their labor. So this is a more like a quantitative effect. But there are many other definitions of demographic dividend. For example, like a trade-off. The one convincing argument to why the number of children, the fertility dropped so much in Asia is that there is a trade-off between the number of children and investment on children like education. So like my mom had nine siblings and they are not very well educated, like my grandma as well. But I have only one sibling and I went to college and I have a PhD. So Asia's success story often resulted from this high investment in education. So this is another part of demographic dividend. So during the demographic transition, there is a large block of working population. And also as the fertility declines, they invest on children. So that's the example might be like Korea, Japan, Taiwan, and the fertility actually declined. But the problem is that educating children is very expensive in some countries. So I mean, due to private tutoring and rising competition among kids. So that's actually some problems. Yeah. I mean, is there research to say that people are making such rational decisions about whether or not to have children sort of astounding to me? Yeah, well, actually, I don't know about that. I mean, I can just tell from my own experience. Yeah, it's a rational decision making or not. Well, yeah, perhaps I'm just going to assume that we actually make rational decisions. Yeah. Well, you know, I'm a political scientist. That's the first assumption that I question, like why are humans making rational decisions? Goodness gracious. So moving right along because that's a whole other show, you also chair the Executive Council for the National Transfer Accounts Project, which is a title that tells me absolutely nothing about it. So could you please tell us more about that project's work and scope? Okay. Okay. So the National Transfer Accounts Network or Project, in short, we call it just NTA, was officially launched in 2004 by Ron Lee at UC Berkeley and our own and the Mace NetEase Wessener. So research teams, we started from seven countries, but now the research teams in more than 90 countries are constructed. 90 countries? Yes. Wow. I didn't realize it was so large. Okay. Sorry. Keep going. I mean, it's so successful. I mean, so I thought to how come, I mean, in three 16 years, the 90 countries are constructing these outcomes. So NTA produces a data which is a combination of economics and demography. So numbers in demography is like a head count, fertility, mortality, changing age structure. This is all head count. But numbers in economics is like a single indicator, like such as production, consumption, how much donation produced, save, right? So the data we produce is the combination of these two, something like how much older versus the young people or male versus female produce, consume, and save. So as a result, the data from the NTA can substantially improve our understanding of how changing population age structure influence our economy. So this is a marriage between demographers and economists actually. So we can actually talk about what is the fiscal sustainability of public finances in the future? What's the impact of population on economic growth, generational equity, gender equity, and other important features of the economy? And also, yeah, the data was also designated as Korea's national official statistics last year. And Thailand is using the data for their national budget planning, because the age structure is changing so rapidly, they want to know what would be the budget for elderly because the government program is not age neutral. It's targeted. So NTA is a huge success in Africa as well, because they use the data for indicators of achieving sustainable development goals, so-called SDGs. So since 2004, we have provided data and related research to world policymakers and researchers, of course, in key areas. So this is what I'm thinking is consistent with the idea of evidence-based policy, which refers to the idea that policy decisions should be based on and informed by established evidence and data. So to summarize, I think the network has been successful, very successful, because it provides what researchers and policymakers need. And also, we have a very good organizational structure. I'm the chair of the Egypt Council. Yeah, we have the Egypt Council. We have over 200 members, actually, around the world. The NTA is decentralized by region, you know, Europe, America, Asia, Africa, and actually, people are very nice, very collegiate, so it's fun. Gosh, a nice bunch of economists. So 1,200 people, I mean, are they all economic researchers, or are you working with governments? I presume the value of this is that it's independent, right? So how do you engage with the statistics bureaus, for example? Oh, it's a very good question. So I gave a lot of, actually, online training, but because I was an Asian regional team leader, and in Asia, it's more actually centralized, so there are a lot of help from many organizations like the UN Population Fund. It's called APRO, Asia Pacific Regional Office, located in Bangkok. So they have a very good network, so actually, you know, they have a very good network in each government and statistics bureau. So they actually contact me, and I also collaborated with other people. So they say, oh, we need this training, we need to know. Can you actually translate your manual into Burmese now? So actually, it's translated to many different languages. I was surprised. So that's the way, I mean, there is a regional center, and the regional center has, they're like a headquarters, so those who help me help other people. So yeah, that works. Yeah, I guess I'm just, I'm really interested in the applicability of it. And so you 90 countries are getting this data, and you mentioned both Korea and Thailand. The governments are actually using this data to underpin some of their policy decisions, because they're making clearly targeted decisions about budgetary decisions. But are you in all of the countries in Asia, and are you in any countries in the Pacific? Oh, okay. And then also, and sorry, Senghap, and then one last question about that. And if people were interested in procuring this research, your findings, how could they access it? Oh, okay. So let me actually answer the second question first, because it's in the public domain. So we actually put the all the data sets, we have a very well developed our website, ntaocons.org. So we have a very good nta.org. Okay. Ntaocons, N-T-A-C-C-O-U-N-T, so N-T-A-C-C, so N-T-O-Cons, because there are two N-T-O-Cons. N-T-A-Cons, so that works. So if people, or people can just search on Google, National Transport Council, it leads to their website. So they can download the country data, because we actually post the country data. Yeah. And well, Asia and Africa are two probably best examples, which uses, utilize this one for policymaking. The one thing is that in some countries, like, there are, like, what is the, like, buzzword? What is the most important topic? And the people are different. Like in Latin America, they say inequality. Right. Asia, like, aging and growth. So it's, yes. So that's actually, we have kind of buzzword game, you know, this, what is the most important topics in your region. So each country actually uses the data for different purposes. I don't have a kind of record for how many times it used, it was used, because they don't cite, you know, I