INTERACTIVE: Is Malaysia facing a population drop?

PETALING JAYA: Malaysia’s population growth could grind to a halt and make a U-turn in the next five decades if the country’s declining fertility rate doesn’t stabilise.

On Tuesday, Women, Family and Community Development Minister Datuk Seri Nancy Shukri said the population could shrink in 2072 after reaching an expected maximum number of 46 million people in 2071.

The minister said such a situation could happen if the fertility rate continues to decrease at the current pace and no intervention is taken to deal with the situation.

Projected population figures in a United Nations report shows that Malaysia is among many countries facing the possibity of a population drop in the future.

According to the UN World Population Prospects 2022 published in July last year, the country’s population may peak at 42.2 million in 2067 before falling to 39.5 million in 2100.

Malaysia’s current population is estimated at 33.4 million, according to the Statistics Department.

“Based on the projections, the total population of this country will shrink at some point before it reaches 50 million,” said Chai Sen Tyng from Universiti Putra Malaysia.

Chai, the senior research officer at UPM’s Malaysian Research Institute on Ageing (MyAgeing), said his institute’s modelling shows a similar trend.

“We have been telling people Malaysia’s population will never hit 50 million and we are betting the odds on it due to our falling fertility rate.”

Malaysia’s Total Fertility Rate (TFR), which is the average number of children a woman has in her lifetime, fell to a 50-year low of 1.6 last year, according to the Statistics Department.

The figure is well below the replacement level of 2.1, or the fertility level at which a population exactly replaces itself from one generation to the next.

Chief statistician Datuk Seri Mohd Uzir Mahidin in a statement last month said the TFR has been below the replacement level since 2013.

“It signifies a potential demographic crisis that could lead to issues such as population decline, an ageing populace, and socioeconomic implications,” he added.

While the country’s fertility rate is falling, life expectancy is rising and stood at 73.4 years last year.

“A rising life expectancy, added with falling fertility, is the reason why we have an ageing population,” said Chai.

Some ageing nations with low fertility rates such as Japan and China are already recording a decline in their population size.

Japan’s population dropped by 800,000 last year as its fertility rate fell to 1.26, the lowest in 17 years.

China’s population also declined last year, the first drop in six decades as the country’s birth rate fell to a record low of 6.77 births per 1,000 people.

The UN’s data show many countries, including some in Asean, facing the possibility of population declines in the coming decades based on current fertility rate trends.

Chai said demographic projections that stretch decades into the future can be highly unstable.

“In Malaysia’s case it won’t be too off the mark because if the fertility rate has already fallen drastically, it cannot suddenly go back up sharply,” he said.

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No matter how you slice it

One way to measure how fast a country ages is by tracking the growth in the share of older persons in the total population.

But how old is old in the first place?

Developed countries set 65 as the age at which someone becomes categorised as an older person.

Malaysia meanwhile uses 60, which is the UN’s age definition of an older person.

Chai: Numerous ways to measure population ageing.

It doesn’t matter whether one uses 60 or 65 in trying to figure out what’s happening to Malaysia’s population, said Chai.

“You don’t wake up on your 60th birthday to suddenly discover a fundamental change in yourself, because ageing doesn’t happen overnight to an individual.

“It is a gradual process, and it is the same with what society is currently going through.”

The Statistics Department, in its Current Population Estimates Malaysia 2023 report, said Malaysia is expected to become an ageing nation by 2030.

That is the year the population aged 60 years and over surpasses 15% of the total population.

The World Bank, however, says Malaysia has already passed the ageing society threshold.

It said that Malaysia became an ageing nation back in 2020, the year when the share of the country’s population aged 65 and above reached 7%.

The discrepancy on whether Malaysia has already passed the threshold to ageing nation is due to different measurements being used, Chai said.

“Various definitions and cut-off points are used to draw a line on whether we have already passed the threshold.

“These measurements are just markers for us to gauge how much time we have to make the necessary preparations,” he added.

The population pyramid below tells the story of how Malaysia is ageing.

