Some of Asia’s largest economies are very concerned about declining fertility rates.
Over Hundreds of billions of dollars are spent by regional governments in an effort to buck the trend. Will it function?
In the 1990s, Japan started implementing measures to encourage couples to have more kids. Singapore’s initial fertility policy dates back to 1987, while South Korea began adopting it in the 2000s.
Recently, China, whose population has decreased for the first time in 60 years, joined the group.
It is challenging to determine the actual cost of these initiatives, but South Korean President Yoon Suk-you recently stated that his nation had spent more than $200 billion (£160 billion) during the previous 16 years trying to increase the population.
The number of children expected per woman fell to 0.78 in South Korea last year, shattering the country’s own record for the lowest fertility rate in the world.
Prime Minister Fumio Kishida of the neighbouring nation of Japan, which had record-low birth rates of less than 800,000 last year, has promised to quadruple the budget for child-related initiatives from 10 trillion yen ($74.7 billion; £59.2 billion), or just over 2% of the nation’s gross domestic product.
So why do these governments seek population growth?
Simply defined, greater economic growth results from a larger population that is able to work and create more products and services. Additionally, while a greater population can result in increased government expenses, it can also increase tax income.
A lot of Asian nations are also ageing quickly. With about 30% of its population now over the age of 65, Japan leads the pack, and some other countries in the area are not far behind.
Contrast that with India, which recently surpassed China to become the world’s most populated country. Since more than a quarter of its population is between ages of 10 and 20, its economy has tremendous room to grow.
The cost and responsibility of caring for the non-working population also increase when the proportion of people of working age decreases.
“They won’t be able to afford to support the elderly,” said Xiujian Peng of Victoria University. “Negative population growth has an impact on the economy, and combined with an ageing population, they won’t be able to afford it.”
Payments for new parents, subsidized or free schooling, more nurseries, tax incentives, and extended parental leave are commonest strategies used in the region to improve birth rates.
But are these actions effective?
Attempts to increase the populations of Japan, South Korea, and Singapore over the past few decades have had virtually little effect, according to data from those countries.
According to a research published by the Japanese finance ministry, the policies were ineffective.
The United Nations shares this opinion.
According to Alanna Armitage of the United Nations Population Fund, “We know from history that the types of policies which we call demographic engineering where they try to incentivize women to have more babies, they just don’t work.”
“We need to understand the underlying determinants of why women are not having children, and that is often the inability of women to be able to combine their work life with their family life,” she continued.
However, Ms Peng claims that Scandinavian countries’ fertility programs have performed better than those in Asia.
“The common reason is good welfare system, and child-rearing expenses are lower.
Additionally, their gender equality is far more balanced than that of Asian nations.
In the World Economic Forum’s assessment of the worldwide gender gap, Asian nations came in lower than average.
Major concerns exist over the financing of these costly initiatives, particularly in Japan, the developed country with highest level of debt in the entire world.
Japan is considering a number of options, including expanding its debt through the issuance of additional government bonds, hiking the sales tax, and raising the cost of social insurance.
While the other two would impact already underpaid employees, which would persuade them to have fewer children, the first alternative places additional financial strain on future generations.
However, Antonio Fatás, a professor of economics at INSEAD, asserts that funding for these initiatives is necessary whether or not they are effective.
“Fertility rates have not risen, but what if support were to decline? They might even be lower, he speculated.
To prepare their economy for declining populations, governments are also making investments in other sectors.
In an effort to attract younger workers from outside, policymakers are also talking about modifying their immigration laws, despite the fact that this is still unpopular in nations like Japan and South Korea.
It will be a competition to recruit young people to work in your nation because the fertility rate is declining globally, Ms Peng continued.
These governments seem to have no other option, regardless of whether the money is wisely spent on fertility measures.
