How to get ageing populations to invest in their health – World Economic Forum

Looking back 150 years, the proportion of elderly in Japans population was only a few per cent; now it exceeds 27%, making Japan the worlds top super-aged society. In 2060, it will exceed 38% and remain at this level in the future, retaining its top spot. OECD countries and many emerging economies including China will follow suit at their own respective speeds. The transition is a great outcome of public health and medicine.

A super-aged society is a natural consequence of longevity and we should celebrate it; on the other hand, our new challenge is healthy longevity or how we can be healthy, active and happy until the very end of our lives. Japanese data on the elderly, gathered by Dr Hiroko Akiyama of the University of Tokyo, suggests that health status at 65 is a strong indication of quality of life for the rest of life. In the 70-year-lifespan model, where people die in their 60s or 70s, health is not as big an issue for working-age people; in the 100-year lifespan model, one should continuously invest in ones health from as early a point as possible to maintain ones health after retirement. But how?

The Fourth Industrial Revolution offers good news on this front. Now, it is much easier than ever before to gather indicators of what affects ones health. We can gather genomic data, daily vitality data, health check data and medical treatment data. We can also gather data regarding lifestyle, social connectedness and financial activity all at a lower cost. Then artificial intelligence (AI), the Internet of Things (IoT) and Big Data analysis can help us to understand our health more accurately and easily, and maintain it cost-effectively. We have rich new solutions for healthier lives.

The issue is the motivation or incentive for ordinary people to invest in their health before becoming elderly. Health geeks with rich health literacy invest in their health, using new technology but we observe quite a number of ordinary people with less health literacy. How can we inspire such uninterested people toward health investment or prevention before becoming sick?

The traditional approaches are from government, insurers or healthcare providers. National or local governments encourage members of their populations to improve health literacy and to receive health checks. Insurers may change member premiums and conditions, based on the member's health status or lifestyle. Hospitals and medical doctors are in a good position to advise locals. However, governments tend to lack resources, insurers cannot reach non-members and hospitals cannot cover people who dont come to hospitals.

Governments can enforce obligations for ordinary individuals or businesses to take care of their health. A typical example of this is regulation for occupational health. While the requirement level and compliance level differs country by country, we observe employers obligations to secure employee safety and health in offices and factories in many countries. However, while a legal obligation is good at securing minimum standards, it is not good at encouraging best practices. An obligation is necessary but insufficient.

We need to use incentives for both individuals and businesses to realize better occupational health. A public-private partnership programme called Health and Productivity Management (H&PM) started in Japan six years ago. It encourages CEOs and company management to invest on a voluntary basis in their employees' health for productivity and creativity purposes. The return of that investment is healthier employees with energy and enthusiasm and better evaluations from the labour market, capital markets, customers and society, all of which improves the value of the company. Now, more than 2,300 large companies and 35,000 SMEs in Japan have implemented H&PM.

External evaluation strengthens the return of investment. The Japanese Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange select 35 listed companies from 26 sectors (based on the results of a yearly survey) for the H&PM stock selection competition. in addition, Nippon Kenko Kaigi, a large business and medical federation including the Japan Chamber of Commerce and Japan Medical Association, nominates 3,300 companies as certified H&PM companies.

So far, we have observed positive outcomes from H&PM. In the past five years, certified H&PM companies have outperformed other ordinary companies on the Tokyo Stock Exchange, according to an analysis by Tokyo Mitsubishi and Morgan Stanley Securities. Some institutional investors such as AXA Insurance have started considering H&PM as one element of environment, social and corporate governance (ESG).

While direct evidence is lacking, logically speaking, H&PM will have positive external effects on the rest of society and the economy, since healthier employees become healthier citizens and active consumers. Considering new business trends such as the SDGs, ESG or stakeholder capitalism, some companies are now more focused on these external effects than on the financial returns derived.

Countries with the largest populations aged 60 and above

H&PM is not unique to Japan: Johnson & Johnson started H&PM decades ago and say one dollar invested generates 3 dollars in return. The US Chamber of Commerce issued a report that poor occupational health reduces GDP by 8.2%, 7%, 5.4% in the US, Japan and China respectively. In 2019, Business 20 (B20) included H&PM into its proposal to the G20. H&PM is a good strategy for improving occupational health in emerging economies with fewer initial resources. Sri Lanka started an H&PM awards programme in 2019.

It is fair to say that the rapid expansion of H&PM in Japan faces a unique challenge owing to the countrys labour shortage. As an ageing society, Japan lacks younger individuals as human resources, which makes recruitment a very important business issue. The same is true for the need to retain trained staff and convincing them not to resign. While H&PM works very well in this regard, such a labour shortage may happen in many countries as they age.

Increasing human productivity is one of the hot topics among global businesses amid rapid industrial structural change. I believe, H&PM is a new, positive strategy for realizing healthy longevity which will prove effective in many companies and economies.

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Written by

Kazumi Nishikawa, Director, Healthcare Industries Division, Commerce and Service Industry Policy Group, Ministry of Economy, Trade and Industry of Japan

The views expressed in this article are those of the author alone and not the World Economic Forum.