realized that, oh, this is anti-data, you know, in paper. Oh, actually in research, I mean, in policy and research, you use this, but they just use it as kind of granted. So we are donating the data set and or research and providing the methodology as well. Yeah. All right. Well, actually, before I forget, I should congratulate you because the South Korean president recently awarded you a presidential commendation, right? And it was for your substantial contribution to economic growth through statistical research and clearly your philanthropic contributions to research since people can access all your data for free. So can you tell us a little bit more about your work in South Korea and maybe touch on how rapid population aging has affected Korea's economy and society? Thank you for the compliment. I forgot it as a recognition of our research network as a whole. So population aging is such an important policy agenda in Korea. And it's my, actually, one of my main topic, main country, study countries. So among OECD countries, Korea is characterized by the lowest fertility rate, 0.98 last year, highest power trade among world of people and also the highest labor force participation of all the people. So people actually ask, you are, you know Korea, okay, I'm originally from Korea. And so how come, how can you be consigned this, you know, this numbers, right? So, you know, because of South Korea, so economy doesn't matter. So, but first over, however, I would like to mention that South Korea's economy and demographic transition is actually one of the success stories. The high poverty rate problem might, again, stems from the very rapid population aging. But I don't believe it would be a very long lasting permanent problem. So this is actually my research topic, what's going on, and how can you, you know, eliminate or alleviate this problem. Korea's older people used to rely a lot on traditional family support system and savings. So, but the traditional family support system, meaning grown up children taking care of their older parents has been deteriorating. And I don't think my kids actually take care of me anyway, but and low interest rates for the past 20 years, I mean, that asset income, like interest from savings is quite low. So it's changing, the support system is changing Korea very rapidly. And public pensions also provide much less support to elderly Koreans than in any other developed countries. So only one third of our Korean liter is with any pension at all, because it's not matured. So the pension system has been handed rapidly, but it's not able to catch up to the speed of the population aging. So of course, I mean, older Koreans or any any people in any country, they can work or older people can work more as they live longer and healthier. Surprisingly, Koreans are pushed out of their career job very early at age 50s on average, very before the official retirement age. So they do not fully retire, they rather they take temporary positions with little job security and low wages for building ours. Thus, despite the relatively high employment rate, very high, like 40% of South Koreans age 65 and older, they are still living in relative poverty. In other words, although many older Koreans are working more than four out of 10 people on less than median income. So this is my research topic. I'll continue to this. And yeah, I mean, this is also a fascinating country. It is, but it also, I mean, a real concern. And you've sort of talked about this a little bit right throughout the show, but are there any overarching cultural challenges that prevent countries like Japan or Korea? Yeah, from addressing these issues. And then also, if you wouldn't mind, because I think we're kind of, we've got about five minutes there, if you could also touch on the role of women as a factor into these challenges, but also the opportunities. Yeah. Can I spend two minutes? No, no, no, like, no, we've got another five minutes. Opening more borders and accepting more immigrants can be an effective power still to mitigate the negative impact of population aging, right? So, but in Korea and Japan, it seems politically more difficult than other countries due to national sentiment. So many Japanese and Korean may not socially accept immigrants the same way as countries like the US and other European countries do. But because of such a rapid population aging, actually Japan started opening its borders much more beginning last year. However, if you look at the inside, the policy change was controversial, even among their cabinet, because immigration has long been so-called political third layer relating to controversial debate. So even within the cabinet, actually, in the beginning, there was huge debate. And there are other cultural challenges, as you mentioned. For example, in Korea and Japan, most of the verses are from marriage. So Korea has the lowest percentage of children on outside marriage among all these countries followed by Japan. So around- Sorry, it's the lowest in all the OECD countries. Lowest percentage of children born outside marriage, yes. So about only 2% in both countries. So this is- So why? Is it because it's such a Christian country? So you asked the cultural challenge. So cultures do change, but they are changing very slowly. It's like one ethnicity, one nation, you know, so these are culture. So it's like a European country such as France, they have like one half of the verses are outside marriage. So it's not socially acceptable to have children born outside marriage in Japan or Korea. So this is a huge hurdle. And also women in Japan or Korea, they are most of the burden of child rearing, I already mentioned. So and also the burden of caregiving to seniors for the heavily on daughters and daughters in law. So yeah, this is a huge challenge, cultural challenge. Right. So I think we've got two minutes left. So I'm just going to ask you, you know, what's the answer? How do we change that? And your wife's listening. Yes. Oh, this is very difficult question. How do you change it? Well, actually, it's not an issue in my house, my home. So I mean, we have a very good gender balance work, balance beauty work at home. So it's changing. But historically, I mean, you know, first of all, it takes time, I think. I mean, it's in other countries, it's also there, they actually went through some kind of, you know, gender revolution. There is also many social welfare programs, which actually target women and take care of children. So they are developing. I think it changes. I mean, it's just so slow. So I said it's a cultural challenges. But policy is important. And also, you know, this is probably so cliche, nothing is ever easy. And Asian policy makers face a number of difficult challenges. But of course, transparent government, political stability, and good leadership are extremely important as usual. So policy works. So that's my answer. I could not have said it better myself. And thank you for being such a trooper, because that last question was a bit of a doozy and not directly relevant to your core research. So thank you very much, Sankov. And thank you for your time today. That's all we have time for. But I feel like you and I have a lot of follow up conversations. And I look forward to sharing this, the links that you refer to in terms of the National Transfer Accounts Project on our website. So thanks everybody for joining us at East West Centre Insight today. And we'll see you next time. Aloha.