In the good old days of the German Democratic Republic, aka East Germany, Hoyerswerda was a model industrial town with about 80,000 inhabitants. It had the highest birthrate in the East. After reunification, things changed. The population fell by half. The average age increased from 35 in 1989 to 48.

“Every time I visit my parents and I drive through Hoyerswerda, there’s every time a new house that’s torn down,” says 24-year-old Judika Zirzow, a German woman who now works in a bank in Karlruhe. “The face of Hoyerswerda is different... It’s sad to think that if I have children, I could never tell them, ‘Here’s where I grew up.”

Very different. Instead of urban sprawl, the city government has to deal with urban shrinkage. It is demolishing apartment buildings. In a city that once had 21,000 apartments, 7,500 have been torn down and 2,000 more are scheduled for demolition. Young people returning to see their parents find that whole blocks have become vacant lots. According to an article in the New York Times:

"Emptiness is the reigning feeling when walking through the city, which has lost more than 40 percent of its residents since the fall of the wall, with the population dropping below 40,000 people from more than 70,000."

In the years after the collapse of Communism, birth rates in East Germany plummeted, hitting an incredible low point of 0.77 in 1994. “For a number of years East Germans just stopped having children,” according to Reiner Klingholz, director of the Berlin Institute for Population and Development. Now birthrates have bounced back and are much the same throughout the country -- which are still amongst the lowest in the world.

While depopulation is bad news for the German people, it may be good news for German animals. Wolves are making a comeback around Hoyerswerda. According to Der Spiegel,

"But for five years now, the wolf population has been establishing a solid foothold in the country. And now, they are set to expand throughout Germany's east... "We have more wolves living in Germany right now than we have had in 200 years," [says one expert]"

 

 

If you want a short, sharp introduction to the topic of global ageing, the latest issue of The Economist is just the ticket. It covers the demography and economics of ageing (in the developed world) and concludes that "the consequences will be scary". Finally the message is beginning to sink in. You can download a PDF if you sign up for a free account.It's worth it.

Some highlights:

The end of retirement -- in its leader for the special issue, The Economist points out that Otto von Bismarck created the modern pension system in Prussia in 1889. Workers over 70 would receive a government payment -- but their life expectancy was only 45, so it was a good deal for the government. Nowadays the average American retires at 64 and can expect to live for another 16 years. The financial pressure of paying pensions to 20% of the population is going to force us back to "the pre-Bismarckian world where work had no formal stopping point".

A slow-burning fuse: why the world is getting older explained in simple language. The financial effects will be severe: a declining workforce, a possible asset meltdown, stingier governments.

"People in rich countries will have to be weaned off the expectation that pensions will become ever more generous and health care ever more all-encompassing. Since they now live so much longer, and mostly in good health, they will have to accept that they must also work for longer and that their pensions will be smaller."

Suffer the little children: most of the rich world is short of babies. But it is remarkably difficult to persuade women to have more. Flexible labour markets help, but they are not a panacea.

"... having children is a personal choice, and if people really do not want them there is nothing governments can do. The UN expects fertility in developed countries to recover somewhat by 2050, to 1.8 children per woman, but many experts think that forecast is too optimistic."

A world of Methuselahs: the benefits, and the costs, of living longer. This section reviews the age-old dream of eternal youth, or at least, a very long and healthy life. The problem faced by modern economies is that people are living much longer and are healthier for longer. But older people inevitably require more health care. Who will manage it? How will it be paid for?

Scrimp and save: pensions will have to become far less generous. Life for the elderly was good in the 1980s, when there were only 20 people of retirement age for every 100 people of working age. But governments cannot afford to support the elderly of 2050 in the same cushy lifestyle because there will be 45 old codgers for every 100 workers.

"So if state pensions are having to be reined back, private pensions are getting meaner, riskier and less predictable, and money saved for retirement is threatened by financial crises, what is the man in the street to do to make ends meet? The only thing for it, say all the experts in unison, is to carry on working."

China's predicament: getting old before you get rich. Because of the one-child policy, China is ageing extraordinary fast. In fact, in some areas there are already labour shortages because there are not enough young workers.

The conclusion of the survey is sobering. The world is moving into unknown territory. Ageing will affect the world in profound and unpredictable ways, ranging from the economy to geopolitics. Every country with ZPG will pay the consequences for not having children. With one significant exception:

"Because America’s population will still be growing when that of most other developed countries is shrinking, America will be the only developed country that still matters geopolitically."

