ARC Centre of Excellence in Population Ageing Research
By anyone’s count, 7 billion is a lot of people. But it’s worth bearing in mind that the number could have been much higher. In 1965, the total fertility rate (an estimate of the number of live births in a woman’s lifetime) across the world stood at 4.9. If that rate had been maintained, the global population would be growing towards 15 billion by 2050, instead of 9 billion plus.
What’s changed is how many children each woman has, on average. The UN estimates that currently, the total fertility rate is about 2.5 globally. That same organisation projects fertility falling to 2.03, somewhat below replacement, by the end of the century.
At the other end of the life span, life expectancy at birth has increased from 56 in 1965 to 68 today. This increases population, of course, but not by as much as the reduction in fertility reduces it.
But these two trends imply a third, not much discussed when attention is focused on just the total, and that is population structure. The ageing of the population is a happening phenomenon in countries such as Japan, the world’s oldest. In these countries, low fertility has led to a range of economic and social challenges. These are well rehearsed at the level of a single economy – fiscal stress because so much support for the aged is provided by government; an older and generally less flexible labour force; a decline in entrepreneurship and innovation; challenges in caring for the aged; and so on.
Policies directed towards increasing fertility are therefore frequently encountered, because age dependency ratios are projected to move so rapidly, as the working population peaks and then declines, and the baby boomers retire and live longer. The UN lists 47 countries who believe their fertility is too low, and 43 of these have policies aimed at raising the fertility rate. Australia is among the 43.
But the best policies for higher fertility are indirect. The decline in fertility in the 60s and 70s stemmed in large part from the increase in women’s labour force participation, perhaps the largest change in labour markets in the last century. Countries with superior childcare facilities, and attitudes of acceptance towards mothers of young children in the labour force, tend to have higher fertility rates than those where this level of social support does not exist.
From a global perspective, the age dependency ratio, which may be thought of as the ratio of the retired population to the working-age population, has moved from 9% in 1965 to 12% today, and is projected to more than double, to 26%, by 2050. And while countries whose population are already shrinking, such as Japan’s, find this challenging, this dynamic at a global level is much more dramatic. For centuries, a gradually expanding population has kept economies growing and societies dynamic. We don’t yet know what will happen when we can no longer rely on that future.