Numbers don’t lie

Population aging generally requires two things: decreased birth rates and increased longevity. For the advanced industrial economies, this has happened over a relatively long period of time and is closely tied to periods of technological or scientific progress, like the Industrial Revolutions. It's only in recent years that this trend has become a megatrend, and it is affecting newer economies at much faster rates.

In some economies, like Taiwan, the demographic shift has been swift and severe. Taiwan is now aging at twice the rate of countries like the United States. Their birth rate, which was nearly six in 1960, plummeted to just under one in 2020; the lowest birth rate in the world. Life expectancy, on the other hand, was just under 64 in 1960, but leapt to just over 81 by 2020. By contrast, the U.S. birth rate contracted by two thirds, and roughly nine years were added to life expectancy during the same period of time.

Taiwan will join the Super Age by 2025.

Harsh realities hit home

If Taiwan does nothing to adjust its current demographic reality, it is projected that the total population will peak in 2029 and begin to contract in 2030. The older population (65+) will be more than twice the size of the younger population by 2033. The U.S., on the other hand, will most likely continue to grow, despite low birthrates and increased longevity, thanks largely to immigration.

Taiwan’s population has to make some very difficult decisions in the coming years if it expects to turn these harsh realities into social and economic opportunities. Doing nothing will create an artificial labor shortage and consumer imbalance that could make challenges insurmountable for the economy. Inflation could occur, and Taiwan may struggle to maintain its credit rating, which makes it more expensive to borrow money. Systemic issues could become structural, and Taiwan’s prosperity could falter and then spiral out of control.

Silver linings on dark clouds

The simplest way to address Taiwan’s demographic conundrum is to confront systemic ageism in the labor market head-on. On the whole, people in Taiwan are living longer and healthier lives than ever before, but they aren’t working longer. Extending working lives will gin up the economy, and improve equity for younger generations.

The government should tap into this vast reservoir of labor by encouraging businesses to retain workers for longer periods of time. The government should also motivate employers to recruit individuals who may have left the workforce due to forced redundancy or retirement. But, the government, which allows early retirement, should lead by example if it wants the private-sector to follow.

Taiwan has the unique opportunity to transform its economy into one that embraces an older and more generationally diverse future. With the right investments in infrastructure, cities across Taiwan could become innovation centers where the world can learn what works best in inclusive community design.

The bigger prize for Taiwan could be transitioning part of its economy away from its main exports like durable goods (e.g. electronics, machinery) or raw materials (e.g. metals, plastics, rubber), to one that embraces consumer goods for the Super Age. Taiwan has the potential to become a laboratory for age-tech and analog solutions to meet this new era, as well as a production center that can deliver these innovations to the world.