Interconnections between Climate Change and Population Aging: Implications for a More Inclusive and Sustainable Development in Malaysia
March 24, 2023
Malaysia is aging at an unprecedented rate. In 2020, it became an ageing society where the share of individuals aged 65 years and older exceeded 7% of the total population. The World Bank estimates that the country could reach a super-aged society by 2056, with persons beyond 65 years old accounting for more than 20% of the total population. As a result, the national old-age dependency ratio, or the number of individuals 65 years old and above per 100 working-age population, has witnessed a steady increase to 11% in 2021. Nevertheless, the aging trend is uneven across the country, with Perak considered the oldest state with its old-age dependency ratio reaching 13.2% in 2020.
The trend of societal aging poses a growing concern against the backdrop of limited financial resilience in old age as well as fragmented social protection system. The level of savings of Employees Provident Fund (EPF) members is worryingly low, especially after conditional withdrawals were allowed during the pandemic to help members cope with economic effects of lockdowns. At the end of 2021, around 48% of active EPF contributors under the age of 55 have savings of less than $2,320 in their accounts.
Further, the social protection system remains fragmented with few efforts effectively addressing the specific vulnerabilities and needs of older people. Public healthcare expenditure remains limited to cope with increasing number of older people, particularly to provide sufficient detection, screening, and treatment of non-communicable diseases as well as to deliver palliative care.
What does Climate Change mean in an Aging society?
The two phenomena may interact in interesting and unexpected ways.
- Workers respond to climate uncertainties and shocks by working more, translating into a longer working life to maintain consumption spending and retirement needs. It could, however, lead to a fall in real wages. Other macro-economic effects arising from such changes in the labour market can include higher real interest rates, inflation, and debt-to-GDP ratios as consumption and capital needs continue to rise against the backdrop of stagnant nominal wages. Higher prices in turn magnify the impact of climate change .
- Over 78% of Malaysia’s population will be living in urban environments. Future cities will therefore host a higher number of older people, living in poor climate-resilient infrastructures and vulnerable to the heat sink effects associated with large urban conglomerations. The increase in both the number and intensity of disasters, such as heat waves and hurricanes/typhoons, could disproportionately affect the elderly’s mobility and safety.
- Climate change continues to strain the global food system through its direct impact on agricultural yields and on wider systemic disruptions, such as market volatility and supply chain disruptions. The elderly is particularly vulnerable in most aspects of food security – affordability, access to stable food supply, and nutritional quality .
- Switching to remote work may make it easier for certain groups of workers to manage caregiving responsibilities. Digital services such as remote monitoring that reduce the need for travel and transport are being increasingly integrated into care services—but they may also reduce human interaction in care.
- Technological advances, which help alleviate many of the negative aspects of age-related changes, by improving access and mobility (e.g., cars and elevators) and overcoming disabilities (e.g., advanced lighting and audio systems) and delaying mortality are in fact highly energy dependent. Many have now become part of the socio-economic and technical lock-ins of infrastructure and modern living.
Climate change and aging will place dual pressures on the workforce alongside greater care needs. However, current thinking on effective ways to adapt and respond to the two megatrends of climate change and aging remains disentangled. It is critical to integrate a future-proof and inclusive aging into the just transition agenda. The convergence of climate change with the demographic trend of aging population requires combining careful analytical work using age-disaggregated data and strategic foresight and systems approach to explore the potential interactions between these two distinct policies issues and find practical solutions to the problems.
* This article appeared in the Asia Pacific Economist Network Monthly Update, 10 March 2023 published by Bangkok Regional Hub.
 Engin, K. and V. Thakoor. 2022. Macroeconomic Effects of Climate Change in an Aging World. IMF Working Paper No. 2022/258. Washington, DC: International Monetary Fund.
 Harper, S. 2019. The Convergence of Population Ageing with Climate Change. Journal of Population Ageing, 12, 401–403. https://doi.org/10.1007/s12062-019-09255-5