China has one of the fastest growing ageing populations in the world. Due to longer life expectancy and low fertility rates, the World Health Organisation estimates that by 2040, 402 million people or 28% of China’s population will be over the age of 60.

Changing attitudes to finding jobs, particularly among the youth, also presents particular challenges for governments against the backdrop of an already shrinking labour market and rapidly ageing population. Hong Kong and China’s governments have introduced a range of measures to address the problem of ‘too many old people and too few young workers to support them’.

Drivers of shrinking and ageing populations

Like many economies around the world, China faces the problem of having more people set to retire than people entering the workforce to replace them. However, unlike other developed western economies, it is growing old before it has gotten rich thanks to decades of birth restrictions under the former one-child policy (1980-2015). By 1991, China’s replacement rate had already fallen below the level needed to maintain a stable population.

With less people getting married and fewer births, labour pools are shrinking as current workforces approach retirement. There are fewer workers to support more retirees, and concerns about labour and skill shortages remain high on the agenda of policy makers and employers.

Apart from the residual impact of the One Child Policy, China’s looming demographic crisis is also being driven by an increasing aversion among young Chinese to having kids. Increasingly high costs of living, the rising popularity of the ‘dual income, no kids’ lifestyle, uncertainty about the future, and record-levels of youth employment are all contributors to why many young Chinese are opting out of having children.

Another growing lifestyle choice among young Chinese born in the late 1990s and 2000s is ‘lying flat’ or ‘tang ping’ in Chinese - a social movement that came about as a means of protest against demanding work culture and excessive societal expectations. The ‘Lie-Flat Movement’ has been described by academics as “a deliberate renunciation of the conventional pursuit of wealth, marriage, and consumption, (to) instead adopt a minimalist, simplified attitude to life”. Similar to the trend of ‘quiet quitting’ in the United States, to ‘lie flat’ is to do the bare minimum at work or choose not to work at all. It stems from increasing dissatisfaction among the younger population, frustrated by limited social mobility and broken promises of reward and ‘success’ for running the rat race.

Overall, we are seeing the effects of economic slowdown, together with an oversupply of university graduates and limited roles in the desired (skilled) sectors to absorb them, leading to record high youth unemployment rates in China. The jobless rate for people ages 16 to 24 rose to its highest recorded level (since the National Bureau of Statistics adjusted its reporting metrics to exclude students in December 2023) of 18.8% in August 2024, but since dipping to just below 17% in March 2025.

In Hong Kong, a 2024 survey conducted by the Employees Retraining Board revealed a lack of incentive among youths to engage in employment, with over a third of the younger respondents who were not working or studying having no future plans to find a job. Lack of financial urgency and being unable to face work pressures were cited as influencing factors for not wanting to work. The prospect of competitive remuneration, flexible working hours and remote work options were only incentives for some to take up work.

What measures are governments taking?

Rising retirement ages and revisiting retirement policies

China is raising its retirement age amid a shrinking labour market and a cash-strapped pension system, which the Chinese Academy of Social Sciences has predicted will dry up by 2035 if drastic measures are not taken.

From 1 January 2025, China will start gradually raising the retirement age over the next 15 years. For men, the retirement age will be increased from 60 to 63. For women, the retirement age will also go up: women in blue-collar jobs will see their retirement age rise from 50 to 55, while women in white collar jobs will see it increase from 55 to 58.

In addition, from 1 January 2030, the minimum number of years an employee must contribute to the pension system before they can receive pension benefits will gradually increase from 15 to 20 years. This increase will take place incrementally every 6 months.

If an employee completes the required years of pension contributions before reaching the new retirement age, they may be allowed to begin receiving pension benefits —up to three years before the new retirement age—but not before the original retirement age.

China’s current retirement ages are currently among the lowest in the world, and have not changed since they were first implemented in the 1950s. The Chinese minister of human resources and social security has said that the reform was necessary (and long overdue) in circumstances where China’s economic, social and demographic situations, as well as societal values have changed enormously over the past 70 years.

