Low birth rate: millionaire plans from Asian countries to combat it

The decline in birth rates is a great concern in some of the largest Asian economies and their governments spend hundreds of billions of dollars trying to reverse this trend.

Japan introduced its first policies to encourage couples to have more children in the 1990s. South Korea followed suit in the 2000s, and Singapore’s first fertility law dates from 1987.

China, which saw its population decline for the first time in 60 years, recently joined this club.

It is difficult to quantify the exact cost of these regulations, although South Korean President Yoon Suk-yeol said his country has spent more than $200 billion over the past 16 years in an attempt to increase its population.

Last year, South Korea broke its own record for the world’s lowest fertility rate, with an average number of 0.78 babies expected per woman.

In Japan, where a record number of fewer than 800,000 births occurred last year, Prime Minister Fumio Kishida has promised to double the budget for child-related policies from US$74.7 billion, which is just over 2% of the Gross Domestic Product of the country.

There are more countries in the world trying to lower their birth rates, but the number of countries wanting to increase their fertility has more than tripled since 1976, according to the most recent United Nations report.

In simple terms, a larger population that can work and produce more goods and services leads to higher economic growth. A large population implies higher costs for governments, but it can also result in more tax benefits.

Many Asian countries are aging rapidly. Japan leads this trend with almost 30% of its population over the age of 65. Other countries follow close behind.

Compare India, which has just overtaken China as the world’s most populous nation. More than a quarter of its people are between the ages of 10 and 20, giving its economy enormous potential for growth.

And, once the share of the working population shrinks, the cost and burden of caring for non-workers grows.

“Negative population growth impacts the economy and, combined with an aging population, they won’t be able to afford support for the elderly,” says Xiujian Peng of Victoria University in Australia.

Most of the measures in the region to increase birth rates have been similar: payments to new parents, subsidies for free education, more childcare, tax incentives, and longer maternity and paternity leave.

Data from the past few decades in Japan, South Korea, and Singapore show that attempts to increase their populations have had little impact.

The Japanese Ministry of Finance published a study calling these policies unsuccessful.

It is a vision shared by the United Nations.

“We know from history that the kind of policies we call population engineering, when they try to incentivize women to have more babies, just don’t work,” Alanna Armitage of the United Nations Population Fund told the BBC.

“We need to understand the underlying determinants of why women are not having children, and that is often due to the obstacles women have in combining their work and family lives,” adds Armitage.

In Scandinavian countries, however, fertility policies have worked better than in Asia, according to Peng.

“The main reason is because they have a good welfare system and the cost of raising children is cheaper. Their gender equality is also much more balanced than in Asian countries.”

The latter is included in the report on the global gender gap of the World Economic Forum.

There are also big questions about how these costly measures should be financed, especially in Japan, the most indebted economy in the developed world.

Various options are being considered in Japan, such as selling government bonds, which involves increasing your debt, increasing your sales tax, or increasing your social security premiums.

The first option adds a financial burden to future generations, while the other two would hit workers hardest, in turn convincing them to have fewer children.

But Antonio Fatás, an economics professor at the European Institute of Business Administration, says that regardless of whether these policies work, they have to invest in them.

“Fertility rates have not risen, but what would happen if there was less support? Perhaps they would be even lower,” says Fatás.

Governments also invest in other areas preparing their economies for dwindling populations.

“China has been investing in technologies and innovations to balance the shrinking workforce and mitigate the negative impact of its dwindling population,” Peng explains.

And while it remains unpopular in countries like Japan and South Korea, lawmakers are discussing changes to their immigration rules to try to attract young foreign workers.

“The fertility rate is falling globally and there will be a race to attract young people to come and work in your country,” adds Peng.

As to whether or not the money is well invested in fertility policies, it does not seem that these governments have any other alternative.

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