Promoting Active Ageing in Southeast Asia

This chapter analyses the main areas potentially limiting work capacity at older ages. It first describes how employment differs by age across countries, highlights long working hours among ASEAN countries and discusses health and safety regulations as well as exposure to physical risks. It then turns to wage disparities across age and gender given the importance of the minimum wage in most ASEAN countries, strong gendered views on the division of labour in some of them and the role of mandatory retirement rules. The third section discusses possible mismatches between the demand and the supply of skills at older ages. The final section focuses on health and presents new estimates of unused health-related work capacity at older ages. While better health is conducive to higher work labour market participation, a large part of the unused work capacity at older ages is not related to insufficient health status.

The Key findings are the following.

Employment at older ages

• The employment rate of people aged 65 or more is high in ASEAN countries, at 30% on average in 2022, which compares to 13% in the OECD, in great part due to very weak social protection in old age. The employment rate of people aged 65+ was even higher than 40% in Cambodia and Indonesia while it was less than 15% in Brunei Darussalam and Myanmar.

• Employment rates are much lower among women than among men in ASEAN countries, and especially so among older workers, partially due to strong gendered social norms regarding the division of labour in some ASEAN countries.

• Poor working conditions might limit work capacity at older wages in ASEAN countries. Long working hours are common: one in four workers work more than 48 hours per week compared to one in ten in OECD countries. This is the case for more than 30% of workers in Cambodia, Lao PDR and Myanmar. Many older workers in ASEAN countries are highly exposed to physical risks, including posture‑ and movement-related risks, and occupational injuries remain an important concern in some ASEAN countries.

• There is ongoing policy effort to improve health and safety at work in ASEAN countries. Recent examples include improved capacities of the Labour Inspection Agency in Lao PDR; important role of both International Advisory Panel for Workplace Safety and Health in Singapore and National Council for Occupational Safety and Health in Malaysia; expansion of work safety committees in Thailand; and, enhanced work-related risk assessment in Viet Nam.

• Employment protection ceases five years after the normal retirement age in Malaysia, the Philippines and Thailand, and at the normal retirement age in Singapore and Viet Nam, where they might encourage premature dismissals of workers. Unlike in some OECD countries, seniority wage setting does not seem to play a big role in ASEAN countries.

Health related ability to work at older ages

• Differences in labour market participation across ASEAN countries are larger at older ages. Better health clearly leads to higher work capacity across age groups within countries. Yet, health only partially explains wide participation differences among older people across countries.

• Some ASEAN countries have large unused health-related work potential (UHWP): a significant portion of the older population is not active even though their health would allow it.

• While at the aggregate level, the extent of UHWP is similar among ASEAN and OECD countries, women’s low participation rates account for most of the UHWP in ASEAN countries. Gender norms explain why women in particular may not participate in paid work while in good health.

• Both the design of pension systems and income constraints faced by older people are crucial for their decision whether or not to participate. In the absence of significant safety nets and developed pension systems in most ASEAN countries, older people, men in particular, may keep working despite being in bad health.

Poor working conditions, and more generally low quality of jobs, might create constraints for longer working lives. The OECD definition of job quality is based on three dimensions: earnings quality, labour market security, quality of the working environment (OECD, 2024[1]). Earnings quality is measured with both average wages and the wage distribution. Labour market security indicators include both unemployment rate and income smoothing provided by unemployment benefits. The quality of the working environment captures non-economic aspects of jobs including the nature and content of the work performed, working-time arrangements and workplace relationships (OECD, 2017[2]). This section looks into employment rates by age and selected elements of working conditions: working hours, physical risks at work, health and safety regulation and discrimination against older workers.

On average, employment rates by age are similar among ASEAN countries and OECD countries. In 2022, employment rates stood at around 80% in the age groups 25‑54, and at around 65% for people aged 55‑64 (Figure 2.1, Panel A). Among the 55‑64 age group, employment rates were lower in Brunei Darussalam, Malaysia and Myanmar at 50% or less, compared with 60‑75% in other countries (Panel B).

By contrast, the employment rates of people aged 65 or more are high in ASEAN countries, at 30% on average compared to 13% among OECD countries in 2022. Employment rates of people aged 65+ in Cambodia and Indonesia were even higher than 40% while they were less than 15% in Brunei Darussalam and Myanmar. People older than 65 often work in the informal economy, in agriculture in particular, and many of them do not have access to pensions (Chapter 3). Without pensions and with very limited safety nets, employment, often despite low earnings, is the only choice for some older people.