In Hong Kong, while there is no statutory retirement age, some employers require their staff to retire between the ages of 60 to 65. Given Hong Kong’s ageing population problem, governments and employers are being urged to rethink their retirement policies in order to leverage older workers to boost productivity and narrow employment gaps.

Introducing pronatalist measures

In 2016, the Chinese Government raised the birth cap to two children, and again to three children in 2021 as part of its pro-birth drive to quell the looming demographic crisis. However, fertility rates continue to plummet, and China’s population continues to decline, a trend which some observers say is getting close to “irreversible”. A prominent gender imbalance and changing attitudes among young people - a sex ratio skewed towards males, fewer women of childbearing age, and people choosing to get married and have children later in life (if at all) – have led to China’s population shrinking for the first time in 60 years in 2022, and again in 2023 and 2024 for three consecutive years as the number of deaths rose and birth rates hit an all-time low.

The United Nations anticipates that China will likely experience the largest absolute population decline of any country in the world, shrinking by 204 million people between 2024 and 2054, and 760 million people through the end of the century. By 2100, China is projected to have lost more than half of its current population of around 1.4 billion, returning to recorded 1950s population levels.

Similarly, in Hong Kong, the fertility rate is at an all-time low prompting the Government to roll out a series of pronatalist measures including a cash bonus of HK$20,000 for each newborn. The number of unmarried persons in Hong Kong has also increased following the general trend of marriage postponement or non-marriage over the past few years. Further, the proportion of elderly persons aged 65 and over is projected to increase from 20.5% in 2021 to 36% in 2046. By 2050, Hong Kong is projected to have one of the oldest populations in the world with the highest share of people aged 65 and above.

Extending working lives 

In Hong Kong and China, we are starting to see a shift towards extending working lives. This is reflected in a recent report published by The Hong Kong Labour and Welfare Bureau, which predicts a manpower shortage of 180,000 people by 2028 with labour-intensive sectors including construction, city operations, health services, accommodation, food, retail, tourism as well as innovation and technology expected to be the hardest hit.  To address the prevailing manpower shortages, the Hong Kong Labour Department recently launched a three-year Re-employment Allowance Pilot Scheme to incentivise ‘elderly and middle-aged’ people to rejoin the workforce. By expanding the potential labour force to meet the immediate needs of employers, and encouraging experienced workers to return to the workforce, the scheme is expected to enhance overall workforce productivity and provide economic benefits through increased employment and consumer spending.  

Regional governments across China are actively promoting old(er)-age labour force participation, including the Shanghai Government, which recently proposed measures to strengthen the training system for reemployment, increase resources to facilitate labour force participation of older talent, and protect the rights and interests of older persons in the labour force.

Low birthrates in Japan and Korea have been declared “quiet” and “national” emergencies respectively by the country’s leaders. In a policy speech in October 2024, Prime Minister Shigeru said that Japan’s low birth rate and resulting population decline was a “challenge to the very foundations of the country”; while earlier in May 2024, former President Yoon Suk Yeol said he would dedicate his term to improving the Korea economy by “mobilising all of the nation’s capabilities to overcome the low birth rate”.

Social infrastructures such as pension and health care systems in Japan and South Korea will be difficult to maintain as a result of their shrinking populations and workforces. While some of their policies have made positive strides, current measures have not been sufficient to reverse the trend of population decline – something experts say will require ongoing and more radical solutions, including policies more focused on gender equality and providing longer-term financial assistance beyond pregnancy and early childhood.