In 2006 the Danish government brought about an unusual welfare reform. It increased the pension age from 65 to 67 between 2024 and 2027, with the age for early retirement rising from 60 to 62 between 2019 and 2022.

This means that people who are now under 50 will not be able to qualify for an early retirement until they are 62. Similarly, they will also not be able to claim a state pension until they turn 67.

Furthermore, from 2025, the age limits in the retirement system will be indexed to the mean life expectancy of 60 year olds. This means that the average length of time that people spend on early retirement and public pension will be around 19 years. If life expectancy does not change, the early retirement age will stay at 62 years and the pension age at 67.

I came across this nugget of information in The Economist’s survey this week of ageing societies, and supplemented it by Googling around. A 2008 report from the OECD pointed out that:

Adherence to this indexation principle is vital as it forms the backbone of fiscal sustainability: without that, current standards in publicly funded services could not be maintained in the context of population ageing. However, even within the framework of the welfare agreement, it will be difficult to meet growing pressure to raise service standards in areas like healthcare simply through additional public spending.

Another surprising country, demographically, is Morocco. In 1962, its fertility rate was about 7.2 children per woman. Nowadays it is about 2.5 and heading south. Contraception is widespread, with many women delaying child-bearing for 5 years after marriage.

So what is the result of the rapid shrinking of family size? According to a feature in Magharebia, a website about the Maghreb sponsored by United States Africa Command, a military outfit, the future could be bleak for the elderly:

Demographic changes have had a perceptible impact on social solidarity in Morocco, sociologist Naïma Bichri explains, leaving many people in their twilight years, like Ba Mohamed, to navigate the challenges of everyday life on their own.

"We're seeing problems which never existed in the past. Indeed, it was rare for an elderly person to be cast aside. Families took care of their own and respected those older than themselves," she tells Magharebia. "This trend is dying out more and more."

The problem is that by 2030, 15% of Moroccans will be senior citizens. There are about 2.5 million now and in 20 years’ time, there will be 8 million. Most of them depend upon families for support, as few receive government pensions. However, with the ageing tsunami on the horizon, government officials are worried about how elderly without families will cope. So now the government is working on ways to strengthen the family.

 

There’s a demographic dimension to the turmoil in Iran over the disputed election results. Most of the rioters seem to have been young people in the cities. When you look at Iran’s demographic profile, you can see that there are bound to be tensions – there is a huge “youth bulge” amongst the 15 to 29-year-olds.

In Behind the Numbers, a blog of the Population Reference Bureau, Farzaneh Roudi explains why. In 1977, the total fertility rate (TFR) in rural areas was 8.1 and in urban areas 4.5. Thirty years later, the corresponding figures are 2.1 and 1.8. The TFR for the whole country is 1.9, well below replacement level and about the same as France. Iran somehow managed to reduce its birth rate by about two-thirds in a single generation.

“The rapid decline in the total fertility rate is due to simultaneous reduction at all ages: delay in childbearing by young couples, increased spacing of births by married women, and cessation of births by older women. These changes coincided with the revival of the national family planning program, delivered free through a nationwide network of primary health care facilities. Today, nearly 80 percent of married women of reproductive age use family planning and 60 percent of married women use a modern method.”

It would be interesting to know what techniques of social engineering the Islamic Republic used to achieve this demographic implosion. I would wager that the regime is quite unprepared for the result.

First of all, they are faced with youthful rebellion. About 2.3 million of Iran's 3 million unemployed are below the age of 30. This means that the regime is squandering its "demographic dividend" -- the large number of energetic, well-educated young workers who can contribute to economic growth. Given Iran's plummeting fertility rates, this is an unrepeatable opportunity for the government, and it is slipping from its grasp. 

“Unemployment and high costs of living, coupled with social and political restrictions, have made it increasingly difficult for young Iranians. The sudden uprising that erupted following the disputed presidential election of June 12 is a manifestation of all the underlying frustrations.”

And by mid-century, these youthful protesters will be elderly and there will be a relatively small working-age population to support them in a society with seriously weakened family ties. The future looks very bleak indeed – in the long run. The mystery is how the ruling elite is preparing for this. 

Being a flight attendant was the glamour job back in the 60s and 70s. But haven’t you noticed that they’re getting older and older? A study from the Population Reference Bureau shows that this impression is not wrong. In fact, the age profile of American flight attendants has changed dramatically since 1980.