Gender employment gaps are substantial in ASEAN countries and more pronounced among older workers than in the overall working-age population. On average across ASEAN countries, the employment rate for individuals aged 15‑64 is by 17 percentage points (p.p.) higher for men than for women; the gender gap ranges from less than 10 p.p. in Cambodia, Lao PDR and Viet Nam to more than 25 percentage points in Indonesia and Myanmar.1 This gap is substantially higher among the 55‑64 age group as it averages 25 percentage points across ASEAN countries, even exceeding 40 p.p. in Malaysia and Myanmar. By comparison, the gender employment gap is 14 percentage points for the working-age population on average across OECD countries and 17 percentage points among older individuals.

The proportion of people aged 60‑64 with tertiary education is expected to increase in all ASEAN countries following the strong recent improvements of higher education attainment. Between 2025 and 2055, the share of older people with tertiary education is projected to increase by 16 percentage points across ASEAN countries on average (Figure 2.2). Singapore would benefit from the largest increase, with a 36‑p.p. rise. Cambodia, which has the lowest share of people aged 60‑64 with tertiary education in 2025, is projected to record an increase of only 4 percentage points by 2055. However, these changes will not be enough for ASEAN countries to catch up with OECD countries, because the share of people with tertiary education is projected to increase also by 16 percentage points on average across OECD countries. The larger catch up would take place in the case of lower education level. The share of older adults with primary education at most is expected to decline by 29 percentage points on average across ASEAN countries. Thailand, Indonesia and Brunei Darussalam are anticipated to experience decreases of around 40 p.p. or more. As a result, in 2055, among the population aged 60‑64 in ASEAN countries, 10% are projected to have no education, 15% to have primary education, 46% to have secondary education only, and 29% will have tertiary education. Meanwhile, in OECD countries, only 1% will have no education, 2% will have primary education, 47% will have secondary education, and 49% will have tertiary education. Several ASEAN countries will continue to have substantial share of older populations without education attainment. In Cambodia, Lao PDR and Myanmar around 20% or more older people will still have no education in 2055.

Long working hours are common in ASEAN countries: one in four workers work more than 48 hours per week compared to one in ten in OECD countries (Figure 2.3). This is the case for more than 30% of workers in Cambodia, Lao PDR and Myanmar while less than 20% of workers work that long in Malaysia, the Philippines and Thailand. In addition, only three in ten workers work less than 40 hours per week in ASEAN countries against four in ten on average across OECD countries. Very long working hours are widespread and likely to both accelerate wear and tear at work and limit employability at older ages.

In principle, the law sets long working hours in many ASEAN countries and, in practice, these regulations are unlikely to apply fully to informal workers, workers combining multiple jobs and the self-employed. In Cambodia, Lao PDR, Thailand and Viet Nam, the standard weekly working time is 48 hours, typically spread over six days. It is 45 hours in Malaysia and 44 hours in Brunei Darussalam, Myanmar and Singapore. Indonesia and the Philippines set the statutory working hours at 40 hours over five days. Overtime is expected to be paid more, e.g. at 130% of the regular hourly pay in Cambodia and the Philippines. In addition, shorter working hours apply to some jobs or sectors: 37.5 hours per week in the public sector in Indonesia, 42 hours per week in hazardous or arduous jobs in Thailand,2 and 40 hours in the health sector within large cities in the Philippines.3 By comparison, in the majority of OECD countries, the statutory limit for normal weekly hours is set at 40 hours a week, based on a five‑day working week and eight‑hour working days. Higher statutory maxima exist in Chile, Colombia, Israel, Mexico and Türkiye. Australia, Belgium and France have a lower limit (OECD, 2021[3]).

