Taiwan Faces Grim Future of Fewer People and Poorer Elderly

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