The unlocked potential of ageing and silver economy in Sri Lanka is gaining increasing attention as the country’s population ages rapidly, raising both economic challenges and opportunities linked to labour participation, care services, and consumption patterns.
The unlocked potential of ageing and silver economy in Sri Lanka as demographic shifts reshape economic opportunities
Sri Lanka is entering a significant demographic transition that could reshape its economic and social landscape in the coming decades. According to recent policy analysis, the unlocked potential of ageing and silver economy in Sri Lanka could become a major driver of economic growth if the country successfully harnesses the capabilities and spending power of its older population.
Currently, more than 18 percent of Sri Lanka’s population is aged 60 or above, and projections indicate that one in four citizens could be 60 years or older by 2041. This rapid demographic shift raises complex policy challenges related to healthcare, pensions, employment, and social protection. At the same time, economists and policymakers increasingly argue that the ageing population should not simply be viewed as a burden but rather as an economic asset.
An analysis by the Institute of Policy Studies of Sri Lanka highlights that the unlocked potential of ageing and silver economy in Sri Lanka lies in transforming demographic change into a “demographic dividend.” This concept refers to the economic gains that can arise when population structures shift in ways that increase productive capacity and consumption.
While population ageing is often associated with slower economic growth and higher fiscal pressures, improvements in health and life expectancy have also created opportunities for longer and more productive working lives. In Sri Lanka, the average life expectancy has reached around 75.5 years, meaning that many individuals spend nearly 15 years in retirement after leaving the formal workforce.
The concept of the silver economy Sri Lanka refers to the system of economic activities linked to the needs and consumption patterns of individuals aged 50 and above. This includes sectors such as healthcare, financial services, housing, tourism, insurance, technology, and care services tailored specifically for older adults.
Globally, the silver economy has become a major economic driver in ageing societies such as Japan and several European countries. Older consumers are increasingly recognized as active economic agents with significant purchasing power, accumulated life experience, and growing demographic influence.
However, Sri Lanka currently faces several structural challenges that limit its ability to fully realize these opportunities. Labour market participation among older individuals remains relatively low. In recent years, about 49 percent of people aged 55 to 64 were economically inactive, indicating limited employment opportunities or incentives to remain in the workforce.
Gender disparities are also evident in labour force participation. Among older workers, male participation rates stand at around 36 percent, while female participation is only about 11 percent. This gap suggests that many older individuals, particularly women, are unable to remain economically active despite possessing valuable experience and skills.
One structural constraint is the formal retirement age of 60 years, which restricts opportunities for older workers in the formal sector. As a result, many older individuals continue to work in the informal economy where their skills may be underutilised and employment conditions less secure.
At the same time, savings and retirement income remain major concerns. Only around 31 percent of individuals above retirement age receive a pension, while more than three-quarters of retirees depend financially on others. A significant share of older adults also lack income from savings, despite having previously contributed to funds such as the Employees’ Provident Fund.
These financial vulnerabilities increase the risk of poverty among older citizens. Data shows that individuals aged 65 and above recorded the highest multidimensional poverty rate at 17.9 percent in 2019. With Sri Lanka still recovering from recent economic crises, older populations may face heightened financial insecurity.
Another growing concern is the emerging elder care crisis Sri Lanka may face in the coming decades. Traditionally, elderly care has been provided within family structures. At present, around 76 percent of people aged 65 and above live with their children. However, demographic and social changes are gradually reshaping these patterns.
Three-generation households are expected to decline sharply, from 19 percent in 2012 to just 5 percent by 2060. Smaller family sizes, urbanisation, and rising female workforce participation mean that fewer family members may be available to provide informal care for ageing relatives.
This shift is likely to increase demand for professional elder care services. Yet Sri Lanka currently lacks sufficient capacity in this sector. Public elder care institutions are limited and often face high demand, while private care facilities remain unaffordable for many middle-income households.
Home-based care services also face similar challenges. Professional services can be expensive, while lower-cost alternatives are frequently informal and unregulated. Free adult day-care centres exist but are limited and primarily targeted at low-income elders.
As the ageing population grows, the shortage of trained caregivers is expected to worsen. Projections suggest Sri Lanka could face a deficit of more than 149,000 long-term care workers by 2037, highlighting the urgency of policy intervention.
Despite these challenges, experts argue that the unlocked potential of ageing and silver economy in Sri Lanka could deliver substantial benefits if supported by the right policy framework. A strategic approach would involve expanding employment opportunities for older individuals through flexible work arrangements, part-time employment, phased retirement, and remote work options.
Encouraging businesses to adopt age-friendly practices could also help integrate older workers into the labour force. Certification programmes recognising age-inclusive workplaces may encourage companies to create accessible and supportive environments for older employees and customers.
Financial planning and retirement security are also essential components of the strategy. Expanding pension coverage, promoting retirement savings, and strengthening insurance systems would help ensure that older adults maintain financial independence in later life.
Equally important is the development of a robust elder care ecosystem. Expanding both public and private care facilities, incentivising investment in the care sector, and strengthening training programmes for care workers could simultaneously address social needs and generate employment opportunities.
Community-based care initiatives could also play a significant role. Leveraging existing local government infrastructure, such as community centres and administrative networks, may provide cost-effective solutions for supporting ageing populations.
Ultimately, policymakers stress that demographic ageing does not have to become an economic burden. With strategic planning and investment, the unlocked potential of ageing and silver economy in Sri Lanka could transform demographic change into a powerful engine for inclusive growth and social resilience in the decades ahead.