Many older workers in ASEAN countries are highly exposed to physical risks, including those related to posture‑ and movement-related risks. On average across ASEAN countries, 62% of workers aged 55‑64 work in occupations associated with high exposure to physical risks compared to 52% among workers aged 25‑54, as many older workers are currently working in agriculture (Figure 2.4).4 Long-term exposure to physical risks is likely to reduce work capacity at older ages. In OECD countries, fewer workers work in occupations with high exposure to physical risks, at about 30% of jobs in France, Japan and the United States, for example. Additionally, for a given occupation, physical intensity and associated risks are typically less intensive in OECD countries due to extensive regulations on health and safety at work (OECD, 2022[4]). In Brunei Darussalam and Singapore, the share of workers in physically risky jobs among those aged 55‑64 is around 30%, and it is less than 10% among the 25‑54 age in Singapore.

Occupational injuries remain an important concern in ASEAN countries with low income. One caveat though is that data about injuries at work are not available for many countries and serious underreporting is very likely given the scope of informality. Yet, the number of fatal injuries at work stood at 14.6 per 100 000 workers in Malaysia and 5.3 in Thailand, compared to 3.1 in Brunei Darussalam, 1.3 in Singapore, 2.6 in France and 0.8 in Sweden.5 In particular, criticism of poor working conditions in apparel factories in Asian countries generally has been widespread. Enacting progressive laws alone has proved to be inefficient to improve working conditions because enforcing health and safety regulations requires mobilising substantial resources, which have often been missing (Robertson et al., 2016[6]). In Viet Nam, the construction, the mining and chemical sectors are among the most hazardous industries and have high occupational injury rates; the construction sector typically ranks first in terms of the number of occupational incidents in ASEAN countries (ASEAN, 2023[7]). In Cambodia, garment and construction workers are reported as being the most vulnerable to workplace accidents (ILO, 2013[8]). Migrant workers are particularly exposed to occupational risks in the construction sector in Brunei Darussalam (Santoso, 2009[9]).

The positive impacts of improving health and safety at work are substantial and are likely to exceed the cost of their implementation in all age groups. Based on results from 48 companies from eight ASEAN countries, investments in occupational safety and health programmes in the construction sector resulted, on average, in monetary benefits estimated as at least twice the value of investment spending (ASEAN, 2023[7]). Moreover, in Singapore, workers in companies with well-developed health and safety frameworks, are 4.4 times more likely to be proud to work for their company and 7.4 times more likely to be satisfied with their current job (Chia et al., 2015[10]). In addition, employees in these companies are 1.7 times more likely to report being able to easily balance work with other activities.

There is ongoing policy effort to improve health and safety at work in ASEAN countries. In Lao PDR, employers are required to inspect risks to safety and health and report the results to the Labour Inspection Agency at least once per year. In Singapore, the International Advisory Panel for Workplace Safety and Health holds regular meetings to improve workplace standards and outcomes. In Thailand, the law specifies an obligation for employers to create a safe working environment, provide appropriate training, and assess work-related risks regularly. Employees have the right to participate in relevant work safety committees. Non-compliance by employers may result in fines or even imprisonment. In the Philippines, despite a well-established health and safety regulation in the legislation, lack of compliance is a serious issue with only 1 in 18 workers enjoying effective occupational health and safety protection (Lu, 2022[11]). Since 2015, Viet Nam has required employers to conduct risk assessment and evaluation, and in 2016 the government issued more precise guidelines. In Malaysia, regulations concerning health and safety at work are regularly evaluated by the National Council for Occupational Safety and Health, which prepares reports and recommendations for the Minister of Human Resources. Most workers in coffee farms in Viet Nam are covered by health insurance and health and safety regulations, but this is not the case for seasonal workers (ILO, 2023[12]). Key constraints to improve health and safety in the sector include low awareness, inadequate protection equipment, lack of training and insufficient data collection on accidents.

In Malaysia and Singapore, relatively high-income ASEAN countries for which age‑specific wage data are available, wages are the highest for workers in age 40‑55 Figure 2.5 shows age profiles of monthly wages in Malaysia and Singapore. While workers aged between 15 and 24 earn about 60% of the average wage, those aged between 35 and 49 earn around 120% of the average wage in the case of men and women in Malaysia and women in Singapore; men in Singapore have steeper earnings profiles as they earn 150% of the average wage in their prime age. For those above 50, the earnings drop below the average wage, except for men in Malaysia. Low earnings of older workers reflect both their reduced working hours and the fact that they often work in low-income jobs. The relatively high wages of older men in Malaysia suggests that seniority wage setting in the public sector might prevent stronger wage decreases (see below).

