Falling Fertility Rates

My Facebook wall has been exploding with baby pictures of friends as of late, which reminded me of this important topic of discussion.

Fertility rates in Asia have been in shocking decline over the past few decades, to the point that respective political leaders are no longer able to skirt around the issue. To visually drive this point home, I’ve created a few simple charts with data pulled from the World Bank data archives: the Total Fertility Rate (as births per women), Female Population as a % of total population, and Female Labor Participation Rate as a % of total population.

AsiaTotalFertilityRate1990-2011v2AsiaFemalePopulation1990-2011AsiaFemaleLaborParticipation1990-2012

Just over the last two decades, the total fertility rate (TFR) in most parts of Asia fell by about 0.5 births per woman, while Japan gradually stabilized to an average of 1.38 births. This overall decline is even more significant when considering that over the last 20 years, the number of women in Asia as a percentage of overall population increased as a whole, albeit with a shrinking overall population. The only exception was China where cultural preference for males still remain prevalent, with pollution-related infertility cited as another possible explanation. Keeping in mind that the TFR must remain above 2.1 for any population to naturally replace itself, these countries are facing steady extinction if current demographic trends persist without any moves to further relax immigration or foreign labor laws.

Numerous factors explain the correlation between growing economic prosperity and the burdens of maintaining a modern standard of living. Firstly, the increasing levels of education and financial independence of women are contributing to their decisions to delay in starting families and to have less children. With Asian societies staunchly remaining male-centered, women are often strapped to choose between furthering their careers or caring for their young, but never both. Given the dearth of adequate daycare facilities coupled with strong cultural expectations to stay at home, it is no surprise that many young and educated females in Japan or Korea are forgoing marriage or pregnancy as a whole.

Secondly, high housing prices and childcare costs (including daycare and education) are also contributing to the overall decisions by individuals to reduce household debt burdens by delaying marriage, a decision not limited to females. This change is most evident in Hong Kong and Singapore, where female labor participation rates jumped 12.2% and 8.3% in the span of two decades, respectively. While the financial crisis and subsequent economic downturn have heavily affected job seekers’ fortunes, property prices have soared in Hong Kong and Singapore given their economic proximity to China and ties to the US exchange rate. The resulting influx of foreign wealth is flaming the anger of local citizens who are priced out of their own housing markets, fomenting rising social discontent in recent years. The Wall Street Journal captures a snapshot of Singapore:

The irony, as with other earlier boomtowns, is that the very sources of Singapore’s success may ultimately prove its undoing. The gushers of cash that have flooded Singapore in recent years have put relentless upward pressure on property prices, with private-home prices rocketing 59 percent higher since the second quarter of 2009, even as real-estate prices have tumbled or gone sideways in much of the rest of the world. Prime Minister Lee Hsien Loong was only admitting the obvious, some analysts say, when in a recent interview he said that the country’s property boom is “almost a bubble.”

To allay these social undertones, Asia’s political leaders visibly shifted their focus to face stark demographic realities in 2013 in their policy statements, albeit in a divergent fashion. In Japan, Prime Minister Shinzo Abe took a page from Goldman Sachs Japan’s chief equity strategist Kathy Matsui’s 1999 research on “Womenomics” to advocate greater female labor participation in the work force. Culture aside, China has less socioeconomic impediments to achieve higher labor force participation rates for women. However, with China’s rapidly aging society on-course toward a demographic collapse, President Xi Jinping announced the decision to incrementally relax the one-child policy at the conclusion of the Third Plenum meeting. And in Singapore where a January 2013 white paper signaling a 30% population growth strategy touched off a series of anti-immigration rallies, social tensions are increasingly palpable in the tiny island whose social infrastructure has become strained by its dependence on foreign workers and migrants.

While each country grapples with its own demons in its own way, the hope here is that politicians have their ears closer to the ground and give priority to fertility-related policy making compared to other social and economic woes. At the same time, demographic issues never came about independently, and its solutions should never be decoupled from the efforts to address them.

And now, showcasing another creative idea from Singapore to raise the fertility rate…

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