A country of old men? By Zane Varpina For AmCham Outlook series on - - PowerPoint PPT Presentation

▶
a country of old men
SMART_READER_LITE
LIVE PREVIEW

A country of old men? By Zane Varpina For AmCham Outlook series on - - PowerPoint PPT Presentation

Dec 22, 2022 149 likes •409 views

A country of old men? By Zane Varpina For AmCham Outlook series on May 24 2018 Photo source: University of Pennsylvania What (almost) everyone knows about demographic situation in Latvia Shrinking population since 1990 2.7m (1990)

slide-1
SLIDE 1

A country of old men?

By Zane Varpina For AmCham Outlook series on May 24 2018

Photo source: University of Pennsylvania

slide-2
SLIDE 2

What (almost) everyone knows about demographic situation in Latvia

  • Shrinking population since 1990
  • 2.7m (1990) à 1.9m (2017) à 1.7m (e, 2030) à 1.5m (e, 2050)
  • Ageing
  • Median age ↑: 34.7 (1987) à 42.9 (2016) à 46.9 (e, 2030) à 49.3 (e, 2050)
  • Old-age dependency ↑: 17.3 (1987) à 30.2 (2016) à 43.2 (e, 2030) à 59.3

(e, 2050)

  • Due to:
  • Negative natural population growth and
  • Emigration

Source: Eurostat databases, baseline projections

slide-3
SLIDE 3

Fertility

  • Under-

replacement fertility in EU

  • Second

demographic transition

1.70 1.69 1.59 1.58 0.5 1 1.5 2 2.5 France Ireland Sweden United Kingdom Norway Denmark Lithuania Latvia Belgium Finland Netherlands Estonia EU-28 Slovenia Czech Republic Bulgaria Germany Austria Romania Luxembourg Malta Hungary Slovakia Croatia Italy Spain Greece Poland Portugal Cyprus

Total Fertility Rates in EU, 2016

Source: Eurostat databases [proj_15naasfr]

slide-4
SLIDE 4

Migration

  • Total emigration from

Latvia: approx. 270k

  • people. Estimates vary.
  • 800,000
  • 700,000
  • 600,000
  • 500,000
  • 400,000
  • 300,000
  • 200,000
  • 100,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Estonia Latvia Lithuania

Cumulative net migration in the Baltic countries, 2000–2017

Source: Eurostat databases, [demo_gind]

slide-5
SLIDE 5

Migration

  • Emigrants: the

young (and the educated)

  • 1,500
  • 1,000
  • 500

500 1,000 Less than 1 year 2 years 4 years 6 years 8 years 10 years 12 years 14 years 16 years 18 years 20 years 22 years 24 years 26 years 28 years 30 years 32 years 34 years 36 years 38 years 40 years 42 years 44 years 46 years 48 years 50 years 52 years 54 years 56 years 58 years 60 years 62 years 64 years

Estonia Latvia Lithuania

Net migration in Baltic countries by age, 2017

Source: Eurostat databases [proj_15nanmig]

slide-6
SLIDE 6

Migration

  • Growing regional

disparities

Source: Eurostat, regional statistics [demo_gind3, demo_gind], NUTS3 regions

Crude rate of total population change by regions in Europe, 2015 (per 1,000 inhabitants)

slide-7
SLIDE 7

So what?

slide-8
SLIDE 8

Threat to competitiveness

  • Labour shortages à raising wages à wages grow faster than

productivity à exports less competitive

  • How big is the shortage?
  • In the coming years Latvia to lose 18,000 to 20,000 working age

people yearly (2%) – partly due to migration and partly to retirement (-240k in period 2017-2030)

  • 2017 Foreign Investors Sentiment Index: demography and access to

labour are two of the most problematic areas. Investment attractiveness has decreased “because of unavailability of labour” (Sauka, 2018)

slide-9
SLIDE 9

Slower economic growth

  • IMF, 2016: “Migration shaved 0.6 to 0.9 percentage points off annual

growth rates” in several CE and SEE countries, including Latvia; i.e., 9- 14% lower GDP after 15 years

  • IMF: without emigration, by 2030 the GDP per capita in Latvia could

be 3-4% higher than otherwise. In addition, the natural population shift into retirement age will slow down growth even further

slide-10
SLIDE 10

Fiscal outcomes: pensions, social care, health and education

  • Public finances under pressure via:
  • Increased fiscal spending and
  • Slower economic growth
  • A retiring population increases spending on pensions and health care.
  • Reduced economic activity suppress tax revenues, governments

become relatively more sizeable and costly

  • Latvia will not feel significant financial stress till 2030
slide-11
SLIDE 11

Changing consumption patterns

  • Fewer people à smaller market
  • Pension savings are insufficient à seniors are cutting down their

consumption in comparison to pre-pension spending (in US retirement spending drops by 37%)

  • The consumer basket for seniors differs from that of the younger

population

  • Real estate
  • New business opportunities to replace the redundant goods and

services consumed by the younger population

slide-12
SLIDE 12

Structural changes in education and health

  • Education
  • Conventionally targeted at the young,
  • To be replaced by continued/adult education
  • Healthcare
  • illnesses and causes of death changing, reasons attributable to ageing
  • HLE stagnating
  • Shortage of medical personnel
slide-13
SLIDE 13

Solutions? Options?

