Population Demographic Decline

Many believe that local, national and global population growth is exponential leading to calls to avoid immigration or cut, need for population control etc., but is it true?  No, according to experts, outside of the UN Population Division, population will peak mid century then decline while ageing further.

What does this mean for the world and nation state economies?  Competition for people whether immigration and temporary workers to fill gaps and support budgets.

From The Lowy Institute:

‘Harnessing demographic destiny

GRANT WYETH

Competition for the world’s best and brightest will intensify as global population growth slows. Is Australia ready?

Global Population will peak then decline

Managing Population Decline (Image copyright Pexels)

Once confident predictions that the world’s population will reach billion by the end of this century are beginning to be debunked. It is now appears more likely that the global population will hit a ceiling before reaching nine billion by mid-century, and then begin to decline.

This tapering of world population growth is being driven by two key revolutions. One is increasing urbanisation, with more and more people living in cities, which makes children less of an essential resource for families then they would be in rural areas. The other is female education and empowerment, with women deciding – when given the choice – that they desire no more than two children.

Such global trends have significant implications for individual countries, both in national capabilities and geostrategic calculations. This is particularly the case for Australia. Countries that are able to both retain and attract people will find themselves at a distinct advantage.

Currently there is a low-intensity competition for human capital between mostly Western states. These countries have recognised a basic demographic problem; that their birth rates are too low to replace their populations, and without immigration they will end up with elderly societies without the workers to sustain their living standards. Alongside this, attracting highly skilled migrants also boosts productivity.

Yet the population strategies of most of these countries are under threat by parochial narratives that place the political sustainability of their immigration programs at risk.

These narratives are born out of a paradox within the nation-state, where elements within these countries believe that the strategies of the state are undermining the nation. Such sentiment seems uninterested in economic imperatives, or indeed foreign policy concerns about their country’s capabilities in relation to others. Yet these issues are vital to a national interest, and therefore need to be aligned to how a country sees itself….

….. However, it would not be prudent for Australia to rely on this possibility.  By seeking to enhance its own capabilities, Australia can help to escape the influence of external forces. Which means in a world of declining birth rates, Australia’s immigration program should be seen as the country’s principal strategic asset. This indicates that Australia may need to develop something it currently lacks – a prominent positive public narrative around its highly successful immigration story.

A recent speech from Canada’s Conservative Party leader Andrew Scheer offers a good example of the way Australia can develop a positive public narrative around immigration. Scheer highlighted the bravery of migration, the honour Canada feels at being chosen by migrants, and the prosperity that has developed in Canada as a consequence of these migrant flows. It is a speech that no politician in Australia could seemingly deliver (bar its requisite politicking) but is a sentiment that is embraced by all Canadian political parties (with the exception of the Quebec nationalist parties).

As a competitor to Australia for skilled labour, the message Scheer conveyed helps to reinforce support for Canada’s immigration program. And if national competition for people intensifies as global population declines, it will provide Canada with a distinct advantage that Australia currently cannot match.’

For more articles about population growth, immigration and NOM net overseas migration, click through.

 

 

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Immigration is not Cause of Unemployment

While most politicians, media and society assume ‘immigration’ drives unemployment, recent Australian research from CEDA contradicts this, as did research presented by left workers’ ‘Solidarity’ in 2012.

Why has it ever been an issue?  Political tactics and strategy, amplified by media and societal word of mouth have felt compelled to promote nativist or white nationalist tropes (from the past) as an appeal to native or incumbent citizens, creating fear, anxiety and even anger (see ‘alt right’), as both an electoral strategy and ideology (e.g. blaming immigrants vs. wage rises).

Immigration whether permanent or temporary does not cause unemployment

International Temporary Resident Workers and Professionals (Image copyright Pexels).

From The Guardian:

Temporary skilled migration has not undercut Australian jobs or conditions, report finds

Politicians’ ‘revolving door’ response to foreign workers frustrates businesses, industry group CEDA says

Temporary skilled migration has not undercut job opportunities or conditions for Australian workers but the “revolving door” political response to foreign workers has frustrated businesses, an industry report has found.

