Is Immigration the Answer to Ageing Populations?
Why Developed Countries May Turn Pro-Immigration in the Near Future
I’m great at writing pieces and never finishing them. My Google Drive is getting a bit full actually. I think my problem is I go to write something and realise about halfway through the piece, what I’m writing isn’t very original.
Someone has already written about it. Better. And I would be plagiarising from a bunch of articles I’ve read on that particular topic. So, I’ve been holding off from writing something unless it was original.
Enter Chartr. They do Data Storytelling via two emails a week. I recommend subscribing.
Chartr covered the story about Japan’s Prime Minister, Shinzo Abe, stepping down a couple of weeks ago. They pointed out that Japan’s biggest problem is its ageing population. Just ~17% of Japan’s population is younger than 20.
This is an issue I was already aware of, an issue that is affecting most developed countries. But where I thought Chartr fell short presented me with a topic to write about.
“In simple terms, it means Japan needs to come up with a serious plan for the long term future, and they pretty much have 2 options:
1) Try and stimulate a baby boom to rebalance things (arguably already too late).
2) Accept that the population will shrink, and try to plan accordingly.”
For years, Japan was in favour of anti-immigration policies. Now, they’re doing option three, which was omitted from Chartr’s list: get immigrants through the door.
I believe the rest of the developed world will be forced to follow.
Why Ageing Populations are Bad
Let’s establish why this is an issue.
It feels like the world population is constantly increasing. In 1800, it was 1 billion; in 2020, it’s closer to 8 billion. So many of us have been living under the assumption that the population is destined to keep increasing until the end of time. That isn’t the case.
The UN predicts that the world population will peak by 2100, at around 11.2 billion. Some studies say that it could peak by 2060. But there is a sharp contrast between the developing world and the developed world.
For the 21st Century, we will see places like the majority of Africa have rapid population growth but somewhere like Europe will see its populations start to decrease in the next 30 years.
It’s been forecasted that Japan’s population, for example, will fall to around 75 million in 2100, down 40% from today.
So, this is why it’s bad for Japan and the majority of developed countries who also have ageing and shrinking populations. Fewer working-age people supporting an ever-growing elderly population is a significant economic problem.
Less tax revenue but more people to care for.
How to Tackle this Issue
As we know, developed countries have options: stimulate a baby boom, accept and plan for a shrinking population or increased immigration. Let’s go through them one by one.
Stimulate a Baby Boom
If this worked, it would be a great idea. But it doesn’t.
Natalism is already in action across a number of countries. Countries with right-wing, anti-immigration governments are implementing fertility policies to try and stimulate baby booms in their own countries. Good examples are Hungary, Poland and now even Russia.
Tax breaks, loan forgiveness, free school dinners, subsidies, maternity capital and more. The problem is these measures don’t work as advertised. They’re brilliant at lifting families out of poverty, improving work opportunities for women and even education for children, but not for increasing birthrates.
Until the mid-1960s each woman around the world had on average 5 children. Since then the number of children has halved and is now just below 2.5 children per woman. Why? Because women are accessing better education.
There is a strong link between higher education of mothers and lower mortality rate of their children. So, you’d assume more children are born. But actually what happens is that when fewer children die, families decide to have fewer children in the first place, which results in an indirect decline of fertility rates.
Population growth is high where fertility remains high and fertility rates remain high where the education of women remains low.
Ultimately, the education of women is improving globally, which is great. And why the global population will eventually peak in all countries. But for these developed countries where women are already well-educated, policies to stimulate a baby boom are arguably too late.
Accept and Plan
The benefit for developed countries is their economies are usually capital intensive. They don’t rely on people as much because they can afford to invest and maintain machinery for production.
And becoming as capital intensive as possible is something we should aim for. Keynes wrote the essay ‘Economic Possibilities for our Grandchildren’ in 1930 speculating that improvements in productivity and technological changes would lead us to a 15-hour working week.
But that hasn’t come yet. Most of us have 40-hour working weeks.
Different countries will adopt technologies at varied rates. AI, IoT, 5G and robots are changing everything about the way we live and work. The issue is all countries are obsessed with GDP growth, and that isn’t guaranteed.