By comparison, differences in the age structure of wages are large across European countries. On average across the EU, median hourly wages are 7.8% higher for workers aged 50‑59 than for their peers aged 40‑49, and workers aged 60 or more have slightly lower wages (by 1.1%) than those aged 50‑59 (Eurostat, 2022[13]). Compared to workers aged 50‑59, median hourly wages are substantially higher for workers older than 60 in Italy (14.5%) and France (8.2%), while it is the opposite in Germany (‑12.1%) and the United Kingdom (‑15.1%). These different patterns result from various skills depreciating at different paces, younger cohorts having different skills than older ones, low- and high-wage earners quitting labour markets at different ages and also from various wage‑setting mechanisms.

On average across ASEAN countries, women earned 9% less per month than men, compared to 20% less among OECD countries based on ILO data in 2022 (Ilostat, 2024[14]). This is consistent with gender pay gaps being generally low in low-income countries (ILO, 2024[15]). The average gender pay gap is around 20% in Indonesia and Lao PDR while it is slightly negative in the Philippines and Thailand (Figure 2.6). This OECD average reported here is larger than the average gender pay gap of 12% reported by the OECD (2024[16]) because, as opposed to the OECD statistics, the ILO figures include part-time workers, who more often are women.

The gender pay gap is largely influenced by occupational choices of men and women. For example, when wages are compared between people with the same education level working in similar jobs, the so-called adjusted gender wage gap halves in Singapore (Lin, Gan and Pan, 2020[17]). The selection of men and women into certain sectors or occupations is related to strong views on the gender division of labour in some ASEAN countries (Box 2.1).

All ASEAN countries have a minimum wage, although it applies to all sectors in seven countries only. In Brunei Darussalam, it applies to the financial and ICT sectors only, and in Cambodia to garment industry and in Singapore to some low-skill jobs, including cleaning and food services. This policy instrument was introduced in the Philippines and Thailand more than 25 years ago, and in Malaysia in 2011. In the Philippines, Thailand and Viet Nam, the minimum-wage level differs regionally while in Lao PDR it differs by sector. In Lao PDR, Malaysia and the Philippines, social partners are involved in establishing its level. Domestic workers are excluded from minimum wage regulations in Cambodia, Indonesia, Malaysia and Thailand (ASEAN, 2023[20]). By comparison, the minimum wage exists in 30 out of 38 OECD countries (OECD, 2022[21]).

Seniority wage setting plays a large role in several OECD countries including Japan, Korea and Türkiye. In seniority-based pay schemes, wages rise as a function of seniority rather than actual performance. For individuals aged 50‑60 years, additional ten years of job tenure with the current employer are estimated to increase wages by nearly 6% on average across OECD countries and by more than 10% in Japan, Korea and Türkiye (OECD, 2018[22]). There are concerns that seniority-based pay schemes create a barrier to continuing to work at older ages by making older workers more expensive than younger workers with the gaps not reflecting productivity differences. Across OECD countries, there is a negative relationship between the age‑wage premium and the job retention rate of older workers (OECD, 2019[23]).

Seniority wage setting seems to be limited in scope in ASEAN countries, but precise empirical evidence is missing. Informal workers, who represent a large share of employment in many ASEAN countries, are unlikely to be paid based on tenure or age. However, in Malaysia and partially in the Philippines, wages in the public sector are set based on seniority, whereas in Cambodia wages are based on seniority in a number of sectors, including mining, trade and transport.

Some ASEAN countries have introduced incentives to employ older workers. Thailand grants tax exemptions to companies hiring workers aged 60 or more. Singapore reduces social security contribution rates of workers older than 55 from 37% to 12.5%‑31%. These reductions were introduced during economic downturns in 1988, 1993 and 1999. The government also subsidises wages of workers aged 55 or more, who are granted an additional return of 1 percentage point on their pension accounts compared to younger workers. In many countries, wage subsidies continue to be frequently used to offset any gap between pay and productivity of older workers but most evaluations show that budgetary costs can be large relative to the net employment effects, suggesting that these programmes are rarely cost-effective (OECD, 2019[23]). To encourage employers to retain and hire older workers, OECD (2019[23]) recommends to: eliminate discrimination in the recruitment, promotion and training process, and in employment retention by improving anti-discrimination legislation and undertaking public-awareness campaign; ensure that age is not a criterion in determining the level of employment protection while promoting better access to quality jobs for older workers; discourage mandatory retirement; encourage employers’ and workers’ representatives to identify mechanisms facilitating the retention and the recruitment of older workers; and, promote good practices by employers in managing an age‑diverse workforce.

