‘Baby bust’ spells trouble for rich nations

In the UK, the number of people over 70 years old will increase by 50 per cent by 2030 [GALLO/GETTY]

The world’s richest nations are approaching a baby bust. It’s a bear market for newborns and the effects could spell economic and social dislocation in the next 20 years, according to some analysts.

As demographers debate the dangers and benefits of the earth’s population reaching seven billion on October 31, advanced economies in Europe, East Asia and even the US are facing declining birth rates.

With senior citizens making up a larger proportion of the population, countries are worried that there will be too many retirees receiving healthcare and social security payments and too few workers to support them.

“The costs of supporting the elderly are generally met through taxes,” Madeleine Sumption, an analyst with the Migration Policy Institute in Washington, told Al Jazeera. “Without any reforms to current working and spending patterns, the costs are expected to grow to unsustainable levels in many wealthy countries, particularly in very rapidly ageing countries such as Japan and Italy.”

For a population to stay at a steady state, the fertility rate needs to be about 2.1 children per woman. Japan’s rate, one of the lowest in the world, is 1.21, according to the CIA, far below basic replacement levels. The UK is at 1.91, Belgium’s is 1.65, Canada is at 1.58, South Korea has a rate of 1.23 and Italy has a rate of 1.39.

More than 30 countries have what is considered a very low fertility of less than 1.3 births per woman.  

Demographic dangers

“With a lower fertility rate, the ageing of the population is inevitable,” said Roderic Beaujot, a demographer at the University of Western Ontario in Canada. “You have less people at the bottom of the [age] pyramid and with people living longer you have more people at the top of the pyramid.”

In the UK, for example, the number of people over 70 will increase by more than 50 per cent – from 6.2 million today to 9.6 million in 2030 – according to government forecasts.

“Ageing has become a huge industry,” Peggy Taillon, director of the Canadian Council on Social Development, a research organisation, told Al Jazeera. “People are looking for options because of the costs associated with care.”

Rising healthcare expenditures are just one of the challenges ageing, developed countries are beginning to face as children of the so-called baby boom – the period of high economic growth following World War II – begin to retire.

“In order to maintain their standard of living, based on the economic level they have been at for the past 50 years, [developed countries] are going to have to replace their population after the baby boom,” said Thomas Janoski, a professor of sociology at the University of Kentucky. “Demography is the one thing in the social sciences you can predict pretty strongly.”

There are two main solutions to the baby bust: increasing fertility rates or encouraging immigration. Both seem fairly simple, but can be difficult to achieve.

Facing a steep demographic decline, Russia initiated a policy known as “mother capital” where women are paid about $10,000 to have more than one child. It seems to have had a small effect, but the general trend remains dismal for the world’s largest country by territory.

The other option, immigration, is not popular in East Asia and is becoming less appetising for some Europeans. Japan has one of the lowest naturalisation rates in the world, Janoski said. “Japan and Korea will be the odd cases, but with China sitting on their border, they will have an incentive to keep their economies strong, as they don’t want to become vassal states of China,” he told Al Jazeera.

Class and religion

In Europe, a common fear among the far-right is that immigration from Muslim majority nations will create “Eurabia”. But demographics don’t seem to back up that view.

“Perhaps the biggest surprise, given received notions about the Arab/Muslim expanse, is the recent spread of sub- replacement fertility to parts of the Arab and the Muslim world,” wrote Nicholas Eberstadt, a political economist at the conservative American Enterprise Institute. “Algeria, Tunisia, and Lebanon are now sub-replacement countries, as is Turkey.” 

Traditionally a sender of emigrants to the US, Canada, Australia and other regions, widespread immigration into Europe began after World War II, as large numbers of mostly low-skilled labourers from Turkey, North Africa and the UK’s former colonies in South Asia were encouraged to come in search of work.

The children of those immigrants, in some cases, are accused of not assimilating to European culture. This divide, however, could be based more on class than religion. 

In contrast to Europe, Muslims in the US are among the most highly educated demographics. Forty-three per cent of Muslim American women hold college degrees, compared with 29 per cent of American women overall, making them the second-best educated religious group following American Jews, according to a 2009 Gallup poll.

Debates in the US about Latino immigration share similar rhetorical overtones with European discourse about Muslim immigrants.

Successful models

From the perspective of national interest, Canada’s immigration policies – which prioritise skilled workers and investors – may offer the best model.  

“In proportion to its population, Canada naturalises the most people in the world by far,” Janoski said. “Canadian immigration policy is really focused on economic growth,” where immigrant investors or skilled workers are given preference over family reunification which drives the model in the US and other countries, he said.

“That is why they came up with the policy for Chinese entrepreneurs. When Hong Kong [formerly a British colony] went back to the Chinese, they [Canada] gave relatively quick citizenship to businessmen.”

Recently, Filipinos have become one of Canada’s largest immigrant groups, with many first arriving as domestic helpers or temporary healthcare workers before gaining citizenship.

These professions are fundamentally linked with demographics, as most wealthy countries will be hiring more healthcare professionals in the coming years.

“People are looking for options because of the costs associated with care,” said Taillon. “A lot of people are going the way of international nannies because they see it is a better option.”

The employment rate for foreign-born citizens of Canada is actually higher than for native-born Canadians, the Globe and Mail newspaper reported. By 2031, one in three workers in Canada is projected to be foreign-born, according to government statistics. This trend should cushion the country from the baby bust.

For Europe and Japan in particular, the choice seems stark. “Countries that do not wish to open their doors to immigration will be forced to rely more on other policies to shoulder the burden of population ageing,” Sumption, from the Migration Policy Institute, said. “For example, retirement ages may have to rise faster and tax burdens may have to increase.

“Like immigration, these other policies are also politically controversial and painful to implement.”

Follow Chris Arsenault on Twitter: @AJEchris