What is the objective and goal? Areas of policy responses:

Affecting fertility Affecting migration flows Labour market policies Mitigating effects of emigration

slide-14
SLIDE 14

Affecting natural population change

  • Pronatalist policies that aim at affecting childbearing behaviour and

boosting fertility rates:

  • direct financial transfers or reduced opportunity costs of childbearing
  • But:

100 200 300 400 500 600 700 800 900 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Family support for third child, EUR, 2015 TFR, 2015 00 10 20 30 40 50 60 70 80 90 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 Total paid leave available to mother, fulll time equivalent, weeks, 2015 TFR, 2015

Correlation between TFR and family support for third child: 0.21 Correlation between TFR and mother leave entitlements: -0.32

  • And timing!
slide-15
SLIDE 15

Affecting migration

  • Aim at affecting physical population change or migration
  • Remigration and engagement with diaspora
  • Role of ‘institutions’
  • Immigration of other countries’ nationals
slide-16
SLIDE 16

Remigration

  • Remigration plan?
  • 40% remigrants leave again

within next 12 months

  • New initiatives like

latvijastrada.lv

Source: Eurostat databases [migr_imm1ctz], [migr_emi1ctz] and [demo_gind]

Return migrants as % of emigrants (calendar year) 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Estonia 15 11 15 45 45 42 35 36 26 39 59 90 Latvia 31 47 25 36 30 Lithuania 10 9 19 22 29 14 5 27 45 53 59 50

slide-17
SLIDE 17

Institutional environment and migration

  • Highly-skilled

emigrants leave countries where institutions and governments are weak and move towards countries where they are stronger (IMF, 2016)

  • The Global

Competitiveness Report 2017-18

Source: GCR 2017-18 (Swab, 2017)

slide-18
SLIDE 18

Hiring from other countries

  • Unavoidable
  • Timing important

Source: The Economist, 12 July 2017, based on Eurostat [proj_15npms]

slide-19
SLIDE 19

Affecting labour market

  • Labour force participation
  • Productivity and efficiency
  • Technologies
  • Education
  • Retirement age
  • Health
slide-20
SLIDE 20

Labour force participation

Total Females 15–24 15–64 55–64 15–24 15–64 55–64 EU28 33.8 66.6 55.3 32.0 61.4 48.9 Estonia 37.5 72.1 65.2 36.1 68.6 66.5 Latvia 32.8 68.7 61.4 31.6 67.6 61.4 Lithuania 30.2 69.4 64.6 27.8 68.8 62.8 Sweden 44.5 76.2 75.5 45.9 74.8 73.5

Source: Eurostat data, [lfsi_emp_a]

Total employment as percentage of population by age, 2016

  • Gaps in participation

for youth, elderly and females

  • Access to affordable

kindergartens might encourage quicker re-entry into the labour market

slide-21
SLIDE 21

Productivity, efficiency, and robots

  • Productivity =

number one policy action area

  • Efficiency
  • Robots cannot

replace everyone

100 65.6 20 40 60 80 100 120 140 160 180 200 Ireland Luxembourg Belgium Norway Switzerland Austria France Sweden Denmark Netherlands Finland Italy Germany Spain United Kingdom EU (28 countries) Malta Cyprus Slovakia Czech Republic Greece Slovenia Portugal Poland Lithuania Estonia Croatia Hungary Latvia Romania Bulgaria

Nominal labour productivity per person employed (Index, EU=100)

Source: Eurostat data, [lfsi_emp_a]

slide-22
SLIDE 22

Education

  • Represents quality
  • f human capital
  • Low participation

in adult education and training à deteriorating skills

Participation of adults (25-64) in education and training, % (2016)

Source: Eurostat data, [trng_lfs_02] 29.6 27.7 26.4 18.8 18.8 16.8 15.7 14.9 14.4 11.6 10.8 9.6 9.4 8.8 8.5 8.3 7.5 7.3 7.0 6.9 6.4 6.3 6.0 4.0 3.7 3.0 2.9 2.2 1.2 Zviedrija Dānija Somija Francija Nīderlande Luksemburga Igaunija Austrija Lielbritānija Slovēnija ES28 Portugāle Spānija Čehijas Republika Vācija Itālija Malta Latvija Beļģija Kipra Īrija Ungārija Lietuva Grieķija Polija Horvātija Slovākija Bulgārija Rumānija

slide-23
SLIDE 23

Retirement and health

  • Working longer
  • Official vs. efficient retirement age
  • Wish vs. need to work longer
  • ‘Second demographic dividend’?
  • Life expectancy vs. healthy life expectancy
slide-24
SLIDE 24

Mitigating effects from emigration

  • Remittances for investment, not consumption
  • EU-wide structural and cohesion funds to compensate for emigration
slide-25
SLIDE 25

To conclude

“Demographic policy” is not limited to family benefits, but includes wide spectrum of instruments from health improvements to education and fight with corruption