Mandatory retirement rules, which are set in laws, collective labour agreements or employment contracts, give employers the option to terminate the contracts of older workers at a certain age. Countries may facilitate the use of mandatory retirement by including age limits in employment protection legislation or by easing restrictions on layoffs from a certain age. The existence of mandatory retirement and its specific design in a given country are likely to be at least partly driven by employment and wage regulations. Mandatory retirement ages apply to private‑sector workers in 12 OECD countries and to public-sector workers in 18 countries (OECD, 2022[24]). A common trend among OECD countries has been to eliminate mandatory retirement ages or to reduce their role. The OECD (2015[25]) recommends that countries seek to discourage mandatory retirement in close consultation and collaboration with employers’ and workers’ representatives. To defend the mandatory retirement ages, it is sometimes argued that working at older ages limits working opportunities for individuals of younger ages, the so-called lump of labour fallacy. Although this idea might apply well for a single company, it is contradicted by solid empirical evidence at the economy level. In a limited number of instances, mandatory retirement practices may be necessary (OECD, 2018[26]).

Among ASEAN countries, employment protection ceases at the age 60 in Malaysia and Thailand and at 63 in Singapore (MoM, 2024[27]). This means five years after the normal retirement age in Malaysia and Thailand, and at the normal retirement age in Singapore (Chapter 3). In Viet Nam, employees can unilaterally terminate an employment contract when workers reach the statutory retirement age. In the Philippines, workers reaching 65, hence 5 years above the normal retirement age, may be dismissed but there are substantial exceptions for firms in agriculture and retail trade sectors, and for companies with 10 or less employees (Chanrobles, 2024[28]). Indonesia does not specify a mandatory retirement age in the private sector but allows it to be set in collective agreements or internal firms regulation (Amiq et al., 2020[29]).

Being in good health is crucial to one’s ability to work at older ages. Policies encouraging the labour market participation of older workers in ASEAN countries are likely to only be effective when non-participating older individuals have substantial health capacity to work. This section first shows that remaining life expectancy is a good proxy of health across age groups, genders and countries.6 It then compares health and participation levels across ASEAN countries. Finally, the labour market participation of subgroups by age and gender with similar health statuses are compared to help identify which subgroups in which countries have unused health-related work capacity.

The remaining life expectancy at age 60 is 4.2 years lower in ASEAN than in OECD countries on average. Yet, there are large differences in longevity between ASEAN countries (Figure 2.8). Singapore has the highest remaining life expectancy (RLE) at older ages as, for example, 60‑year‑old women would live almost 28 years, which is higher than the OECD average. Thailand’s RLE is around the OECD average, while. Brunei Darussalam’s and Viet Nam’s are close to the ASEAN average, which is also similar to that in some OECD countries such as Hungary and Türkiye. By contrast, RLE is very low in Indonesia, Lao PDR and Myanmar. Across countries, women’s RLE is on average 3.3 years higher than men’s, and even around five years higher in Viet Nam.

Remaining life expectancy correlates strongly with other measures of health status that also include non-fatal disability, such as healthy life expectancy. Non-fatal health conditions, which impair someone’s ability to work, are not reflected in RLE figures but may be accounted for by other measures such as healthy life expectancy (HALE). HALE is an estimation of the average number of years someone can expect to live in full health, i.e. without disease or injury. The WHO provides HALE estimates at birth and at age 60 based on the disability-adjusted life years (DALY) methodology. Figure 2.9 shows that HALE is strongly correlated with RLE: across countries, people can expect to spend between 73% and 79% of RLE in good health. The cross-country correlation is extremely strong, with a linear coefficient of 0.991 among all countries and of 0.998 among ASEAN countries alone.

