Cultural roadblocks and a lack of government action have left Vietnam ill prepared to deal with its rapidly ageing population.
The country has already got old before it has got rich. In 2011, six years earlier than anticipated, the lower middle-income economy joined the club of countries with ageing populations when its share of senior citizens — defined by the UN as those aged 60 years or over — exceeded 10 per cent of the population. It is the third, and poorest, economy in Asean to have reached this demographic milestone, after Singapore and Thailand.
With a flattening fertility rate and steadily rising life expectancy, Vietnam is set to reach “aged” population status — with 20 per cent of the population over 60 — in the next two decades at most, making it one of the fastest ageing populations in the world. By 2050, more than 32m of the country’s 115m citizens will be elderly, nearly three times the current figure.
UN data also show that the proportion of senior citizens living with their children shrank from 76 per cent in 1989 to just 64 per cent in 2009.
Anxiety over how to take care of ageing parents is already troubling many Vietnamese. An FTCR survey of 1,000 urban Vietnamese found that 82 per cent of respondents, more than in any other Asean 5 country, were worried about their inability to take good care of their parents now or in the future.
Their biggest concerns were a lack of time and of geographical proximity. Cost-related concerns were much less pronounced.
Rapid economic growth and urbanisation may have helped Vietnamese families to lead more comfortable lives but they have also pulled family members apart.
The average size of Vietnamese households fell to 3.8 in 2016 from 4.4 in 2002, indicating that the typical three-generation family is splitting into smaller units.
The elephant in the room
However, Vietnamese society has not adequately addressed the question of who will take care of the elderly. The Elderly Law of 2009 merely put caregiving duties on the shoulders of children and grandchildren. In large cities such as Hanoi and Ho Chi Minh City, middle-class families do so with the support of domestic helpers. These untrained, mostly rural workers are in high demand and their wages, starting from 5m dong ($220) a month, are similar to those of an average office clerk or civil servant.
There are just 32 facilities dedicated to elderly care across Vietnam, each accommodating 300 people at most
Nearly 80 per cent of our respondents complained of a shortage of elderly care facilities in the country. While the government has acknowledged this as a problem, it has no clear plan to address it. There are just 32 facilities dedicated to elderly care across Vietnam, each accommodating a maximum of 300 people, and most are privately owned. By 2025, the labour ministry aims to raise the number to 64 facilities, to have at least one facility per province on average, of which 59 will be privately owned.
Having set the target, however, the government has done little to encourage private investment in the sector. It was only in 2016 that it agreed to scrap a 10 per cent value added tax on elderly care provision.
More importantly, private elderly care providers would like the government to offer preferential terms on land leases, both in cost and tenure length, to encourage the building of more nursing homes in suitable locations. Private elderly care providers are typically small businesses that cannot compete with large companies able to pay high land-lease costs.
Changing cultural norms
The government’s lack of action may reflect cultural barriers as well as budgetary constraints. Our survey suggests that a significant proportion of Vietnamese are hostile to the idea of nursing homes for the elderly, with nearly 43 per cent saying it was unacceptable to send one’s parent to such facilities. However, nearly 57 per cent of respondents said the homes were becoming slightly more or much more acceptable. Respondents over 50 years old, those most likely to be already dealing with elderly parents, were more accepting than their younger peers.
According to Nguyen Tuan Ngoc, director of Bach Nien Thien Duc elderly care centre, bringing elderly parents to nursing homes is no longer “undutiful” but “inevitable”.
The centre’s three facilities, all of which are located on the outskirts of Hanoi, are home to about 300 occupants.
Mr Ngoc opened the centre in 2001, making it the first private elderly care centre in Vietnam, when he sensed demand from a busy younger generation whose working schedule no longer allowed them time to look after their parents.
Bringing elderly parents to nursing homes is no longer ‘undutiful’ but ‘inevitable’
With monthly fees ranging from 6m to 18m dong, Mr Ngoc said, the three facilities were operating at 90 to 100 per cent capacity and receiving inquiries very day.
The minimum fee is higher than the national average monthly salary but, according to Mr Ngoc, the cost is affordable as it is typically shared by many children in a family. Before the 1990s, Vietnam’s fertility rate was more than three births per woman.
As Vietnamese society becomes wealthier and older, the number of nursing homes could increase significantly. For that to happen, however, the state must do more to help the private sector.
Until social perceptions change and the availability of facilities improves, families will do their best to make do. This means privately engaged domestic helpers taking care of the elderly will remain a fixture of Vietnam’s big cities.
FT Confidential Research is an independent research service from the Financial Times, providing in-depth analysis of and statistical insight into China and south-east Asia. Our team of researchers in these key markets combine findings from our proprietary surveys with on-the-ground research to provide predictive analysis for investors.