Based on the UN’s estimates and projections, it shows how the share of people in older age groups grows over time while younger age groups shrink.

Click on the play button to animate.

What comes after

Malaysia’s population ageing journey is far from over.

The World Bank in its 2020 report, A Silver Lining – Productive and Inclusive Aging for Malaysia, said the country will transition from an ageing to an aged society in 2044.

An aged society, according to the World Bank, is when the share of 65-year-olds and older persons hits 14% of the total population.

After that, Malaysia will cross yet another threshold in 2056 when it becomes what is known as a super-aged nation.

A super-aged country is one where the share of 65-year-olds reaches 20%.

The World Bank report said Malaysia is ageing at the same speed as Japan and faster than some countries such as France, Australia and the United States.

It noted that some Asean countries – Singapore, Thailand and Vietnam – became ageing nations even before Malaysia.

No matter the speed, ageing poses a big challenge for the country’s future.

“Rapid aging will be one of the most crucial megatrends affecting Malaysia in coming decades, raising policy challenges in areas such as employment, income security, health care, and aged care,” the report said.

Urgent action on ageing

Hawati: Universal social pension needed.

One of the biggest challenges Malaysia needs to prepare for will be old age poverty.

Currently, a whopping 81% of Employees Provident Fund contributors will not have enough savings to retire above the poverty line, as revealed by Prime Minister Datuk Seri Anwar Ibrahim in April.

Hawati Abdul Hamid, deputy director of research at Khazanah Research Institute (KRI), said current social protections for old-age income security from contributory schemes remains limited in coverage and adequacy.

A universal social pension, she said, is critically needed to provide basic old-age income security.

Such a pension scheme, she explained, could be done via a contributory social insurance scheme model which the KRI had proposed in a 2021 report.

Contributions to the scheme would not only be made by workers and employers, but also shared by the government for working-age subgroups ranging from homemakers to the unemployed.

“This model can offer a more sustainable approach to achieving full coverage and ensuring basic income during old age,” said Hawati.

Goh: Older persons should be encouraged to work longer.

Goh Lim Thye from Universiti Malaya said encouraging older citizens to work longer can also help mitigate the economic impact of an ageing population.

“This could involve incentives for employers to hire older workers, adjusting retirement age policies, and providing retraining programmes.”

Financial literacy programmes to help individuals plan for retirement more effectively are also needed.

“This would help Malaysians make informed decisions about savings and investments for their future,” said Goh, who heads the department of economics at UM’s Faculty of Business and Economics.

An increasingly ageing population could also strain the country’s healthcare system.

Hawati said failure to prepare can lead to a surge in healthcare costs, putting pressure on the healthcare system and government budgets.

“Data indicates that the total health expenditure rose at an average annual growth rate of 13.8%, rising from RM15.4bil in 1997 to RM64.3bil in 2019 in real terms.

“Strategies are needed to ensure a sustainable health financing as health cost is expected to increase further,” she said.

Is a falling fertility rate reversible?

In slowing down the effect of depopulation, Hawati said relevant policies are needed to empower women and promote gender equality.

These could include creating accessible and affordable childcare facilities to relieve the burden on working parents.

“This can help women maintain their careers while raising children.

“We should also strive to address discrimination and bias in the workplace and allow women to participate in decision-making processes, both in their households and in society at large,” said Hawati.

MyAgeing’s Chai said several European and Mediterranean countries have managed to stabilise falling fertility rates with effective policies that encourage women to have children.

With depopulation causing a shortage of workers, some high-income countries with low birth rates and ageing populations encourage foreigners with needed skills to migrate there.

Other nations meanwhile encourage and adopt automation to reduce dependence on human worker in certain jobs.

In Malaysia’s case, Chai said the main aim should be to arrest the decline in the country’s fertility rate and then stabilise the figure.

“There is no way to bring our fertility rate which is sharply back up.

“With the right policies, perhaps we can prop the fertility rate back up to 2.0 or 2.1 and hold it there. This should be our main target.”