Measures of disability-adjusted life years show the pattern of health depreciation through age. As HALE estimates are only available at age 0 and 60, it is not possible to evaluate how healthy life expectancy develops across age groups. However, the underlying measure of disability-adjusted life years (DALY) is available for five‑year age groups and can thus show the extent to which disability and premature mortality become more prevalent with age (Figure 2.10). DALY is the sum of years lost to premature mortality and disability per 100 or 100 000 individuals within a specific age group and by gender. DALY does not measure these lost years directly but estimates them based on a complex methodology considering the prevalence and disabling burden of all health conditions (Saito, Robine and Crimmins, 2014[30]). As such, a higher DALY rate indicates a greater burden of disease and injury within a specific group, suggesting poorer health status. Figure 2.10 shows that DALY increases, and health thus decreases, with age and is higher for men. The DALY measure, consistent with RLE, confirms that health statuses are on average worse among ASEAN than among OECD countries. The strong inverse relation between RLE and DALY, with a linear correlation of ‑0.85 across ASEAN and OECD countries and across age (50‑54, 55‑59. 60‑64) and gender subgroups, illustrates that declining health status and declining RLE tend to go hand in hand.

In short, RLE remains a solid proxy for health status at older ages. Not all life years are spent in good health, but across countries HALE is very close to a constant share of RLE at age 60. Moreover, HALE is not available for age sub-groups, and using DALY or HALE instead of RLE as a measure of health status in the coming analyses would imply adopting a much more ambiguous and complex measure with a higher risk of errors for relatively little potential gain.

Differences in labour market participation across ASEAN countries are larger at older ages. Participation rates among older workers are on average lower in ASEAN than in OECD countries. For example, 70.9% of the 55‑59 year‑olds participate in the labour market on average among ASEAN countries compared with 78.2% in the OECD. While labour market participation diminishes with age in all ASEAN countries, the extent of the decline varies significantly across countries (Figure 2.11). In all countries, participation rates are above 72% at age 50‑54 except in Myanmar at 66%. However, at age 55‑59, participation is much lower in Brunei Darussalam and Malaysia, with a drop of 6 and 13 percentage points compared with the 50‑54 age group, while that drop is about 4 percentage points in Indonesia and the Philippines. Cross-country differences in the decline with age are even stronger when considering the 60‑64. The participation rate among the 60‑64 is 37.5 percentage points lower than among the 55‑59 in Brunei Darussalam – which have overall low participation rates – against only 9.5 percentage points lower and from high levels in Cambodia. As a result, the dispersion in participation rates across countries increases with age: the coefficient of variation – the ratio of the standard deviation to the mean – increases from 0.08 at age 50‑54 to 0.11 among the 55‑59 and then 0.26 at 60‑64.

Health only partially explains these differences in labour market participation. The deterioration of health with age is clearly one factor contributing to the decrease of participation with age in all countries. However, the countries with remarkably low participation among the 60‑64 year‑olds, Brunei Darussalam and Malaysia, have relatively high RLE among that age group. By contrast, Cambodia and Indonesia, which have among the highest participation rates at age 60‑64, have below ASEAN-average RLE. Hence, factors other than health play a large role in these participation-rate differences.

Both the design of pension systems and income constraints faced by older people are crucial for their decision whether or not to participate. In Brunei Darussalam and Malaysia, labour market participation rates at older ages are the lowest among ASEAN countries due in part to either early provision or wide coverage of pensions compared to other ASEAN countries. For example, Malaysia’s retirement age is very low at age 55 and additionally employers can mandate the retirement of their workers from age 60; moreover, contribution rates are relatively high in Malaysia, at around 23%, and retirees have the option of taking the entire pension as either a programmed withdrawal from their retirement savings accounts or as a lump sum, reducing work incentives especially among short-sighted individuals. Brunei Darussalam’s retirement age of 60 is common for ASEAN countries but the country’s pension system is well developed with reasonably high coverage levels, and there is a residence‑based basic component that is automatically paid at age 60 in addition to the defined contribution pension. This explains why older people in both Brunei Darussalam and Malaysia may have some large unused work capacity for reasons other than health. Moreover, the high labour market participation rates at older ages in countries with limited pension coverage, such as Cambodia and Indonesia, are likely the result of older people having to work out of financial necessity, even in bad health, to maintain some form of income. When comparing the labour market participation of older people in ASEAN countries, the highest participation levels might thus be higher than the maximum work capacity of people with a certain health status. To estimate a more accurate maximum work capacity, it is useful to compare the maximum work capacity at similar health statuses in OECD countries, where people in bad health generally have more social security and pensions to fall back on.

