Elderly Couple in Nepal

by Biranchi Poudyal 

The potential macroeconomic and financial impact of the aging population has been widely acknowledged and a number of researchers have struggled to estimate the possible outcome of aging on future economics.  With rapid aging populations in places such as Japan, USA and Australia, policymakers are alarmed with several interconnected issues, including a decline in the labor force, increased social security expenses, unsustainable pension commitments and changing demand drivers within the economy. Although population aging exhibit major challenges for even the most developed countries, developing nation like Nepal face some specific issues in making policies that address increasing dependent population and adapting them.

Demographic pressure

The socio-economic consequence of an aging population is becoming increasingly obvious in many developing countries around the world. Any countries demographic average age can witness upward shift in two conditions: a decline in fertility (which results decreasing working population) and an increase in longevity (which adds dependent generation in population). Nepal has experienced a noticeable decline in fertility since 2005-2016 when the fertility rate was 4.19 births per woman at the end of 2005, which eventually decrease to 2.18 children per woman in 2016. Simultaneously, Nepal also experienced increases in life expectancy which have produced not only the burden of the older population but also coerce policy reformation to adapt this demographic pressure.

The elderly population in developing countries like Nepal has relied mainly on their family for social care and material support. Nowadays, such support system is under threat from trends that include declining fertility (fewer children as a supporter); changing family structure; increased life expectancy; and the migration of Nepalese youth to other countries and away from elderly relatives.  Similarly, our government’s health care system is still struggling with infant mortality as well as reproductive health services. But aging population leads to rising demand for Medicare that addresses different paradigm of health conditions. Social security and health expenditure from government tend to be much higher for the elder population than youngers one. The dramatic increase of aging populations—along with disproportionately higher consumption of per capita—will eventually challenge our government’s health care policy.

As the population of developing economies grows older, the causal influence of aging on the macroeconomic is likely to land at the heart of the national economy. Countries showing large elderly demographic count on a smaller share of working population to collect taxes to pay for the chronic health problem, pension benefits and other government sponsored programs. If the retirement age remains stagnant, and the life expectancy keeps on increases, there will be comparatively more population claiming pension benefits and less working as well as paying taxes. Also, as non-working population, those in retirement are expected to pay lower income taxes. Multi-effect of higher expenditure commitments and lower tax revenue will directly hamper economy of Nepal. To offset the outcomes of these demographic shift policymakers must invest in the systems that would incorporate more elderly population in socio-economic sphere.

Adapting old workforce

While Nepal can learn from the policy successes and failures of other developed countries. We have years before the socio-economic effect of an aging population is fully felt. In the meantime, government and policymaker have ground of opportunity waiting for them to more precisely recognize the demographic trends and act accordingly. Dealing effectively with the aging population will require changes in public policies and business practices. Allowing people more freedom of choice regarding retirement timing is a good start. There’s a prevalent belief that an aging population constantly results in slower economic growth. Yet as they live longer, healthier lives, elderly Nepalese may choose to persist working beyond their estimated retirement age.

Likewise, not only the government policies but the non-governmental institutions also require prompt attention. Firstly, attitudes need to be reformed, especially in recruitment practices and organizational strategies. Older workers are often regarded as a burden vis-à-vis younger candidates preferred during recruitment. But in economies world knowledge is power and the skill of experienced workers are always valued more. Different employer study commonly shows that old workers are more experienced, skilled, and loyal than younger recruits. Both government and private sectors need to synch up with this insight.

Many national and international companies around the world have already given an innovative response to this demographic shift. As one evidence, auto producer BMW adds minor strategy to its workplace ergonomics for aging employees, such as providing custom shoes and easy-to-read computer screens. And the Harvard Business Review shows that BMW has 7 percent increase in its productivity and its assembly line error rate drop to 0 after making these changes.

In the case of Nepal too, some specifically designed vocational training for older workers can help to adapt aging population, since it would refresh old resource and reduce the productivity gap. Elder employees who yearn to continue working may request some compliment regarding works and schedules. Allowing more soft-manual labor and telecommuting work will help old employers to thrive in the workplace.

As the census makes clear, the demographic pressure is rapidly strangling us, now policymakers needs sought bottom-up innovations and top-down reforms to adapt aging population. While some adaptations demand greater preparation, others can be undertaken right now, to the benefit of both nation and senior citizens.


Poudyal is a Freelance writer and researcher. He is pursuing Master’s degree in International Relation and Diplomacy at Tribhuvan University