G. ECONOMIC IMPACT OF DEMOGRAPHIC AGING
IN THE PHILIPPINES
Demographic changes resulting from rising life expectancy and falling
fertility rates have made an impact on different economic concerns
including poverty, inflation, and growth. More recently, the prevalent
view in media and the research community especially in the
industrialized west is that the “graying of the population” in the coming
millennium will usher in new burdens to the members of the labor
force as the sector takes charge of supporting the income requirements
and health-care needs of the growing retired population.
Such a portentous view is based on three seemingly logical
assumptions. First, the slowdown in population growth will result in a
significantly reduced number of new labor force entrants. Second, the
increased ratio of the elderly to below-retirement-age workers will make
it increasingly difficult for the labor sector to maintain productivity levels
to support the growing aged population. Third, current trends such as
rising life expectancy, and spiraling medical costs will make it more arduous
for the labor force to maintain present standards of living.59
These premises are not without merit. Past experience generally
supports the assumption that the growth of the elderly population will
lead to a decline in the number of entrants to the labor force. Recent
trends, meanwhile, back up the assertion that medical costs willcontinue to rise in line with the life expectancy improvements. Most
importantly perhaps, if recent macroeconomic indicators such as
inflation and unemployment are to be taken into account, questions
regarding the ability of government and the private sector to maintain
spending patterns amidst aging populations certainly need to be
asked.60
In the Philippines, the economic implications of aging have only
recently gained serious consideration. Perhaps because of the prevailing
view that the local population is generally a young one, the research
community has yet to turn its eye towards the issue. However, the topic
is likely to gather more attention as the elderly in the Philippines
increases from a projected 5.9 percent of the national population in
2000 to 13.5 percent in 2030. Philippine elderly figures are generally
similar to those of its ASEAN neighbors Vietnam and Thailand, and
reflect a general global demographic trend.61
While it is a notable argument that the problem of a strained old-
.age financial security system is not likely to be felt by government in
the medium term given the lack of emphasis accorded to retirement
and pension schemes, it would be prudent to consider strategic studies
on the matter. A well-developed pension system may well be a necessity
for the achievement of NIChood.
Studies by Schulz, et al. (1994) on the effects of economic
advancement on the role of individuals and families in Japan, for
instance, show that the rate of replacement of multigenerational
families by nuclear households is directly proportional to the
improvement in state of the economy. This despite the emphasis
Japanese society places on filial piety. Schulz and company generalize
further by saying that a general decline in the popularity of joint
households in the US, Australia and Japan can be associated with
factors such as the advancing economy, the improved role of women
and broadening of living arrangements.66
Theoretical studies undertaken in more developed nations have shown
that the early analyses of the problems pertaining to the impact of
demographic aging on areas such as the population savings rate, tax
reform, and labor supply are likely to lead to a more enlightened view
on policy formulation regarding such issues.63 The question of raising
savings rates for capital formation, for instance, should be asked with
the view that increased capital would be needed to finance the income
CONCERNS OF THE ELDERLY IN THE and health-care needs of the elderly in the mid- and long-term. On
another issue, that of tax reform, perhaps concerns should be raised as
to the need to allocate more tax pesos for pension system in anticipation
of the growth in the elderly population.
From these issues, perhaps we can surmise that economic questions
posed as a result of population aging are wide ranging indeed. And
while there have been many studies on the topic abroad, the Filipino
research community is yet to undertake the amount of investigation
necessary for the formulation of a comprehensive economic policy that
addresses the needs of the elderly while also answering the call for
sustained economic growth.