There are also serious gender-related reasons for why women in particular may decide not to participate while in good health, as discussed in Box 2.1 above. These will be analysed in more detail in the next subsection.

Some ASEAN countries have large unused health-related work potential: a significant portion of the older population is not active even though their health would allow it. As discussed above, remaining life expectancy (RLE) is used as a good proxy for health level due to its availability by gender and age subgroups and its strong correlation with other measures of health such as DALY and HALE. This section aims at quantifying this unused work capacity by analysing the pattern of labour market participation rates and RLE by age and gender across countries.

Better health leads to higher work capacity. This is reflected in Figure 2.12 relating the labour market participation rates of 60 ASEAN and 228 OECD subgroups with their health status proxied by RLE. More specifically, every data point represents one subgroup belonging to a specific five‑year age group (50‑54, 55‑59, or 60‑64), gender and country. Groups from ASEAN countries can be visually distinguished in the chart from those from the OECD. The estimations herein are only based on the 50‑64 age group. While studies on older working-age people in OECD countries often include the 65‑69 age group, there is only limited data on that age bracket for ASEAN countries.7

For example, with RLE slightly above 17 years, Indonesian women between 60 and 64 years have a participation rate of 52.5%, while the maximum capacity for this RLE level is 75.0% in the OECD (Hungary, men aged 60‑64), and 88.3% in ASEAN (Myanmar, men aged 55‑59). Two frontiers are created from all OECD and ASEAN maximum capacities in relation to RLE (x-axis), as explained further in the note to the chart. When a data point lies on the frontier, all sub-groups with at best similar health status (i.e. same or lower RLE) have lower labour market participation rates.

In the absence of significant safety nets and developed pension systems in most ASEAN countries, older people may keep working despite being in bad health. Hence, this section uses the OECD-standard of maximum work capacity to estimate unused health-related work potential (UHWP). If a data point lies under the maximum capacity curve – the OECD frontier – the distance to the frontier defines the UHWP at this health (RLE) level. Box 2.2 further explains how this method works and compares it with other ways of estimating the unused work capacity. In both OECD and ASEAN countries, labour market participation tends to be higher among those with better health (Figure 2.12). Among OECD countries, the maximum (observed) work capacity increases from about 75% to 96% for RLE of 17 years and 30 years, respectively.

Improving health status has the largest impact on increasing work capacity when the improvement occurs from an initially low health level. In that sense, there are decreasing returns on work participation from enhancing health. This can be seen in Figure 2.12 as the maximum capacity frontier is concave, i.e. work capacity increases faster at lower levels of RLE and plateaus at higher levels. This means that health gains have larger effects on participation among those in worse health. Moreover, ASEAN countries have significantly higher maximum work capacities than OECD countries at lower RLE. As explained earlier, this is likely because older people have to continue to work more frequently, even when in bad health, as there are limited old-age income provisions. That is why this chapter uses the OECD frontier to determine the maximum health-related labour market capacity. This also means that for some ASEAN subgroups, people work beyond what is justified based on RLE according to “OECD standards”: the measured UHWP then becomes negative as labour market participation exceeds what is justified by health status.

Overall, there is substantial unused health-related work potential among the 50‑64 year‑olds. This means that some age and gender groups fall well under the maximum capacity curve in Figure 2.12, with the difference between the data point and the maximum capacity reflecting the UHWP. This suggests that there are factors beyond health that discourage people between age 50 and 64 in both ASEAN and OECD countries from participating in the labour market. In ASEAN countries, low retirement ages and care responsibilities for women seem to play a large role, as discussed below. Earlier work by ADB (2024[33]) suggested that there is substantial untapped health capacity to work among older people in some ASEAN countries, particularly among urban residents.8

At the aggregate level, the extent of unused health-related work potential is similar among ASEAN and OECD countries. The average ASEAN UHWP of 18.7 percentage points suggests that based on health alone labour market participation in ASEAN countries can increase by 18.7 percentage points on average (Figure 2.13). This level does not differ much from the OECD average of 19.6 percentage points UHWP is especially large in Brunei Darussalam and Malaysia, where health status would allow an about 32‑p.p. increase in labour market participation among those aged 50‑64 (Figure 2.13). In the OECD, only Costa Rica, Luxembourg, and Türkiye have a higher UHWP. Conversely, UHWP is significantly smaller in Cambodia and Indonesia, at 6.3 and 8.6 percentage points This is lower than any OECD country, except for Estonia. The aggregate UHWP of other ASEAN countries falls within a 14‑to‑22 percentage points range.

