Birthrates Are Falling Faster Than Anticipated in Many Developed Nations

Birthrates are declining across the developed world, and if you subtract out immigration the populations of the U.S., Japan, S. Korea, Australia, Russia and Europe are beginning to shrink. Western Europe has the lowest average fertility rate at 1.6 children per woman, substantially below the replacement level of 2.1.

The global population will continue to grow overall because of higher fertility rates in the developing world, but birthrates are starting to fall there too and the world's population may stabilize at about 11 billion by mid-century,

The trend is positive from the perspective of global resource utilization, but some nations are panicked. Japan set a record this year for its decline and is trying to reverse the slide,

The Guardian: "The [Japanese] ministry estimated 921,000 babies will have been born by the end of 2018 – 25,000 fewer than last year and the lowest number since comparable records began in 1899. It is also the third year in a row the number of births has been below one million. " ...

"The prime minister, Shinzo Abe, has described Japan’s demographics as a national crisis and promised to increase childcare places and introduce other measures to encourage couples to have more children."

The United States is now experiencing the same trend and our fertility rate has been below replacement level for about a decade.

Axios: "In 2016, the fertility rate in the United States was the lowest it has ever been, according to the Centers for Disease Control. It was 1,765 births per 1,000 population, below the replacement rate of 2,100."

Some demographers in the United States see an impending crisis in this trend because it means that there will be a smaller number of educated young people entering the workforce, less entrepreneurship, and fewer workers to support Social Security and Medicare for our aging population.

However, the slump in birthrates globally should be welcomed. It has resulted from positive trends in birth control and women’s education and employment opportunities.

Axios: "...fertility rates have been dropping since the 1960s as women have increasingly pursued higher education and found more opportunity in the workforce, says Richard Jackson of the Global Aging Institute. That opportunity continues to expand, further reducing the number of children born to women from the EU, the U.S., China or Japan, as well as delaying childbearing."

The challenges, however, resulting from declining fertility rates are real, but they can be addressed if we make wise public policy decisions quickly. National policies meant to encourage women to have more babies have worked marginally, but won't be enough. S. Korea has implemented numerous programs like free daycare and "baby bonuses" to encourage its citizens to have more children, but without much improvement in birthrates.

City Lab: "On paper, the South Korean parental safety net puts countries like the U.S., which offers no guaranteed maternity leave and is cutting funding for the poorest children, to shame. But in terms of boosting the birth rate, the government’s decade-old pro-natalist policy has yet to move the needle. This year, South Korea is expect to clock in at fewer than one birth per woman this year. In Seoul, it’s even lower: Last year, the rate was only 0.94 births per woman."

Several nations, like Russia, have had greater success with pro-family policies, but it's just part of the solution. There are two other policies that developed nations should embrace.

Countries need to fine tune their immigration policies to address their current and future workforce needs. The current trend in immigrant-bashing is counterproductive. More immigration means more workers, more taxpayers, more growth and more productivity.

McKinsey Global Institute: "Moving more labor to higher-productivity settings boosts global GDP. Migrants of all skill levels contribute to this effect, whether through innovation and entrepreneurship or through freeing up natives for higher-value work. In fact, migrants make up just 3.4 percent of the world’s population, but MGI’s research finds that they contribute nearly 10 percent of global GDP. They contributed roughly $6.7 trillion to global GDP in 2015—some $3 trillion more than they would have produced in their origin countries. Developed nations realize more than 90 percent of this effect."

That doesn't mean "open borders", but it does suggest creating a more welcoming immigration policy tailored to meeting each nation's needs for both highly educated and lower skilled laborers.

Even the notoriously xenophobic Japanese realize that they have to pry open their borders a bit to address falling birthrates and ensure future economic growth.

CNBC: "The changes to the immigration legislation [in Japan] means that the inflow of foreign workers over the next couple of years will probably exceed the 195,000 in 2017," said Marcel Thieliant, Senior Japan, Australia & New Zealand Economist at Capital Economics. "That will offset some of the roughly 500,000 annual decline in the working-age population over the coming decade, but it probably won't be enough to prevent the working-age population from shrinking altogether."

Additionally, older workers should be encouraged to stay in the workforce longer even if that entails offering shorter work-weeks and other incentives to keep them. It's also cheaper to retain older but highly skilled workers than it is to train new ones. And, it would mean that there would be fewer people dependent on retirement security systems and more people paying to support such programs.

By: Don Lam & Curated Content

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