Taiwan Set to Suffer Shrinking Population

The Council for Economic Planning and Development (CEPD), the Executive Yuan's economic think tank, predicts that Taiwan's population will start shrinking in 17 years at the latest, thanks to the trend toward single-child families and double-income, no-kids (DINK) families.

With fewer children and an aging population, the CEPD warns, Taiwan will face labor shortages and declining competitiveness. This will have a severe impact on the development of the island's economy.

Taiwan's population structure is set to undergo a drastic change, with the ratio of the population aged 65 and above scheduled to top the 10% mark this year. In addition, the CEPD reports that based on a birth rate of 1.2 per woman, the number of babies born will drop from 205,000 last year to just 180,000 in 2022. That latter figure will be about the same as the number of deaths that year, after which the population will begin to decline.

Actually, the situation may be even more dire. The birth rate declined to just 1.12 per woman last year, which is lower than the 2.1 needed to maintain the population size. If the birth rate falls to 0.9, the population will stop growing in 2016—just 10 years from now.

With the population growing older and fewer children being born, there will be fewer working-age people (those 15 to 64 years old) to support the elderly in the future. Whereas there were 7.4 workers to support each retiree in 2005, by 2026 the ratio will be 3.3 workers per retiree.

During the decade of 2005-2015, Taiwan's middle-aged population (those people aged 45 to 64) will grow from 5.26 million to 6.99 million and its share of the working population will increase from 32% to 40.3%. This will be a critical period for the planning of the island's manpower resources, the CEPD cautions, if labor shortages and economic slowdown are to be avoided.

If an insufficient supply of labor does develop, it will dampen investment willingness among local companies and this, in turn, will affect gross national product and the government's tax revenues while weakening competitiveness. In addition, as the population declines real wages will rise, driving down the employment rate.

To deal with this eventuality, the government plans to formulate a new population white paper with the aim of maintaining a reasonable population structure, strengthening the social security system, and instituting an appropriate immigration policy.

CEPD Chairman Hu Sheng-cheng says that in principle, the government wants to maintain a reasonable rate of population growth. To avoid a woman's backlash, the slogan chosen to help with this will be not be something like “encouraging the bearing of children” but will be “removing barriers to having children,” pointing to such help as the provision of child care. In addition, the government may offer tax subsidies to encourage women to have more babies.