In a few decades, nearly a fourth of the people in Sri Lanka will be over 60 with the vulnerable 80-year-old and above population increasing quickly. As the chart below indicates, Sri Lanka’s working-age population is decreasing while the number of dependent elderly people is increasing.
Sri Lanka’s experience isn’t unusual in Asia and the Pacific. In 2019, 9% of the region’s population was over 65, and this is expected to rise to 18% by 2050. In South Asia however, Sri Lanka is demographically unique as the only country with an aging population. While the aging of its population resembles the experience of East Asian and Southeast Asian economies, Sri Lanka’s demographic transition is unfolding at a lower level of per capita income.
An aging population has several implications. These include potentially adverse impacts on growth from a falling share of the working-age population; an effect on savings as consumption and savings behaviour vary over the life cycle of an individual; and fiscal implications as pension costs rise, along with the cost of providing health and long-term care for the elderly. A new ADB report discusses the state of elderly in Sri Lanka—their sources of income and living arrangements; vulnerability to poverty; participation in the labour market; access to social security, healthcare, and long-term care.
Addressing the challenges that an aging population may bring will require policy interventions and behavioural changes, not only for the elderly but for the entire population. Policy responses will need to be multifaceted to remove constraints on growth, increase female labour force participation, and improve income security, health and long-term care for the elderly. This will require addressing fiscal imbalances that allow for additional expenditures on social services.
Demographic transitions are slow moving and are set in motion by changes that happen over decades. Sri Lanka’s demographic profile has started to change; and individuals, businesses, and the government need to start planning for an aging society. Sri Lanka has managed its social progress well in the past, and by starting early, it will be well-placed to address the next wave of change.