The silver economy is high on the agenda for businesses. It took the UK, the US and France 45 years, 69 years and 115 years respectively to shift from an ageing society to an aged society, but it took Thailand only 19 years, while it will take Singapore and China 25 years.
The UN defines an ageing society as one where the share of people aged 65 and older exceeds 7%.
An aged society is when the share of that cohort expands above 14%, and a super-aged society has a share exceeding 20%. By 2030, people aged 50 and older will constitute 32% of the entire Asia-Pacific population, according to research estimates.
Birth rates in various regions are diminishing and death rates are climbing. The death rates in Japan and South Korea have surpassed birth rates since 2020, while the death rates in Indonesia, New Zealand and Vietnam are projected to outpace births after 2050.
In light of this ageing trend, both elderly individuals as well as businesses are reconsidering ways of working and extending the retirement age.
The age at which many people retire has been rising for three main reasons:
People are working longer because of the high cost of living: During the pandemic, one-third of retired people aged 50 and older in the UK returned to work for financial reasons.
Worker shortages: In Asia, the declining working-age population has prompted businesses to hire more older workers.
Governments are raising the retirement age: China, Japan and South Korea are planning to raise their retirement age gradually to cope with rapidly ageing populations.
THAI SILVER ECONOMY
The population aged 60 and older in Thailand totalled 12.7 million or 19% of the total in 2022, according to data from the Department of Older Persons at the Social Development and Human Security Ministry. The group aged 60 to 69 comprised 7 million people.
The sources of "silver income" among people aged 60 and older included one-third from work and one-third from their children. However, about a quarter of those who received income from their children only received 1,000 to 4,999 baht per year, far below the World Bank poverty line of around 27,000 baht annually.
For the working silver population, agriculture or fishery (60.5%), and services or sales (18.2%) were the main forms of employment.
Classified by type, 65% of Thais age 60 or older work for their own business, 19% support a family business without payment, 13% work as government or corporate employees, and 3% are employers.
We divide the silver economy into four segments: wealthy, frugal, technophile and tech laggards. The wealthy silver segment in Thailand is estimated to contain 677,000 people worth 1.2 trillion baht. This is in sharp contrast to the frugal segment of 4.5 million who account for 32.6 billion baht in total.
The rate at which the silver market is embracing digital technologies is noteworthy. The National Statistical Office reported internet usage for the population older than age 60 grew from 53.6% in the third quarter of 2022 to 56.3% in the fourth quarter.
Based on the data, considering the silver economy as homogeneous would be a mistake. Different sectors need products and services tailored to their goals and the business environment, and companies need to adopt strategic segmentation to repurpose their go-to-market narratives and transformation.
We believe digital will be an important lever to activate this transformation as the silver economy becomes more digital and digital technology drives agility and accelerates change.
Research by Deloitte and the MIT Sloan Management Review indicated that digitally mature organisations not only innovate more, they also innovate differently. For example, digitally mature organisations are twice as likely to cultivate partnerships with their ecosystem players to drive innovation.
Hence, as the silver economy becomes more digital, organisations that have successfully gone digital are expected to capture a greater share of the opportunities and will be able to mitigate risks of being disrupted by the silver avalanche.
Aside from four segments of the silver economy, we foresee six business trends as follows:
1. Healthcare: New forms of elderly care services can be established or the range of existing services extended.
2. Real estate: Residences with functions tailored for the elderly, nursing homes and silver communities all hold potential.
3. Leisure and self-development: Tourism, learning, craft products and upskilling activities for silver citizens.
4. Electronic devices: Tracking and medical devices for elderly people should see higher demand.
5. Legal consultation: More people will seek advice on living wills.
6. Financial products: Reverse mortgages and insurance products tailored to the elderly.
Business opportunities aside, it should be stressed the challenges for Thailand's future demographics are considerable. For example, the declining working-age population also implies fewer business successors, meaning business succession plans need to be well prepared.
Moreover, as Thailand has a large population of low-income seniors, both the government and the private sector should look at ways to support our society and consider how to mitigate the challenges of the future workforce. Ultimately, we need to ensure the country does not grow old before it grows rich.
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Dr Narain Chutijirawong is executive director - clients & markets and Tasada Sangmanacharoen is a senior consultant - clients & markets with Deloitte Thailand.