In any event, reversing the ageing trend in Japan and South Korea will require long-term commitment, and may even take decades. However, the future may not be as bleak as governments fear with some experts offering a more optimistic view – one where population decline and economic prosperity can coexist or where fewer people could mean less competition for university admission and jobs. While shrinking populations are typically associated with less economic growth, some experts say it is not the size of the population but the quality of societal contributions that drive sustained economic advancement. Investing in education, innovation and expanding workforces to include more elderly, women, migrants and even robots could very well form the foundations of the emergency response plans Japan and South Korea need to mitigate the long-term effects of their shrinking populations. According to the International Monetary Fund, the combined effects from a higher labour force participation rate, more efficient allocation of resources, and expanded AI adoption “can more than fully offset the economic drag from ageing.”

Drivers of shrinking and ageing populations

South Korea currently has one of the lowest fertility rates in the world, dropping to a record low of 0.72 in 2023 from 0.78 in 2022. In 2024, the birth rate rose for the first time in nearly a decade to 0.75 but experts warn that the uptick in births is likely to be short-lived with the long-term outlook remaining bleak.

The fertility rate in Japan has also reached a record low falling for the ninth consecutive year from  1.20 in 2023. In 2024, Japan logged 720,988 births down 5 percent from the previous year.

In general, countries need a fertility rate of 2.1 children per woman to maintain a stable population. However, urbanisation, rising costs of living, changing attitudes towards marriage, gender inequality, youth disillusionment, high costs of education, and limited access to childcare have all contributed to plummeting fertility rates in Japan and South Korea – both amongst the top three most expensive nations in the world to raise kids.

Population decline as a result of low birth rates and ageing has become one of the countries’ most pressing issues, with governments grappling to avert catastrophic consequences on their respective economies, social security systems and workforces.

By 2050, it is projected that Japan’s current population of around 122 million will decline to 100 million, while South Korea’s population is expected to decrease from 51.6 million to 46 million. Domestic labour forces are projected to decline even faster than the overall populations. 

While both nations have introduced new measures and legislation to try and reverse their respective population crises, it could very well be a case of ‘too little too late’ with some experts describing the situation as ‘not reversible’.

What measures are governments taking?

Introducing pronatalist policies

Governments in Asia have reportedly spent hundreds of billions of dollars trying to address low birth rates, but numbers continue to plummet in Japan and South Korea.

Japan has implemented several pronatalist measures including financial incentives and subsidies to families for childbirth and child-rearing. New legislation was recently introduced to boost childcare support through the scrapping of an income threshold to be eligible for child allowance and other incentives. Additionally, in May 2024, a new law aimed at providing flexible work options for employees with young children was passed. Since April 2025, companies are now required to offer at least two flexible working options for employees with preschoolers aged three and above. These options may include remote work, shorter hours, or staggered hours. Efforts must be made by employers to allow parents with children under three to work from home, with the revised law also extending exemptions from overtime and childcare leave for sick children. In order to assist the government in evaluating the efficacy of its pronatalist policies, employers are now subject to parental leave utilisation reporting. Employers with over 300 employees are required to disclose the percentage of male employees taking childcare leave, and those with over 100 employees to establish targets for such leave.

Similarly, South Korea has introduced various measures to encourage people to have children, such as an increase in parental leave allowances, more flexible work hours, and incentives such as childcare, after-school programs, and tax subsidies to relieve the financial burden of parents and encourage shared parenting responsibilities. On 26 September 2024, amendments to the Gender Equal Employment and Work-Family Balance Act and the Labor Standards Act were passed. Amendments include enhanced maternity, paternity, and childcare leave entitlements  which took effect on 23 February 2025. Of note, childcare leave  has increased from one year to one and a half years for single parents, parents of a child with a severe disability, or where each parent takes more than three months of childcare leave. Reduced working hours for childcare can also be used for children up to 12 years old instead of the previous eight. Paternity leave has increased from 10 days to 20 days, and maternity leave for premature babies has now been increased to 100 days from 90, while  infertility treatment leave is increased to six days from the current three days. Housing assistance programs aimed at providing more affordable housing for young families have also been introduced.