While flight attendants were younger than the overall US workforce back then, now they are older. Between 1980 and 2007, the median age of all US workers rose by six years, from 35 to 41, but the median age of flight attendants rose by 14 years from 30 to 44. In fact, in 1980, only 2.7% of flight attendants were 55+. Now 21.4% are 55 or over. In 1980 60% of all attendants were between 25 and 34. Nowadays, the figure is about 15%.

There have been other changes. Flight attendants are more ethnically diverse and more male, like many other professions. But they are also much less well paid. After adjusting for inflation, the median hourly wages (in 2007 dollars) dropped by 26% between 1980 and 2007. In contrast, the median hourly wages of all American workers rose by 13% percent.

Is this the future for workers in service industries in greying societies? ~ Population Reference Bureau

A pioneer in the ethics of population control is having misgivings. Daniel Callahan, one of the founders of modern bioethics, writes in the latest Hastings Center Report that his earlier interest in the ethical dimension of bringing down birthrates seems to have missed something.

In a retrospective look at his work in the 1970s seeking to set down ethical guidelines for the work of population controllers, Callahan says that fear of excessive population has been followed by fear of excessive decline.

Ever since the 1970s, I had become addicted to reading a leading demography journal, the Population and Development Review. About four or five years ago, I began noticing a shift in its articles. There were far fewer on population limitation... The goal was and remains zero-population growth (ZPG), taken to be 2.1 babies per woman, on average, but where previously the aim of many groups was to get down to ZPG, the new emphasis was on getting birthrates back up to it. How and why that had happened was the question that demographers (and I, as an onlooker) were trying to answer.

Back in the era of the “population bomb”, many were tempted to take an apocalyptic view. Callahan himself wrote in the journal Science in 1972:

[E]xcessive population growth... poses critical dangers to the future of the species, the ecosystem, individual liberty and welfare, and the structure of social life. These hazards are serious enough to warrant a reexamination and, ultimately, a revision of the traditional value of unrestricted procreation and increase in population.

After a burst of enthusiasm in the 1970s, bioethicists abandoned population studies for clinical work. But Callahan suggests that the “the downstream problems that emerge from technological and social advances of medical progress” are certainly worthy of examination. He lists a few:

* Changes in the dependency ratio;
* fears that a declining number of younger workers will sap economic vitality and;
* "what, in other contexts, would seem a clear public health problem: increased hazards to mother and child from later procreation and, for many, the impossibility of having children at all (helped but not overcome by in vitro fertilization)..."

The fundamental bioethical question in population studies, says Callahan, is “freedom of procreation”. At the beginning of his career the focus was how far governments could go to limit birthrates. Now it is their policies to raise them. ~ Hastings Center Report, May-June

The Latvian economy is in terrible, terrible shape. As The Economist notes, its GDP has declined by one-fifth and imports and exports have contracted by 40%. It is an economic disaster zone rarely seen outside of times of war. The European Union and the IMF have thrown the tiny Baltic country of 2.2 million a lifeline, but everyone is nervous that the country might become a victim of L-shaped stagnation, instead of an optimistic U-shaped recovery.

This makes it an intriguing test case for demographers. Latvia's fertility rate, like other Eastern European countries, is far below replacement level. It hit a record low of 1.12 in 1998, before bouncing back to about 1.4 in 2007. The question is, was that a dead-cat bounce or has Latvia entered the low-fertility trap forever?

The low-fertility trap is a theory advanced by the Austrian demographer Wolfgang Lutz. He believes that a country with declining fertility can enter a downward spiral, from which, like a nose-diving airplane, there is no escape. The key figure is a fertility rate of 1.5. No country (with the exception of Denmark) has slipped below 1.5 for an extended period and bounced back. In the Demography Matters blog, Edward Hugh cross-checks the Latvian experience against the theory and finds that they match nicely. It makes uncomfortable reading for anyone interested in the survival of Latvia. Dr Hugh seems to feel that the Latvian politicians forming its economic policy are not amongst them.

There are 4 economic factors which feed the low-fertility loop:

(1) Competition for exports depresses wages, thus making it hard for young couples to have children.

(2) Because of low economic growth, the tax burden on the working population grows in order to fund welfare payments for the elderly. This also depresses fertility.

(3) As a society ages, there are fewer jobs at an entry level for young people. This creates an incentive for them to migrate.

(4) With the welfare budget already squeezed to pay for an ageing population, there is little left over for policies which might encourage higher fertility.

