MALAYSIAN DEMOGRAPHIC PATTERNS 1 2 DATA AND ESTIMATION 3 - - PowerPoint PPT Presentation

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DATA AND ESTIMATION

3 4 CONCLUSIONS AND WAY FORWARD 1

MALAYSIAN DEMOGRAPHIC PATTERNS

FINDINGS AND IMPLICATIONS

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MALAYSIAN DEMOGRAPHIC PATTERNS

6.83 6.94 6.72 5.94 5.15 4.16 4.24 4.00 3.47 3.10 2.85 2.58 2.35 2.16 2.00 1.87 1.85 1.85 1.85 1.85

5 10 15 20 25 30 35 40 45 50

1950- 1955 1955- 1960 1960- 1965 1965- 1970 1970- 1975 1975- 1980 1980- 1985 1985- 1990 1990- 1995 1995- 2000 2000- 2005 2005- 2010 2010- 2015 2015- 2020 2020- 2025 2025- 2030 2030- 2035 2035- 2040 2040- 2045 2045- 2050

Period Crude Birth & Crude Death Rate (per 1,000) 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00 8.00 Total Fertility Rate Crude birth rate Crude death rate Total fertility rate

Source: UN, 2009, World Population Prospects (The 2008 Revision)

Fertility, Mortality & Total Fertility Rate, Malaysia, 1950 - 2050

Anti-natalist policy (1960s) Pro-natalist policy (1980s)

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MALAYSIAN DEMOGRAPHIC PATTERNS

TFR, Median Age and Life Expectancy for Malaysia, 1970–2050

Year TFR (children per women) Median age (yr) Life expectancy at birth (yr) Life expectancy at 60 (yr) Male Female Male Female 1970 5.94 17.5 57.8 61

• 1

1980 4.16 19.7 63.5 67.1 3.5 7.1 1990 4.00 21.5 67.5 71.6 7.5 11.6 2000 3.1 23.6 69.6 74.5 9.6 14.5 2010 2.58 26.3 72 76.7 12 16.7 2015 2.35 28.0 72.9 77.6 12.9 17.6 2050 1.85 36.3 77.8 82.4 17.8 22.4

Source: DOSM, various years; United Nation (2006; 2012)

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MALAYSIAN DEMOGRAPHIC PATTERNS

Source: DOSM, Pala, 2005

48.2% 48.4% 47.7% 47.3% 49.4% 52.2% 51.6% 52.3% 52.7% 50.6% 47.8% 51.8% 5.2 5.7 5.5 6.2 7.4 9.9 500 1000 1500 2000 2500 3000 3500 4000 1970 1980 1991 2000 2010 2020 Year Number of Older Persons 60 Years or Over ('000) 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 Proportion of Older Persons to Total Population (%) Female Male %

Population Ageing Trends in Malaysia, 1970 - 2020

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MALAYSIAN DEMOGRAPHIC PATTERNS

Age Composition of Malaysian Population, 1970 - 2050

Year Number of Persons (million) Percentage of total population 0-14 15-59 60+ Total 0-14 15-59 60+ 1970 4.8 5.4 0.59 10.9 44.5 50.0 5.4 1980 5.5 7.6 0.76 13.9 39.9 54.6 5.5 1990 6.8 10.3 1.0 18.1 37.4 56.9 5.6 2000 8.0 14.0 1.45 23.5 34.1 59.8 6.2 2010 9.2 17.6 2.1 28.6 31.7 60.9 7.4 2015 8.2 19.0 2.8 30.0 27.3 63.4 9.3 2050 7.2 23.6 6.4 37.3 19.4 63.3 17.3

Source: DOSM, various years; United Nation (2006; 2012)

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MALAYSIAN DEMOGRAPHIC PATTERNS

The speed of Ageing

France (1865 - 1980) Sweden (1890 - 1975) Australia (1938 - 2011) United States (1944 - 2013) Hungary (1941 - 1994) United Kingdom (1930 - 1975) Japan (1970 - 1996)

