How Can Countries Address Declining Birth Rates?

Birth rates are falling in two thirds of the world
Birth rates are falling in two thirds of the world

The first thing to know about the so-called “demographic timebomb” in countries like the UK and the USA is to avoid calling it that.

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As birth rates keep dropping, it’s tempting to use the term “timebomb.” However, demographers, the experts who study population changes, strongly dislike this term.

I hate the phrase, says Sarah Harper, a professor of gerontology (the study of aging) at the University of Oxford. “There is no demographic timebomb. It’s part of the demographic transition. We knew this would happen throughout the 21st century, so it’s not unexpected, and we should have been preparing for it.

Prof Sarah Harper says that increased immigration can solve the problem of lower birth rates
Prof Sarah Harper says that increased immigration can solve the problem of lower birth rates

But the problem is still big. To keep or grow a population, a country needs a birth rate of 2.1 to 2.4 children per woman, known as the “replacement rate.”

In 2022, the birth rate in England and Wales dropped to 1.49 children per woman, down from 1.55 in 2021, and it has been falling since 2010. The same trend is seen in Scotland and Northern Ireland. In the US, the fertility rate hit a record low of 1.62 last year, down from 3.65 in 1960.

“Two-thirds of the world’s countries now have childbirth rates below the replacement rate,” says Prof Harper. “Japan, China, and South Korea have very low birth rates.” Population growth is now mainly seen in sub-Saharan Africa.

Why worry about falling birth rates?

They can cause major economic problems, such as an aging population and a smaller workforce to support retirees. If companies can’t find enough workers, economic growth slows. A smaller workforce also means fewer people paying taxes to fund pensions.

Countries can try to boost birth rates by making it easier for women to have children, through policies like tax breaks and extended maternity leave. However, these measures usually only slow the decline, not reverse it. Many women choose to have fewer children or none at all, to avoid the negative impact on their careers and earnings.

There are two main ways to handle a falling birth rate

keep people healthier and working longer, or allow large-scale immigration. Singapore is focusing on the first option. The country is raising the retirement age, encouraging mid-life training, and pushing companies to hire older workers. The retirement age in Singapore will rise to 64 in 2026 and to 65 by 2030, with re-employment options up to age 70.

In the US, more elderly Americans are working to cover living expenses. Ronald Lee, an emeritus professor of economics, says this trend is higher in the US than in other developed countries. He believes older people should not expect an indefinite period of leisure in retirement. As people live longer and healthier lives, raising the retirement age makes sense.

Increased immigration is another solution, says Prof Harper. Allowing people from countries with high birth rates to move to countries with low birth rates could balance the population. However, this is a politically sensitive issue in many countries.

Even countries with strict immigration policies, like Hungary, sometimes quietly allow selective migration in sectors like healthcare. But overall, immigration levels are not high enough to offset the declining birth rates, and it remains an unpopular solution.

Demographic experts agree that countries will need to either extend working years, increase immigration, or both. But achieving political consensus on these issues is challenging, as neither is a popular choice among voters.