There are large gender differences in UHWP among ASEAN countries. Figure 2.14 shows UHWP by age and gender for all ASEAN countries and a number of OECD countries. UHWP is limited for men in ASEAN countries: on average, there is basically no male unused health-related work capacity before age 60, but the average UHWP reaches about 8% of men aged 60‑64. By contrast, among women, UHWP is large. It expands from 29 percentage points among the 50‑54 to 41 percentage point among the 60‑64. The large unused work capacity reflects both much lower labour market participation and longer life expectancy for women compared with men. This increasing trend of UHWP among both men and women with age applies to nearly all countries (including in the OECD).

The difference in unused work potential across gender is larger in ASEAN countries than in the OECD. The ASEAN female UHWP is much higher than the OECD on average for ages 50‑54 (by 12.0 p.p.) and 55‑59 (by 11.2 percentage points), and only about 1 percentage point lower for ages 60‑64. By contrast, the male UHWP is on average consistently smaller in ASEAN countries than in the OECD. Across all ages, women have larger UHWP than men in all ASEAN and OECD countries highlighted in Figure 2.14. The female UHWP is particularly high in Brunei Darussalam, Malaysia, and Myanmar, and it is above the OECD average for all age groups in Thailand and Singapore. Women tend to have larger UHWP because factors like unpaid care responsibilities (as well as earlier female retirement ages in Viet Nam only) discourage women from paid work, even if their health would allow it. Conversely, the male UHWP is extremely low or non-existent across age groups in Cambodia, Indonesia, and the Philippines.

As a result, women’s contribution to the total UHWP is very large. The female contribution on average makes up 17.2 percentage points of the total average of 19.0 p.p. across ASEAN, or 91% (Figure 2.15, Panel A). This is significantly higher than the 70% average female contribution across the OECD.

Shifting from the gender to the age contributions, older age groups contribute slightly more to the total unused health-related work potential in ASEAN countries. People between 50 and 54 account for 30.1% of total UHWP, while the 55‑59 and 60‑64 age groups account for 32.6% and 37.3%, respectively, of the total among the 50‑64 (Figure 2.15, Panel B). The contribution by age to the total UHWP is certainly more evenly spread in ASEAN countries on average than in the OECD, where the 60‑64 group contributes over half of the UHWP Among OECD countries, financial protection from retirement systems is much more effective in allowing to leave the labour market at older ages.

If labour market participation rates by age were the same in all countries, countries with better health statuses would have higher UHWP. This is because better health generates higher work capacity. Hence, if not matched by higher participation rates, countries with a higher RLE mechanically have a higher UHWP. For instance, Singapore and Thailand both have participation rates close to 75% among the 50‑64, but they end up with a significantly larger UHWP than e.g. Viet Nam, which has only slightly higher participation rates, as both countries have relatively high RLE.

Yet, Brunei Darussalam and Malaysia have the highest UHWP despite lower RLE than in Singapore and Thailand. This is because labour market participation rates are much lower than justified by their lower health status, in great part due to low retirement ages, which is the main non-health related reason. As discussed earlier, both countries have stronger pension provision than the other ASEAN countries, and in the case of Malaysia also early pension provision, allowing even people who are in good health to stop participating. By contrast, Cambodia has weak pension provision and very high participation rates at older ages, as there is no pension that older people in bad health can fall back on. UHWP is low as a result.

Due in particular to the impact of pension policies, non-health reasons are more important to explain differences in labour market participation rates across countries at age 60‑64 than at 50‑54 or 55‑59. Figure 2.16 shows that while health and participation are quite strongly related at age 50‑54 (Panel A), with a linear correlation coefficient of 0.58, this link diminishes with age, with a correlation coefficient of only 0.18 at age 60‑64 (Panel C). As explained above, the protection provided by pension systems can have a great impact on someone’s decision to participate regardless of health. As such, the relationship between health and participation becomes less pronounced at age 60‑64 than at 50‑54. In short, in ASEAN countries overall there is a significant unused work potential at older ages that is not explained by health reasons, primarily among women and in countries with early provisions of pensions.

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