Andrew Mitchell argues that the SAR should increase the age at which people stop work to deal with the many challenges arising from a growing aging population

Editor's note: This article is the first in a series dealing with issues arising from Hong Kong's aging population.

For Hong Kong, 2016 is a milestone year - the year when its demographic window is expected to close. In other words, by the end of the year there will be fewer than two economically active people (defined as those aged between 15 and 60 years old) for every economically inactive person.

The closing of the demographic window is likely to go unnoticed by the majority of people here. However, it is an important social indicator, signifying a society's transition from a period of demographic and economic expansion to one in which the population ages and the economy goes into decline.

There are many ways to mitigate against the fallout of a closing demographic window. Hong Kong needs to consider all the possibilities. However, by far the simplest - and in many respects the most effective - way would be to raise the age of retirement.

The concept of retirement is a relatively recent one. In pre-industrial societies people simply worked until they died. With the onset of the industrial revolution, however, and the emergence of socialist ideologies defending the rights of workers, governments in the newly industrialized nations came under increasing pressure to provide financial support for older members of their society.

In 1889, Germany became the first nation to introduce a retirement scheme, establishing an old-age pension program for citizens aged 70 years and above. At that time, life expectancy in Germany was less than 45 years, although the figure was much higher when infant mortalities were discounted.

Fast forward to the present day, and the normal retirement age in Germany is 67 (there is also an early retirement age of 65). Meanwhile life expectancy is just over 80. This compares with Hong Kong, where the retirement age is only 65 (with an early retirement age of 60), although life expectancy is over 82.

Against this backdrop it is encouraging to see that the present administration has raised the retirement age for new recruits to the Civil Service Bureau from 60 to 65 for general civil servants, and from 55 to 60 for members of the disciplinary forces. However the new arrangements are not retroactive, so existing civil servants who want to work until they are 65 will have to apply for an extension. As a result, for the next 40 years or so we run the risk of losing a number of highly skilled civil servants simply because they have reached the age of 60.

Yet it is absurd to think that, in the modern age, a 60-year-old can no longer make a meaningful contribution in the workplace. A quick look at the Politburo Standing Committee of the Communist Party of China, where the average age is currently 67 and the youngest member is 61, should be more than enough to demonstrate this. There are also plenty of retirement-age high achievers elsewhere, from 87-year-old tycoon Li Ka-shing to the 85-year-old "Sage of Omaha" Warren Buffett. And let us not forget that if Colonel Sanders had been forced to retire at 60, there would never have been a KFC.

Now, whether a world without KFC would necessarily have been any worse is obviously debatable. But whatever one thinks about fast food, it is impossible to deny the economic benefits generated by KFC since its inception in 1952. Similarly, it is impossible to ignore the contribution that people over 60 can make to the local economy, especially in an era characterized by low fertility rates.

Given the challenges of an aging population, it is simply illogical to deny people of retirement age the right to work. Yet this is exactly what is happening in Hong Kong at the moment - not only in government but also in the private sector - despite the fact that there is actually no mandatory retirement age here. It is imperative, therefore, that the government build on its recent initiative to raise the retirement age in the civil service in order to tackle the wider issue of de-facto compulsory retirement.

Of course, any measures taken by the government will need to be introduced in a phased manner so as not to impact adversely on graduate recruitment. Ultimately there is no reason for any ceiling at all.

(HK Edition 06/24/2016 page7)