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Taiwan Faces Grim Future of Fewer People and Poorer Elderly

Nov 24, 2014 | By CENS

With declining birth rate, Taiwan will likely enter an era of shrinking population with poor elderly, warns A. C. Tung, associate research fellow of the Institute of Economics of Academia Sinica, an academic body in Taiwan.

Tung recently cited the report of the National Transfer Accounts (NTA) project on 40 nations compiled by its research teams to show the economic impact of Taiwan's demographic changes.

The report shows Taiwan's average fertility of 1.065, lowest globally to far lag the world's standard of population replacement set at 2.1, to spell for Taiwan declining population coupled with worsening poverty among seniors.

Tung unfortunately does not mention the core causes of such grim future. Stagnant and declining wages in Taiwan, due to changing global market trends and China's rising affluence to motivate talents, businesses and capital out of Taiwan, leaving behind lower wage earners and retirees who can't adequately replenish social welfare systems to alleviate poverty among seniors. Plus lower wages among declining number of Taiwanese youths, who are obliged to support seniors, also exasperate the problem. In addition, rising cost of living, especially exorbitant housing costs in major cities, discourage youths in Taiwan from marriage.

Tung indicates that advanced countries have the optimal fertility rate of 1.24-1.54, with Taiwan's, based on the government's financial situation and long-term consumption standard, should  be 1.48-1.78.

To goad married women to have more babies, Taiwan government has in recent years been offering  incentives, including cash subsidies to newborns, setting up government-supported nurseries & kindergartens, and wider availability of free education to poor kids etc.

However such efforts have been futile. The National Development Council (NDC) estimates Taiwan's population will drop below 18 million by 2061 with seniors to account for over 40%, to severely impact the island's economy and sap consumption by at least 4%.

Economists say such demographic changes have profound implications for  macroeconomy, to influence economic growth, generational equity, human capital, savings and investment, and sustainability of public and private transfer systems.

Tung urges the government to work out effective measures because falling birth rate will worsen the island's labor participation and global competitiveness to impact  governmental finance and weaken  administration. (JL)

Taiwan's Number of Births 1994-2013

No. of births
1994
322,938
1995
329,581
1996
325,545
1997
326,002
1998
271,450
1999
283,661
2000
305,312
2001
260,354
2002
247,530
2003
227,070
2004
216,419
2005
205,854
2006
204,459
2007
204,414
2008
198,733
2009
191,310
2010
166,886
2011
196,627
2012
229,481
2013
199,113
Source: Ministry of Interior


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