Mercer & Marsh & McLennan: Aging and Automation Resilience Index Report

A new study from Mercer and Marsh & McLennan Companies shows that among 20 major global economies, Asian countries are among the least prepared to face the threats of aging societies and workplace automation.

The Aging and Automation Resilience Index analyses a country’s mitigating factors for the challenges of an aging workforce and job automation for older workers, as well as the strength of its local retirement system, thereby assessing how well a country is prepared to manage aging and automation.

Mitigating factors include higher participation rates of the older workforce, adequate levels of pension assets, favorable socioeconomic conditions, and appropriate policy and regulatory conditions.

The countries with the highest resilience to the challenges of aging and automation are Denmark (1st), Australia (2nd) and Sweden (3rd). Of the four Asian countries included in the Aging and Automation Resilience Index (AARI), Singapore (13th) ranks highest, followed by Japan (17th), China (18th), and South Korea (20th).

Today, governments and businesses around the world are experiencing a period of disruption. Technological advances are gradually putting low-skilled routine jobs at risk of being replaced by automation, and these jobs often employ older workers over the age of 50.

At the same time, the world's population is aging, with an increase in the elderly population and a decrease in the working-age population.

Key findings from the report include:

• On average, more than three-quarters (76%) of the work done by China’s older workforce (over 50 years old) can be automated.
• The country with the largest difference in average risk of automation to older and younger workers is Singapore.
• Japan's labor market participation rate stands out, at 75.4, compared with an average of 66.2%, while China's is only 59.1%.
• Compared with the average rate of 14.7%, China (21.5%), Japan (23.5%), South Korea (31.7%) and Singapore (26.8%) all have very high labor market participation rates for workers aged 65 and above.
• Compared with the average level of 51.9%, the ratio of pension assets to GDP in China (1.5%), Japan (28.6%), South Korea (10.9%) and Singapore (31.2%) is very low.

Ms. Li Zhaoqi, CEO of Mercer China, pointed out: "Globally, whether in developed countries or emerging markets, the number of young people is shrinking, while the number of elderly people is increasing, which has caused concerns about productivity losses. The aging trend of the global workforce is accompanied by risks, but also contains opportunities. How to make full use of this new source of labor is an issue that we need to think about urgently."

“In China, for example, by 2030, about 33% of the working-age population will be over 50. We are rapidly approaching the most significant generational tipping point in history. By 2030, in China, for example, about 33% of the working-age population will be over 50. In some developed countries, the number is even higher: 35% in Singapore, 38% in Japan and Italy. In the United States, 27% of the workforce will be over 50 in 2030.”

Mr. Liang Shen, General Manager of Wealth and Investments at Mercer China, said that the index shows that Asia's workforce, government and businesses need to be better prepared for rapid aging and technological advances, especially as these trends are more pronounced in Asian countries.

“Due to the rise of automation, the older workforce is facing an unprecedented risk of unemployment, making it difficult for their economic conditions to match their growing life expectancy. Although some progress has been made, there is still a long way to go. Today’s workforce over 65 is more willing and able to continue working, and companies need to make better use of this experienced workforce.” Shen Liang suggested, “In addition to helping companies provide financial security for the aging workforce, the government also needs to increase pension assets to protect vulnerable workers from financial difficulties after retirement. Moreover, employees themselves can also strengthen their job security and retirement wealth through a variety of ways, including learning new skills and combining investment decisions with physical condition and future career development opportunities.”

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