HONG KONG: Hong Kong employers are being urged to implement a system of optional retirement for workers to ward off labor shortages as the city's rapidly aging workforce begins to retire. However, most workers and their employers need only a gentle nudge to sign on to the idea, according to local think tank the Bauhinia Foundation Research Center (BRFC).

In tandem with the Asia-Pacific region as a whole, Hong Kong is expected to lose at least 10 percent of its labor force in the next 10-15 years, said BRFC Director Winne Ng as she released the study entitled Optional Retirement: Better Choice yesterday.

People aged 65 and above comprised 12.4 percent of Hong Kong's population in 2006. The ratio is projected to reach 26 percent 2036. In 2006, every 1,000 working adults (aged between 16-64) supported 168 people aged 65 or above. In 2036, the figure will rise to 458.

Hong Kong's birth rate was only 0.89 child per couple in 2007, way below the world average of 2.6 children and the replacement rate of 2.1 children.

"We don't have a labor shortage now, but we will in 10, 15 or 20 years," said Anthony Wu, the chairman of BRFC.

In some sectors, a labor shortage has already occurred. The medical sector is an example, said Wu, who is also with the Hospital Authority.

"We will be thrilled if retired doctors and nurses can come back to work for us," he said.

Alfred Chan Cheung-ming, chair professor of social gerontology, Lingnan University, pointed out that not allowing retired people to work is a waste of precious social resources, especially for knowledge-based economies.

"The knowledge, experience and the brain power of the retired are what a knowledge-based economy needs," he said.

Optional retirement could help Hong Kong to avert crises including stymied economic growth, soaring public expenditures on welfare and medical service and the resulting budgetary pressure. But are people willing to continue to work after the retirement age?

The study cited a 2008 survey by HSBC as saying more than 70 percent wish to participate in voluntary or paid work after 60.

Flexible retirement arrangements benefit senior citizens economically: They can continue to enjoy health insurance coverage and avoid exhausting their savings prematurely, said Chan.

World Health Organization's studies indicate work allows people to remain socially active and maintain physical and psychological health, he said.

Questions have been raised over whether people staying longer in the workforce will block younger workers.

This would not be a problem if options are available for the retired to work in different roles - part-time or as consultants, for example, said Wu.

Concerning the demographic transition, "we would have more difficulty in finding young people to fill up the vacancies," he said.

There was also concern for the added cost for retaining senior staffers.

But as overseas experience shows, retired people take pay-cuts for working in part-time positions. While they are at work, they can pass their know-how to younger workers. They actually increase productivity for a company, Chan said.

Hong Kong doesn't have a mandatory retirement age, which turns out to be a good way to encourage optional retirement. Still, there seems to be a preference to retire at 60.

The priority task would be public education programs to change the mindset, the study recommended.

Since optional retirement is market-driven, there's little need to push the government or change legislation. Still, the government cannot afford to lose time in addressing the long-range issue.

Chan, who is the vice chairman of the government's Elderly Commission, suggested setting up a cross-departmental office to lead and coordinate reforms in the relevant labor and Mandatory Pension Fund practices.

For example, currently it's much more expensive to purchase labor insurance for senior citizens remaining in the workforce. But the premiums could drop significantly when there're sufficient numbers of these workers, he said.

(HK Edition 12/16/2009 page1)