As life expectancy in Hong Kong rises, the cost of taking care of elderly people who are in need of care in Hong Kong - either subsidised or non-subsidised residential care or at a home care - is expected to reach HK$222.4 billion per year by 2060, an increase of 5.7 times from the current cost of HK$38.8 billion per year, according to "Eldercare Hong Kong: The Projected Societal Cost of Eldercare in Hong Kong 2018 to 2060" report, a joint study conducted by Sau Po Centre on Ageing at The University of Hong Kong, The Women's Foundation and HSBC Life.
The study looks into the future economic cost of eldercare in Hong Kong in the coming decades. The cost projections are based on cash flow models built by HSBC Life.
According to the study, in 2018, around 342,000 people, which is approximately 5% of the total population, received eldercare, and a total of 45,000 working adults were providing eldercare for a family member. The number of eldercare recipients is projected to double in 20 years’ time to 729,000 and increase 2.6 times to 890,000 by 2060 (11 % of the population); meanwhile, the number of informal caregivers will also double to 89,000 in the next 20 years alone and further increase to 97,000 in 2060.
Edward Moncreiffe, HK Chief Executive Officer, HSBC Life, said, “The fact that the number of Hongkongers receiving, and giving, eldercare is expected to double in the next 20 years should be a massive wake-up call for all of us who work and live in Hong Kong. With increasing life expectancy and the demand for eldercare increasingly outstripping available supply, the outcome may be significant costs to employers and employees. It is critical that individuals and employers take actions now to reduce what will otherwise be a substantial burden on Hong Kong society.”
The cost to employers and individuals
The indirect costs to employers and informal caregivers – in terms of lost employee productivity – will also rise steeply. According to the projections illustrated in the study, the current indirect cost of eldercare for employers is HK$1.8 billion. This will rise to HK$5.3 billion by 2040. By 2060, the cost to employers is expected to grow 4.7 times to approximately HK$8.4 billion.
For informal working caregivers who lose both income and career advancement opportunities, the total opportunity cost is projected to increase dramatically – approximately four times – from HK$1.8 billion in 2018, to HK$4.9 billion by 2040, and to HK$7.2 billion in 2060.
Dr Vivian Lou, Director, Sau Po Centre on Ageing, The University of Hong Kong said, “The number of unpaid caregivers in the workforce providing care for the elderly is expected to increase dramatically in the coming years. The economic costs of eldercare can be felt not only by society but employers and employees as well. There are no easy solutions to this issue but we believe public-private partnerships can be the primary solution to providing quality and cost-effective eldercare in Hong Kong. Through this partnership, we look forward to a future where no-one feels obliged to leave the labour force because of eldercare.”
Women bearing the cost
Caregiving responsibilities are shouldered by people of all ages but when it comes to gender, the burden typically falls on women. According to the study, more than half of all caregivers (58%) were women in 2018. While the number of working caregivers is projected to increase between now and 2060, the imbalance will persist, with almost two-thirds (62%) of the caregivers still expected to be female in 2060. Overall, by 2060, women caregivers will bear an opportunity cost of HK$400 million more than male caregivers.
Fiona Nott, Chief Executive Officer, The Women’s Foundation, said, “We should all be deeply concerned with the growing eldercare burden on Hong Kong’s workforce, especially when individuals give up work to care for elderly dependents which creates financial stress and career costs. These challenges fall disproportionately on women and are projected to rise and contribute to an already low female workforce participation rate and impact efforts to build greater gender diversity at leadership levels. At The Women’s Foundation, we believe tackling this issue requires objective, reliable data and urgent cross-sector public-private collaboration. We support the full participation of women at work and more broadly in our society, particularly encouraging female caregivers to remain or re-enter into the formal economy to counterbalance a shrinking workforce. It is important for employers to put in place policies and practices now to support caregivers and for the Government to draw up long term strategies to support family caregivers.”
Edward continued, “As family dynamics evolve, and children increasingly provide financial support to their parents, we believe insurance players in Hong Kong have a key role in helping to mitigate this future cost burden. As a leading insurer in Hong Kong HSBC Life is committed to raising the public awareness of the costs of eldercare and to developing innovative solutions to improve Hongkonger’s financial futures, specifically to reduce the burden on caregivers as they strive to look after the ones they love into old age.”
Public-private partnerships to help create a thriving ageing society
The rising cost of eldercare is an issue which could be addressed primarily by public-private partnerships. The current and future burden will be felt by all levels of society and it is important to develop a creative response by engaging the Government, employers, individuals and financial institutions.
Public authorities can help by drawing up a long-term strategy for family caregivers. It is important to acknowledge the valuable role that caregivers play, and to give them assistance. Employers can create a welcoming culture for people who combine work with caregiving responsibilities. Being open to requests for flexible working and home working could help businesses retain skilled people who might otherwise leave their jobs.
For the individuals, it is important for them to think about how they can prepare, both psychologically and financially, for potentially becoming caregivers themselves.
The insurance industry should also be innovative and develop innovative products and services that enable caregivers to make provisions for their elder dependents.
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