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In the developing world, the demographer’s metaphorical python is getting ready to feast on another metaphorical pig. In the developed world, it’s going hungry.
In the advanced economies of Europe and elsewhere, both fertility rates and the number of working-age taxpayers are dropping, which means many countries face the need to reduce retiree benefits or raise taxes to support their aging populations. In 2012, the European Union spent more than 13 percent of its GDP on pensions, according to a report by the European Commission, and in the absence of policy change, that percentage can only increase.
The root cause of this problem is the fact that there are too few taxpayers to support the societies’ children and seniors. That deficiency in the “dependency ratio” is most acute in Europe, Japan, and Russia but is a strain on the U.S. economy as well.
Some countries have already curtailed benefits for retirees. Spain, Italy, Germany, Greece, and Ireland have either increased the age of retirement or plan to do so in the near future. This decision, which is deeply controversial everywhere, contributed to the fall of Spanish Prime Minister José Luis Rodríguez Zapatero’s Socialist Workers Party in the country’s 2011 election cycle.
The reining in of social services has caused some retirees to take extreme cost-saving measures. In Japan and Germany, some older citizens have been leaving their homelands (and in some cases are being sent elsewhere by relatives), taking their savings and remittances to countries with a lower cost of living. Private companies are now capitalizing on this new form of old-age migration by building nursing homes in places that promise high standards of care at low cost, including the Philippines, Thailand, and Eastern Europe.
In the U.S., some politicians have proposed raising taxes on higher-income households to avoid pulling the rug out from under pension recipients. These measures have won some support from the judiciary as well. This spring, the Supreme Court of Illinois blocked a law that would have alleviated the state’s budget crisis by lowering pension payouts. Tax hikes are now a serious topic of debate in the state.
As politicians argue about whether to put the burden on retirees or the taxpayers who support them, demographers have noted that some level of long-term sustainability can be achieved simply by aiming for a higher fertility rate in countries that are feeling the squeeze. The best way to do this, says Patrick Gerland of the U.N. Population Division, is to enact policy changes that reduce the cost and work-life conflict involved in raising a family. The birth rate “depends very much on both how the society and the people in society deal with combining work and family, not only the short-term but the long-term challenge,” he says. Providing families with affordable health care, generous maternity leave, and increased access to day care, he says, could help raise the fertility rates of the developed world.
Meanwhile, in developing countries with persistently high fertility rates, the challenge is quite different. In Africa, the birth rate is about four children per woman in some countries, even higher in others. According to Gerland, the trend is due in part to a lack of accessible health care as well as cultural norms that favor large families.
Furthermore, the rates of contraception use in many regions of the continent remain significantly lower than those of the developed world. In 2005, participants at the U.N.’s World Summit made a commitment to providing “universal access to reproductive health.” But when U.N. researchers looked at rates of contraception use six years later, they found that women in the African nation of Chad were using birth control less frequently than in any other country in the world. In sub-Saharan Africa, the rate of usage was only 40 percent, whereas in North America, Latin America, and Europe, the rate exceeds 70 percent.
Until birth rates decline substantially, the job-poor nations of Africa and Asia will need to come up with a strategy for redirecting economic output from agricultural to industrial products, according to a report by the U.N. Industrial Development Organization. “Virtually all cases of high, rapid, and sustained economic growth in modern economic development have been associated with industrialization,” the authors note, “particularly growth in manufacturing production.” The alternatives are to slow the rate of population growth or face the pressure for mass migration.
Next: China and the Urbanization of the World