The question is as developed country populations age and decline in size, is the progress of technology advancement and each country’s adoption of it going to be fast enough to compensate for the withering tax-paying workforce?
Increased Immigration
The attitude we have towards immigrants has been instilled into us. Media and politicians have stoked our fears and scapegoated immigrants for certain issues.
It’s a concern because we’re literally shooting ourselves in the foot.
Studies and research show that immigrants pay tax (sometimes more than the native population, EU versus the UK), don’t steal jobs and don’t cause crime rates to increase.
But partisanism is at an all-time high in places like the UK and US. No one is willing to change their minds. Everyone either needs to leave Britain if they don’t like it or they’re a racist.
The challenge is that now attitudes are so anti-immigration, will a political party be able to get voted in on a pro-immigration platform? Who knows.
Voters have legitimate concerns. Unfortunately, though, they are often convinced the problems we face are caused by something like immigration.
When Joe Biden says he plans to invest in communities through housing, Donald Trump uses provoking language like “Wave goodbye to the suburbs!”. The former wants to grow strong, healthy communities in every zip code; the latter wants to scare people into voting for him.
It is possible to win on a mandate that benefits all. But some countries have been so hostile towards immigrants, the question is will they even want to come.
Britain and Brexit
“We are a Christian country… And we should not be afraid to say so.”
David Cameron said that in 2011 during the Prime Minister’s 400th King James Bible Speech. Whether or not you think it is true, the second half of the sentence is him fanning the flames. Feeding the manufactured culture war that is still ongoing today.
Austerity was already in action by this point. Real wages were struggling to reach pre-financial crisis levels. Productivity was and still is flatlining. Labour thought the only way to get back in power was by offering the public austerity-lite policies.
A year before he made that speech, Cameron won on a platform that had many promises, including one to bring net migration under 100,000 per year. He never achieved this during his tenure.
Even though the Conservatives have now dropped that arbitrary target, they are still hopeful of reducing “overall” immigration, with Priti Patel in charge of the Home Office.
When austerity was ruining people’s lives, it allowed for right-wing populism to flourish. Parties like UKIP threatened those in charge. It made Cameron go as far as holding a referendum on remaining or leaving the EU to stamp it out. He bet big and lost.
When people voted for Brexit, they had opted to Take Back Control. This mainly meant ending freedom of movement (which Swiss voters rejected in a referendum last weekend). Kicking the immigrant out when we are about to need them most.
The UK has an ageing population. There are currently 12.39 million people 65 or over, representing 18% of the total population. In 25 years, there will be 20.4 million people aged 65 or over, representing 26% of the total population.
In contrast, the population aged 16 to 64 years is projected to increase by only 2%. By 2066, there will only be 10 million more people of working age than people over the current state pension age and the age of 16 or under.
Note that I said current before state pension age. This is because it is due to rise to 67 by 2027. So that is one solution: make everyone work longer.
There is a better way. Use immigration to offset the cost of our ageing population.
For the rest of this century, developed countries will be tackling the issue of their ageing and declining populations. A shortfall in tax revenue can be covered temporarily by an increase in economic migration.
The challenge now for somewhere like Britain is not only changing attitudes towards immigration, but to continue attracting and welcoming people here.
Benefiting All
This problem is one for developed countries. The solution I am writing about not only benefits them, but also the rest of the world.
If we change our way of thinking, millions of people seeking a better life will get that opportunity. Immigrants work, pay taxes, create jobs and more — as well as support their families who they left behind.
Remittances are one of the most transformative transactions that happen. 800 million people, one in nine people globally, are recipients of money sent by their family members who have migrated for work.
There is one more benefit too. By raising the living standards of people, we will improve things like female education and reduce fertility rates.
We live on a planet with limited resources. Every year our population grows, the risks and eventually irreversible damage of global warming is accelerated. The sooner the human population peaks, the better.
For developed countries, a pro-immigration approach could be sustained for the majority of the 21st century, as long as the policies put in place protect and benefit everyone.
Hopefully, that is enough time for technology to advance far enough that we can have a 15-hour working week.