115 85 73 69 53 45 26 Developed countries

Azerbaijian (2004 - 2037) China (2000 - 2026) Sri Lanka (2002 - 2026) Malaysia (2020 - 2043) Thailand (2002 - 2024) Columbia (2017 - 2036) Singapore (2000 - 2019) South Korea (2000 - 2018)

33 26 24 23 22 19 19 18 Developing countries

source: Kinsella and He, 2009

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MALAYSIAN DEMOGRAPHIC PATTERNS

Dependency and support ratio, 1950 - 2050

85.0 88.0 94.9 97.5 92.3 84.6 75.4 73.6 69.7 66.2 59.6 55.6 51.6 49.6 48.2 47.7 47.6 47.7 48.6 50.3 52.9 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 100.0 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ratios Total Dependency Ratio Child Dependency Ratio Old-age Dependency Ratio Potential Support Ratio Parent Support Ratio

Source: UN, 2009, World Population Prospects (The 2008 Revision)

1965: 10: 10 2000: 7: 10 2030: 5: 10

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MALAYSIAN DEMOGRAPHIC PATTERNS

Age-Sex Pyramid for Malaysia, 1970, 2000, 2030

Source: UN, 2009, World Population Prospects (The 2008 Revision)

10 8 6 4 2 2 4 6 8 10 0- 4 5- 9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85+

Males Females Percent Age Group 1970 2000 2030

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MALAYSIAN DEMOGRAPHIC PATTERNS

Size of labour force by age group, Malaysia, 1985–2012

Source: DOSM, various years; United Nation (2006; 2012)

Year Total 15–19 20-59 60–64 No % No % No % 1985 5,990.1 662.8 11.1 5,184.5 86.6 142.9 2.4 1990 7,000.2 748.4 10.7 6,084.6 86.9 167.1 2.4 1995 7,893.1 642.4 8.1 7,075.3 89.6 175.4 2.2 2000 9,556.1 637.6 6.7 8,704.2 91.1 214.5 2.2 2009 11,315.3 452.4 4.0 10,600.7 93.7 262.2 2.3 2010 12,303.9 528.4 4.3 11,491.6 93.4 284 2.3 2011 12,675.8 521.8 4.1 11,842 93.4 311.9 2.5 2012 13,119.6 519 4.0 12,248.8 93.4 351.8 2.7

Household Expenditure Survey (HES) 2009

• A nationwide survey covering

21,641 private households in urban and rural areas

• Information on income,

expenditure and the debt burden

• The expenditure data are

reported at the household

level

Household Income Survey (HIS) 2009

• Covered 184,447

individuals living in 43,026 households

• Information on income

and basic amenities

• Income from employment

and self-employment are reported at the

individual level

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DATA AND ESTIMATION

The Data:

• Used the National Income Account data for 2009

to calculate public consumption and macro control

• Used household surveys (HES and HIS) and

administrative records from the Ministry of Education and Health to estimate per capita age profiles

• Per capita age profiles are estimates of per

capita values by single year of age (0‐94+)

• All consumption (private and public) and labor

production can be assigned to individuals

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DATA AND ESTIMATION

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FINDINGS AND IMPLICATIONS

2000 4000 6000 8000 10000 12000 14000 16000 18000 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 Per Capita, Ringgit (RM)

Private other Private Health Private Education Public Health Public Education Public other

Public Education Private Education Public other Public Health Private Health

Per capita consumption profiles for Malaysia, 2009

H2: 33 H3: 57 H2: 95 H1: 15, 20

The Consumption profile

• Public consumption is significantly higher at young

(education) and old (health) age

• The contribution of private health and education is

small, so the age profile of private consumption is driven by its “other” component, i.e., especially during adulthood

• The total consumption profile for Malaysia shows

a special feature, i.e., it has four humps at different ages: (1) adolescents, (2) young adults, (3) near elderly and (4) elderly

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FINDINGS AND IMPLICATIONS

• First hump: Primary school age up to adolescence (peak at 15 and 20)
• Mostly due to educational cost
• Malaysia has allocated a significant amount of budget to education

with Malaysian children receiving free education from primary up to high school; therefore, public consumption is especially high during the school ages of 6 through 19 or 20

