EDITORIAL: Social progress and the birth rate

Thu, Nov 09, 2017 - Page 8

The government has decided to address the nation’s demographic problem with a two-pronged approach of encouraging immigration and people to have more babies.

Increasing immigration of foreign professionals — as the government has sought to do by relaxing certain pension, health insurance, visa and tax restrictions in amendments to the Act Governing Recruitment and Employment of Foreign Professionals (外國專業人才延攬及雇用法) last week and to the National Health Insurance Act (全民健康保險法) on Tuesday — has the advantage of attracting much-needed professional talent to counter the nation’s low birth rate.

The government intends to inventory childcare allowances by local governments in a push to encourage couples to have more children.

However, are these approaches sufficient given the magnitude of the problem?

It is no secret that Taiwan is facing a serious demographic challenge, with repercussions for its economic well-being and national security.

Taiwan is certainly not alone in this challenge. Almost all nations are facing the problem of aging or aged societies due to low fertility rates.

There is reason to believe that Taiwan’s population might start to shrink a couple of years earlier than the projected 2021 date made in the National Development Council’s Population Projections for ROC (Taiwan): 2016-2060 report last year.

The report included population period graphs illustrating the evolution of the problem since 1950 and projects current trends through to 2060.

The graphs divide the population into the young-age population (ages zero to 14); working-age population (15 to 64); and old-age population (over 65).

It also lists the potential support ratio (PSR) — excluding the young-age population and describing the burden placed on the working population by the old-age population — and the dependency ratio (DR) — a ratio between those typically not in the workforce and those typically in it.

The percentage of people in the working-age population has hardly changed since 1950, when it stood at 56.1 percent, to a projected 50.8 percent in 2060.

However, this masks that fact that the PSR over that same period has fallen from 22.4 in 1950 to a projected 1.3 in 2060. The lower the PSR, the more difficult it is for the working-age population to support the non-working population.

In 2005, the PSR in Taiwan was 7.4. The report predicts it will decline to 4.4 by 2020. Those are acceptable figures; 1.3 is not. It is going to put a huge strain on the system.

The DR is also informative. The high of 78.3 in 1950 is due to a high percentage of the population falling into the 0 to 14 age bracket. The projected DR for 2060 is 96.9, with the percentages of the respective age brackets being 8.7, 50.8 and 40.6 percent.

When you see the sequence of charts showing the demographic changes over the past 70 years and the projections, the full magnitude of the challenge seeps in.

One paradoxical aspect of a low birth rate is that the cause is rooted in positive aspects of social progress: Low mortality rates, easily accessible birth control and increased education and career opportunities for women, who consequently have children later in life.

Even adverse causes, such as high housing and education costs as considerations for couples deciding whether they want to have children, are a function of an affluent society and of people’s freedom to make lifestyle choices.

Encouraging people to have more children is a tough proposition with no easy answers.

Moderate rates of immigration could be a solution, but it needs to be handled wisely, with a real understanding of the structural implications for the makeup of society.