The Slippery Slope of Negative Population Growth

CAIRO - 29 June 2019: Just as many developing countries struggle with staggering population growth, a few developed countries are attempting to boost their declining populations. Although overpopulation is an issue that strains the economy, negative or low birth rates—where deaths exceed births, excluding migration—can be just as worrying. Concerned states are opting for solutions that are more of incentives rather than penalties, unlike the case of overpopulation. This phenomenon, which is always met with a growing aging group, did not exist before the 1970s.

The 20 countries suffering from such problems are, in order of the highest to the lowest sub-replacement fertility (two children per couple): Ukraine, Russia, Belarus, Bulgaria, Latvia, Lithuania, Hungary, Romania, Estonia, Moldova, Croatia, Germany, Czech Republic, Japan, Poland, Slovakia, Austria, Italy, Slovenia and Greece.

“The question is whether those countries are developed because they have fewer children, or if they have fewer children because they are developed. Urbanization, industrialization, and higher levels of income turn children into liabilities rather than assets,” Associate Professor of Economics at the American University in Cairo John W. Salevurakes explains. Considering the four factors of production, a shortage in humans translates into a shortage in labor, former Assistant Secretary General of the UN World Food Conference and former Chair of the Economics Department at AUC Adel Beshai says.

Assistant Professor at AUC Rami Galal affirms that when birth rates are too low, there may not be enough young, healthy workers in the future to maintain a country’s economic growth and productivity. In many countries, retirement incomes and medical care for the elderly are financed through taxes on the younger working population; thus, low birth rates will eventually result in a shrinking tax base, he adds.

Beshai explains that the dependency ratio, affecting people from ages 1 to 14, as well as those over 65, both groups that are dependent on others between 15 and 64, can be very high in both developing and developed countries. “When that ratio hits 45%, there is a problem. Advanced countries have big percentages of people who are 84 and above,” he clarifies. Galal refers to a similarly problematic case, “Low fertility rates may also mean a less dynamic laborforce, as younger individuals are typically drivers of various innovations and enter new industries, like high-tech startups, as opposed to older, declining industries.”

Financial Incentives

In 2017, Russian President Vladimir Putin announced granting women an allowance of $180 per month for the first child for a year and a half, allocating $2.4 billion to the initiative. Italy has followed the same path since 2015, granting $80 per month to the third child for three years.

Resorting to similar measures 10 years ago, Germany could not encourage its citizens to have more children by raising the parental leave allowance to two-thirds of income for the first year, in addition to two extra months that can be taken by both parents at the same time. Although citizens have a legal right to a seat in nursery once that child turns 1, there are usually no places available in densely populated areas.

There have been other endeavors that would encourage citizens to have children and possibly attract migrants. These consisted of facilitating access to better opportunities and decreasing living expenses. In 2014, German public universities abolished tuition fees both domestic and international for undergraduate students. By the end of this year, a proposal to make public transportation free will be tested in five cities in western Germany under an emissions reduction plan by decreasing traffic and private vehicles. On the other hand, Slovenia still has falling birth rates despite its subsidized childcare program, parental leaves and allowances. In 2017, Hungarian Prime Minister Viktor Orban launched an action plan aiming to increase the birth rate by 2030 through discounts on student debts and outstanding mortgages.

In comparison, Japan did not take any solid measures to push population growth. However, it is more or less ready for the shrink in labor supply through automation, and increasing dependency on artificial intelligence and robots. Similarly, Greece does not consider boosting birth rates a priority at a time when the country is grappling with austerity measures.

The Immigrants’ Plan in Germany

In 2015, 1.1 million refugees arrived in Germany, which has an estimated population of 80,652,580. Germany’s population is expected to decline to 74.5 million by 2050, with the number of citizens under the age of 15 dropping by 13% and those above the age of 60 at 39% instead of 27%. In 2016, Germany introduced its first integration law for asylum-seekers, which urges refugees to attend language and culture classes, or else risk a penalty of cuts in social welfare benefits.

The courses on German society and culture range between 60 hours to 100 hours; the prolonged course hours are thought to be necessary given the dichotomy between the cultures of the refugees and Germany’s. What is more, refugees applying for permanent residency must be proficient in the German language. Hence, the government made registration for language courses possible following arrival by merely two weeks instead of three months, and before the processing of their asylum applications. In doing so, the German government aims to facilitate refugees’ entry to the labor market through the 100,000 newly available job opportunities. Those opportunities consist of low-wage jobs that pay just €1 per hour. Declining a job might result in exclusion from the social welfare program.

In 2016, integration costs were at around €25 billion. However, such attempts can collapse due to overload, if Turkey allowed refugees to flood into Germany through mass migration. For now, there has been a deal between the European Union and Turkey whereby the latter will deploy good efforts to stem illegal migration to member countries. About 49% of those asylum applications, and not exclusively Syrians, have been rejected.

Although the inflow of migrants is supposed to maintain population growth to fulfill the country’s labor needs, migrants and refugees are expected to have the same birth rate as natives, which would not contribute much to population growth. Thus, the effects of migration on boosting the population are quite short-term. On the other hand, the actions that the German government is taking to encourage people to abandon the childless life and to have more than one child may work well for refugees despite their lack of success with natives.