The report from the Committee for the Economic Development of Australia (CEDA), released on Monday, said that skilled migrants, particularly those on temporary skilled working visas, have been an “overwhelming net positive” for the Australian economy and have not had a negative impact on either the wages or participation rates of Australian-born workers.

However, the report said that despite economic evidence suggesting migration is a positive, “governments have responded to community concern with a seeming revolving door of reviews, reports and frequent policy changes to Australia’s temporary skilled migration program”.’

 

From SBS Australia:

‘Migrants don’t actually threaten Australian workers’ jobs, new analysis reveals

A new report found immigration has not harmed the earnings of local workers.

Temporary skilled migrants have not displaced Australian workers despite fears immigrants threaten the local job market, new analysis by an independent economic organisation has revealed.

Research by the Committee for Economic Development of Australia (CEDA) has also shown immigration has not harmed the earnings of local workers.

The report, “Effects of temporary migration”, showed there are about two million people on temporary visas, including students, working holiday-makers, skilled workers and New Zealand citizens.

The research, released on Monday, showed 70 per cent of temporary skilled migrants reside in NSW and Victoria, which have the lowest rates of unemployment in Australia.’

 

From Solidarity.net

‘Immigration is not to blame for cuts to jobs and wages

9 August 2012

The suggestion that bringing 457 visa workers from overseas is coming at the expense of “local jobs” reinforces the myth that immigration causes unemployment and drives down wages.

In fact evidence from Australia and internationally shows that immigration actually creates jobs. In his book, Immigration and the Australian Economy, William Foster’s surveys over 200 studies on immigration and wages. He found there was, “a marginally favourable effect on the aggregate unemployment rate, even in recession”.

In a 2003 paper economist Hsiao-chuan Chang wrote that, “there is no evidence that immigrants take jobs away from the local Australian over the past twelve years… This supports the conclusion from existing research”.

This is because new migrants generate demand for products and services, such as housing and food. Many of them bring savings to help pay for these things, further boosting the economy and jobs.’

 

Politicians and media commentators could explain more clearly why immigration helps a nation and its economy.  Some of these factors include ageing and declining tax paying work forces in permanent population, with increasing proportion (vs. workforce) of retirees and pensioners requires more tax income to fund related services, and higher temporary immigration means (most of) the same temporary cohort will not also be a drag on state budgets in future.

For more articles and blogs about immigration, white nationalism and economics click through.

Cost of Ageing Populations

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Elections, budgets and governance in most western and now developing nations that are democracies are being impacted by increasing numbers of retirees and pensioners in the upper median age demographic, being catered to by politicians, especially conservatives.

Growing budget imbalances due to increasing numbers of retirees and pensioners drawing on budgets with declining net contributors of working age.

Older Households Drawing upon Budget (Image copyright Grattan Institute)

From the Australian Broadcasting Commission:

The costs of an ageing population keep growing, but who’s going to pay?

 

By chief economics correspondent Emma Alberici

Updated 27 May 2019, 9:29am

‘…..The politics may be tricky but future governments will have to confront the grim economic reality of the post-World War II baby boom.

Australians born after 1946 began to retire in huge numbers in 2011. Demand for the aged pension, aged care and health services have been rising commensurately.

The working age population is a net contributor to the federal budget. Older people, on the other hand, are the largest recipients of welfare, aged care and health care services.

Retirees are getting expensive

A report released last month by the independent, non-partisan Parliamentary Budget Office (PBO) warns the ageing population will exert “historically unique” pressure on the federal finances in the decade to 2028-29.

New figures in the report show that by 2028, Australians born between 1946 and 1964 will cost the Government more than Medicare does each year. Based on 2018 budget forecasts, the PBO estimates the cost of Medicare to be $32 billion in 2028-29. By then, lost revenue ($20 billion) and increased spending ($16 billion) on baby boomers will amount to $36 billion.

The number of working-age Australians for every person aged 65 and over has fallen from 7.4 in the mid-1970s, to 4.4 in 2015. That figure is projected to fall to just 3.2 in 2055.