There have also been aggressive social campaigns to promote the benefits of marriage and family life in both nations alongside measures to support young people, such as education and employment opportunities to improve job security and provide better career prospects. Programs aimed at women in the workforce, including initiatives to reduce gender discrimination and enhance career progression have also been launched. However, the effectiveness of these policies have been varied with birth rates still lower than ever before. For example, although access to childcare has improved, many families still face long waiting lists; and while efforts have been made to promote work-life balance, strong cultural norms around long working hours persist, making it difficult for parents to balance work and childcare responsibilities. 

For women, although there has been progress in increasing their participation in the workforce, gender inequality issues remain, with many women still facing challenges in career advancement due to culturally entrenched gender roles and expectations. The Economist’s 2024 Glass Ceiling Index, which assesses which OECD nations offer women the best opportunities for equal treatment in the workplace, ranked Japan and South Korea in third last (27^th) and last place (29^th) respectively out of 29 countries.

Increasing support for immigration

The issue of population decline as a result of low birth rates and ageing populations is not unique to Asia, but unlike other developed economies in the US or Europe, Japan and South Korea have shunned immigration in the past as a means to grow their respective populations. In more recent times, however, Japan and South Korea have both increased support for immigrants, introducing policies to attract foreign workers to help mitigate labour and talent shortages.

Japan has traditionally been conservative in its immigration policy and ex-patriates have found it difficult to secure long-term working visas in Japan. However, in 2019 Japan introduced the Specified Skilled Worker Visa scheme, which offers a pathway for foreign workers to fill labour shortages in certain sectors including nursing, hospitality and construction. The government has also expanded eligibility for permanent residency, and increased support for foreign workers through various language and integration programs to encourage longer-term settlement and a more stable workforce. Due to these reforms and initiatives, the number of foreign nationals in Japan increased by 11 percent from 2022 to 2023 and now comprises over three million people, the highest number in its history. Still, Japan’s attractiveness to skilled foreign workers remains hampered by factors such as comparatively low international wages, a stringent tax regime, and a demanding work culture.

South Korea is also focusing on attracting skilled workers through programs such as the Korea Immigration Service’s points-based system, which evaluates foreign talent based on education, work experience and language proficiency. Specific visa categories, such as the Employment Permit System, which gives foreign workers a pathway to fill roles in sectors facing labour shortages such as manufacturing, agriculture and construction have also been introduced. The impact of these policies is reflected in recent immigration statistics released in December 2024, where for the first time, the number of foreign workers in South Korea exceeded 1 million. To encourage longer-term settlement, the government has also recognised the importance in providing support for integration as well as policies to allow foreign workers to bring their families with them.

Despite long-held perceptions of Japan and South Korea being ethnically homogenous and xenophobic nations, there has been a general acceptance of the governments’ pro-immigration policies, though complaints from foreign nationals facing racism and discrimination are still common.

While the gradual easing of immigration restrictions has seen some success in filling labour shortages, these measures have not significantly offset the population decline. Further, many of these policies have typically centred on filling low-wage, low-skilled positions which experts warn could exacerbate labour market imbalances if not carefully managed.

According to a researcher at the Korea Small Business Institute, although foreign labour is essential to offset the country’s shrinking working-age population, it is critical to direct foreign workers to unfilled positions while protecting jobs for domestic workers including young job seekers and elderly workers. Although foreign workers can help to address the talent shortage in low-wage roles, systems to enable wage progression and better working conditions will be essential in ensuring stability of the labour market over time.

Encouraging older workers

One of the ways governments are attempting to mitigate shrinking workforce numbers and skills shortages and alleviate pressure on social security systems is to enable the elderly to remain in, or re-enter, the workforce. As a result, there has been an increased focus from governments on improving working conditions for older employees.

Japan reportedly has the highest number of seniors working past retirement in the world, followed by South Korea where more than half of individuals aged 65-69 are still in employment. The Japanese government is actively encouraging employers to improve senior employment by securing employment opportunities for workers until the age of 70, through legislation such as the Revised Law Concerning Stabilization of Employment of Older Persons and various other subsidy programmes. We are also seeing more employers introducing policies that enable employees to extend their retirement age without losing their retirement benefits. 

