Older Persons in Southeast Asia: An Emerging Asset

7. Employment of Older Persons: Diversity across Nations and Subnations in Southeast Asia

Employment of Older Persons 167 7 EMPLOYMENT OF OLDER PERSONS Diversity across Nations and Subnations in Southeast Asia Evi Nurvidya Arifin and Aris Ananta Promoting an increase in labour force participation of older persons has been high on the agenda of countries facing ageing population. It is seen as a means to deal with the issue of how to finance old age within a limited or unsustainable pension fund.As noted in Hermalin et al. (2002), working has a significant impact on the life of older persons — both for their income and health. In turn, health may have a significant effect on labour supply (Cai and Kalb 2005; Kalwij and Vermeulen 2007). The United Nations (2001) concluded that the labour force participation rate of older persons had declined worldwide significantly, in both developing and developed countries. The reduction was greater for men than women. The rate for the population aged 65 and above declined from about 55.0 per cent in 1950 to about 30.0 per cent in 2000 for men, and from about 14.0 per cent to about 10.0 per cent in the same period for women. At the same time, labour force participation rates are usually higher in developing countries than in developed countries. The higher rate is 168 Evi Nurvidya Arifin and Aris Ananta partly because of the limitation or non-existence of old-age income security scheme, health insurance, occupational safety, and other social safety nets. Older persons in developing countries are more likely to be forced by economic necessities to remain in the labour market. Therefore, along with the disappearance of the informal social safety net, the declining labour force participation rates among the older persons have raised concern on how to finance older persons in their old age. From a macroeconomic point of view, delaying the retirement age and letting older persons remain at work in old age is good because it can minimize the use of retirement resources and older persons can continue to produce goods and services and hence contribute to economic growth. From a microeconomic point of view, keeping older persons at work can be useful for their active ageing and improving their psychological wellbeing , thereby, reducing the cost of health care and services, as long as the elderly are not forced by economic necessity to work. This chapter discusses the age-specific pattern of labour force participation in Southeast Asia, so as to compare the profile of older persons’ participation in the labour market relative to the profile of young persons — without examining whether they are happily employed, whether they work because of economic necessity, or out of pleasure. It provides important information for further studies on the labour market in general, and employment patterns of older persons in particular. This chapter also examines the employment patterns of older persons in Southeast Asia, especially in Singapore, Brunei Darussalam, Malaysia, Indonesia, and Thailand. Singapore and Thailand are the two countries in Southeast Asia with an advanced demographic profile, having attained below replacement level fertility rates for a relatively long time, and having the highest percentages of older persons among the ASEAN countries. The other extreme is the relatively low percentage of older persons in Brunei Darussalam. The ageing process in Malaysia and Indonesia is in a phase between these two extremes. This chapter also studies subnational economies in the region, as discussions at the national level of large countries may obscure many important issues. Because of so many variations within a country, we concentrate on a few subnational economies of three countries: Indonesia’s provinces of West Sumatra, Jakarta, and East Java; Thailand’s provinces of Sing Buri, Chaiyaphum, and Phuket; and Malaysia’s states of Johor, Penang, Trengganu, and Kuala Lumpur. To improve the comparability among the selected economies, we use the latest available population census data Employment of Older Persons 169 sets. Therefore, all data sets examined in this chapter refer to 2000, except for that of Brunei Darussalam (2001) and some specific statistics. It is also important to note that some findings for the period between 2000 and 2001 may reflect some of the impact of the 1997–99 Southeast Asian crisis on their economies and labour markets. In this chapter, we define older persons as those aged 60 years and above. However, not all available information on employment refers consistently to this group. In Brunei Darussalam, published statistics on employment sector and...