Economists and policy makers need to find new taxpayers and increase workforce participation to support the hordes of older people entering retirement.

The ageing population means that by 2028-29, the PBO estimates there will be 600,000 fewer workers.

While the Australian population has been ageing, life expectancy has also improved.

As far as the government’s fiscal fortunes go, it’s a perfect storm. The pension was introduced in 1909 with 65 set as the qualifying age for men.

While mostly conservative parties attract most of the upper median age vote they are or have been compromised by financial policies catering to the same, but impairing budgets into the long term.  Who’s going to pay? Younger generations…..

For more articles or blogs about ageing democracy and demography, click through.

Per Capita GDP Growth and Ageing Populations

Australian economic, political and social narratives focus upon ‘high immigration rate’ and ‘population growth’ as negatives, claiming in first article following from The Conversation that the latter masks low or declining economic growth.  On the other hand, VOX CEPR suggests a linkage between ageing, longevity and declining per capita GDP; increasing numbers of retirees may well be a significant cause?

Vital Signs: Australia’s sudden ultra-low economic growth ought not to have come as surprise

March 7, 2019 1.28pm AEDT

Australia’s big little economic lie was laid bare on Wednesday.

National accounts figures show that the Australian economy grew by just 0.2% in the last quarter of 2018. This disappointing result was below market expectations and official forecasts of 0.6%. It put annual growth for the year at just 2.3%.

But the shocking revelation was that Gross Domestic Product per person (a more relevant measure of living standards) actually slipped in the December quarter by 0.2%, on the back of a fall of 0.1% in the September quarter…..

Population growth hides it

The more insidious answer in Australia is that, for a long time, our high population growth, fed by a high immigration rate, has masked a much less rosy picture of how we are doing. And neither side of politics has wanted to admit it.

At 1.6% a year, Australia’s population growth is roughly double the OECD average, which is perhaps why we hear politicians say things like “Australia continues to grow faster than all of the G7 nations except the United States,” as Treasurer Josh Frydenberg did this week.

The good news is that standard economic theory tells us that in the long run, immigration has very little impact on GDP per capita in either direction, unless it drives a shift in the population’s mix of skills.

But in the short term, it depresses GDP per capita because fixed capital such as buildings and machines has to be shared between more workers….

But the fundamentals of the Australian economy are looking somewhat weak. Like the US and other advanced economies, we are living in an era of secular stagnation – a protracted period of much lower growth than we had come to expect.

And until we do something to tackle it, such as a major government investment in physical and social infrastructure, we will continue to face anaemic wage growth, shaky consumer confidence, and mediocre economic growth per person.’

 

The impact of population ageing on monetary policy

Marcin Bielecki, Michał Brzoza-Brzezina, Marcin Kolasa 05 March 2019

Population ageing is likely to affect many areas of life, from pension system sustainability to housing markets. This column shows that monetary policy can be considered another victim. Low fertility rates and increasing life expectancy substantially lower the natural rate of interest. As a consequence, central banks are more likely to hit the lower bound constraint on the nominal interest rate and face long periods of low inflation, especially if they fail to account for the impact of demographic trends on the natural interest rate in real time

Many countries, developed and developing alike, are experiencing a process of population ageing – fertility rates remain below the level that guarantees the replacement of the population and the average life expectancy at birth keeps increasing. As a consequence, the ratio of the elderly to the working-age population – the old age dependency ratio – has been, and will be, increasing over the upcoming decades. To give some idea on the magnitude of this process, while the ratio of elderly (aged 65 or more) to the working-age population (aged 15-64) in the euro area was around 0.25 at the turn of the 21st century, the proportion is projected to exceed 0.5 by 2050 (see Figure 1).

The demographic transition will have many consequences related to various aspects of economic activity. To mention just a few, the increasing share of elderly in populations is likely to negatively impact the growth rate of GDP per person (Cooley and Henriksen 2018) and the sustainability of pension systems (Boulhol and Geppert 2018), and will lead to an increase in the share of GDP being spent on healthcare and related services (Breyer et al. 2011)….’

For more articles about population growth and NOM net overseas migration click through.