All of these mechanisms seem to be at work in Latvia. Unfortunately, there is yet another which occurs more in Eastern Europe than in other developed countries. Like Russia, Latvia has a high male mortality rate. Latvian men die, on average, about 10 years earlier than German men. This means that it is very hard to increase labour rate participation by upping the retirement age to ensure that there will be more workers supporting the young and the elderly. They are either too sick or dead.

Unhappily, Dr Hugh feels that conditions for a bail-out demanded by the EU threaten the survival of Latvia.

Indeed only this weekend the Latvian Cabinet met in emergency session, in order to reach to agreement a the package of measures to be put before parliament. These measures -- I think it is hard this part really is the unkindest "cut" of all -- are actually being demanded by the leaders of the European Union (via their representatives on the European Commission) in order to agree the release of the next tranche of the Latvian "bail out" loan, and among measures being discussed are a reduction of 10% in both state pensions and maternity and child care benefit. The former may be hard, but unavoidable the latter, as we will see, more or less amounts to voluntarily agreeing to slit your own thoat.

As they say in Riga, Paldies Latvijas valsts un Eiropas Savienība par gaišo nākotni. Thanks to the Latvian government and the European Union for a Bright Future.

I am a baby-boomer, I confess, but I have to acknowledge the justice of the fiery j’accuse launched at us by Financial Times analysis editor Frederick Studemann. He complains that the boomers have had a great party but trashed the family home. “We now get to clear up the mess. We are essentially little more than glorified pooper-scoopers.”

Strong words, but he goes on:

 

“This might all be just about bearable if they had not made such a mess of things. Yes, freedom of the individual and personal fulfilment are undoubtedly laudable. But my, did they come with a cost, as we now pick up the tab for decades of boomer debt-fuelled, take-now-pay-later consumerism that has blighted economies and ravaged the planet. Add to that the less measurable costs of an atomised, more self-obsessed ‘broken’ society and it all makes for quite a clean-up job.”

As Charles Sizemore points out at the HS Dent Financial Blog, this could be an opening salvo in an inter-generational conflict between a huge number of elderly dependents and a shrinking number of productive workers in a greying world.

“The political and ideological debate today is defined by two major conflicts: social conservatism vs. social liberality and government control vs. free market.  We believe that age might be the defining political conflict in the decades ahead.”

Age – not the environment, or whales, or climate change.

Demography is not quite as simple as it looks. The key figure, everyone know, is that a population replaces itself if the birth rate is 2.1. However, what does that "2.1" measure?

This is the "total fertility rate" or TFR. This is "an estimate of periodic fertility and is defined as the sum of number of children born by women in a defined age range (16-49) extrapolated to the lifetime fertility of the total number of women in that age group". (I’m quoting Edward Hugh here, a Barcelona based economist of British extraction).

The important thing to remember is that TFR is an estimate, because most of the women in the age group have still not finished their child-bearing life. But, they might surprise us, although it is unlikely that an army of 35-year-olds will have 10 kids, sending the fertility rate soaring. But a 38-year-old might have 2 children. And a 40-year-old might have one.

So the accurate figure is the cohort fertility rate (CFR), "the average number of children which women actually give birth to during their lifetime fertility cycle, [which] is only known when the women in the cohort end their fertile life". In other words, we know the number of children that women born between 1960 and 1965 will bear, because their reproductive life has drawn to a close.

This helps to explain the mysterious little bumps in the birth rates in France, the UK and the Nordic countries. More and more women are delaying child-bearing. When they do have babies, it appears to create a mini-baby boom. What’s really happening is that after a lifetime of childlessness women are rushing in before their biological clock strikes midnight.

The point is, comments Norwegian demographer Aslak Berg in the very useful Demography Matters blog, "when the average age at birth is increasing, TFR will tend to underestimate completed fertility." He concludes that this means that the picture for Europe is not quite as dismal as it looks. Almost, but not quite:

What’s been happening over the last few years is not that European women have more children but that the fertility pattern or the average age at birth has stabilized which means that the TFR is now becoming much more accurate in predicting completed fertility. This means that the European countries with a comparatively healthy fertility –a European Fertile Crescent from France through the British Isles to the Nordic countries will have their TFR increase to around replacement rate whereas the rest of Western Europe will have slightly better, but still much too low TFR’s. Incidentally, I predict that much of the difference in TFR between the US and the European Fertile Crescent will prove to be caused by the fact that unlike in Europe, the US average age at birth has remained stable for a very long time –this difference will lead to a differently shaped population pyramid but will not affect the overall size of the population in the long run.