In South Korea, 60% of the population aged 55 to 79 are currently employed – the highest labour force participate rate among this age cohort since data collection began in 2005. Various factors contribute to the rise in working seniors including longer life expectancies, while increasing costs of living and less young people to support them are motivating seniors to remain in the workforce longer.

Singapore is one of the fastest ageing nations in the world. In order to address the needs of its ageing population and alleviate pressure on its social systems, the government plans to aggressively tap technological developments and extend working lives to allow the elderly to remain in the workforce longer.

Singapore’s fertility rate hit a record low in 2023, falling below 1 for the first time in the Republic’s history. This, coupled with longer life expectancies mean that Singapore has an ageing population without a young base to support it.

What measures is the government taking?

Raising retirement ages

To tackle these demographic challenges, Singapore plans to raise the retirement age from 63 to 64, and the re-employment age from 68 to 69  in 2026. Meanwhile, speaking at a Population Association of Singapore conference in May 2024, Minister Indranee Rajah said that in addition to allowing seniors to remain in the workforce longer, the Republic should tap technological developments to address the needs of its rapidly ageing population.

Leveraging automation and AI

Like many global economies, Singapore has embraced and invested heavily in automation as a key strategy to tackle workforce shortages, particularly in the manufacturing, logistics, and services sectors. Automation in the manufacturing sectors has been supported by initiatives such as the Industry Transformation Maps launched in 2016, which encourages businesses to adopt advanced technologies to meet evolving market demands.

In 2014, the government launched the Smart Nation Initiative to harness technology and data to improve the quality of life for its citizens and drive economic growth. Key aspects of the initiative include support for digital transformation across various sectors including healthcare, education and transportation, as well as supporting research innovation and growth of tech startups to foster Singapore’s digital economy.

In order to assist companies in their automation adoption journeys, the government offers various grants and funding schemes, such as the Productivity Solutions Grant, to offset some of the costs associated with adopting new technology.

Support by way of upskilling and skills development programs in areas such as AI, data analytics and robotics have also been introduced to help workers transition into new roles created by automation. Initiatives such as SkillsFuture launched in 2015, encourage lifelong learning and enable workers to adapt to new technologies.

Singapore also recently updated its national AI strategy recognising the need to “master AI to overcome our labour and productivity challenges”. It launched the world’s first Model AI governance Framework in 2019, positioning itself as global leaders in AI with plans to raise the pool of AI talent, uplift the AI capabilities of its industries and workforce, intensify the promotion of AI adoption across all enterprises, and upskill its workforce through sector-specific AI training programmes.

Through these initiatives, Singapore is not only addressing immediate workforce shortages but also establishing itself as a leader in innovation and productivity in the long term.

Reskilling older workers

As working lives get longer, individuals will have to adapt to the increasing pace of change. For example, 50-year careers will become the norm rather than the exception, and employees may choose to make radical career choices or change direction and seek fresh challenges in their later lives. Automation and AI are having a growing impact on jobs and job roles - while some jobs may be displaced, new jobs and skills will also emerge for which people need to be reskilled and retrained.

In particular, some elderly workers may struggle to adapt to new technologies. Researchers say that although automation is freeing workers from routine tasks, older workers may feel threatened by new automation advances which generate skill mismatches.  It is, therefore, critical in the context of ageing and in developed economies, such as Singapore, which are moving towards knowledge-intensive activities, to provide pathways to continuous upskilling of workers who wish to extend their working lives. 

Singapore has clearly recognised the challenge of ensuring individuals obtain the skills they need to progress in work, redirect their careers and secure the jobs of the future through its various initiatives. For example, through establishing adult learning systems to tackle skills obsolescence and maintain the employability of older workers.