South Asia’s demographic shift is an opportunity—but only if the region acts now

One in five workers worldwide lives in South Asia, where 1.17 billion people are in their prime working years. This represents an enormous economic opportunity. When provided with the right opportunities, a workforce of this scale can further fuel economic growth, create wealth, and drive innovation. South Asia has already reaped some benefits from this demographic dividend: Since 2000, the growing share of working-age adults has contributed to gains in GDP growth and labor productivity. But this demographic advantage will not last forever. South Asia is aging seven years faster, and at lower income levels, than comparable emerging market and developing economies. By 2049, people aged 65 and older are projected to account for 14 percent of the region’s population, marking its transition from an aging to an aged society. This shift presents an urgent challenge, but also an opportunity. If South Asia acts now, it can capture more of the economic benefits of its large working-age population while preparing for a future in which more people live longer. Creating more and better jobs is the first priority. Only 60 percent of South Asia’s working-age population is employed, while 88 percent of employed workers hold informal jobs that pay less, offer limited protections and benefits, and make no contributions to the taxes that fund much-needed public services. A large working-age population alone cannot deliver a demographic dividend. People need opportunities to put their skills to productive use, and they need to remain healthy enough to do so. That means making it easier for micro, small, and medium enterprises to access finance and grow, streamlining regulations that hold back businesses, and improving education and training so workers have the skills employers need. It also means removing the barriers that keep women from entering and remaining in the workforce, and addressing the rising burden of chronic disease, which is a growing issue for working-age people. The second priority is to prepare for longer lives. Across the region, health systems, long-term care services, pension systems, and labor markets are not equipped for a population that is living longer, but not necessarily healthier. A person born today can expect to live to age 72, but only 61 of those years are expected to be healthy. Governments can help people remain healthier longer by shifting health systems toward prevention and primary care rather than relying on hospital care. Employers and policymakers can expand mid- and late-career training and create phased pathways to retirement, enabling people to work for as long as they want. And formal long-term care systems, supported by trained and skilled care workers, can improve quality of life for older people while easing the burden on families. Over time, a healthier older population, supported by the right institutions and opportunities, could generate a second demographic dividend. They could also support a silver economy: Older people are workers, consumers, savers and contributors to their communities. Their needs and preferences can create markets for better housing, health services, care, and financial products. Stronger social protection and financial markets will be essential to turning longer lives into greater economic security and opportunity. Only 17 percent of South Asia’s working-age population contributes to a pension scheme, and just 10 percent of older South Asians receive pension benefits—the lowest coverage globally. Pension and financial systems need to protect workers’ savings, expand basic coverage for those who need it, and help channel greater savings into productive investment. A demographic dividend is never guaranteed, and the choices South Asia makes now will shape its future. Policies to create more opportunities for young people and support people as they age will better position South Asia to ensure that its demographic transition becomes a source of sustained prosperity.