• Second hump: Age 21 to 44 (peak at 33 years old)
• High private consumption in this age group may be attributed to

lifestyle-related expenditure such as recreation

• Third hump: From mid-50s to early 80s (peak at 57)
• High private consumption may be due to cultural expenditures such

financing children’s weddings; public and private consumption on health start to increase at this stage

• Fourth hump: Starting in the 80s (peak at 95)
• May be due to health costs

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FINDINGS AND IMPLICATIONS

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FINDINGS AND IMPLICATIONS

2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 22000 24000 26000

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94 Per Capita, Ringgit (RM) Earning Self employment Labor Income

Per capita labour income for Malaysia, 2009

The Income profile

• Has four phases, with:

1. A sharp increase between age 19–33 2. Slow growth with a peak at age 44 3. A sharp decline until around age 61 4. A gradual decline until around age 90

• A small proportion of total lifecycle income earned by persons

under age 20 (1.4%) and at age 60 and above (4.38%)

• Very small portion of elderly who are employed continue

working after age 70

• The self-employed continued to work even after age 70
• Many shift from wage-based to self-employment upon

retirement: Self-employment peaks at around age 57

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FINDINGS AND IMPLICATIONS

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FINDINGS AND IMPLICATIONS

2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 22000 24000 26000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94

Per Capita, Ringgit (RM)

Labor Income Consumption

The most important graph for Malaysia, 2009

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FINDINGS AND IMPLICATIONS

The Life Cycle Deficit for Malaysia, 2009

• 12000
• 10000
• 8000
• 6000
• 4000
• 2000

2000 4000 6000 8000 10000 12000 14000 16000 18000 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 82 85 88 91 94

The lifecycle : Deficit

• Child dependency up to age 26
• Older person dependency starts at age 57
• Those age 57 and older can change how they

support their consumption using means other than their labor income

• The total deficit for 2009 is RM410,249.83, to be

financed either by asset reallocation and/ or familial or public transfers

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FINDINGS AND IMPLICATIONS

The lifecycle : Deficit

• The most critical issues for financing the lifecycle deficit:
• How intertemporal reallocation can benefit the economy

with good investments

• How public transfers can provide an efficient reallocation

system from taxes to government services that can suport the development of human capital, reducing poverty and inequality

• Private transfers from families are critical, especially if

there is no other means for the elderly to finance their consumption

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FINDINGS AND IMPLICATIONS

The lifecycle : Surplus

• A productive/surplus period of 31 years (from age 26 to 57)
• The average duration of education is long, and a high

number of persons age 55 and above are outside the labour force

• The retirement age was recently extended to age 60, so the

lifetime income for wealth accumulation can be improved

• But EPF fears that many Malaysians in retirement will be in

poverty due to insufficient saving (The Malay Mail, 5 October 2014), mainly due to

• Premature withdrawal for housing, health and education
• The relatively low income of employees, which affects how

much they can save for old age

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FINDINGS AND IMPLICATIONS

The lifecycle : Surplus

• The Government is well aware if this issue and has

developed several programmes to improve saving for old age

• The Private Retirement Scheme is a new initiative to

promote voluntary saving for old age

• The Government has also created 1Malaysia Retirement

Scheme for self-employed workers to save with the EPF and the government contributing RM 60 to investors

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FINDINGS AND IMPLICATIONS

• The Malaysian Government is heavily investing in its people through public

expenditure on health and education; there are universal health programmes and free education for all Malaysians up to high school

• Malaysian consumers are spending heavily on other consumption, especially
• n housing, most likely driven by the rising cost of living and housing prices
• The amount of surplus may indicate that Malaysians are not saving very

much; this raises the following concerns:

• Whether Malaysians are making bad financial decisions and not

preparing for retirement, suggesting the need to intensify financial education programmes for all ages

• Whether efforts to capture the second demographic dividend are

sufficient

• Whether current levels of public expenditure on health and education are

sustainable

• Whether the current social protection system is adequate and effective

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CONCLUSIONS AND WAY FORWARD