Normally demographics is boring to newspapers. Changes take too long and the implications are too far away in the future. The media find it difficult to find “news”. At least in the start of 2022 this seems to have changed. The Financial Times has had a flurry of articles in the last four weeks about demographics.
The Office of National Statistics Report
It all started four weeks ago when the Office of National Statistics (ONS) issued a new forecast for the UK population. It represented a significant shift in assumptions. As reported in the financial times:
Forecast Fertility Net Migration Male Life Female Life
Made In Expectancy Expectancy
2014 1.89 185,000 84.1 86.9
2016 1.84 165,000 83.4 86.2
2018 1.78 190,000 82.6 85.5
2020 1.56 205,000 82.2 85.3
The table shows the main assumptions behind each forecast when it was made. The most surprising number is the revised assumption on fertility. In the 2014 forecast they were assuming 1.89 children in the lifetime of each female. They maintain a number close to that until this latest forecast. They then cut it dramatically to 1.56. They seem to have recognized that the current trends will continue. For the first time ever, half of the women born in 1990 were still childless when they reached the age of 30. This is a massive single generation shift. The mothers of those 30 year olds had their first child at the age of 22. Their daughters will have their first child at the age of 31. The European numbers are as stark. In 2000 the average age for a first child was 27.6 years and now it is 30 years. The number of women remaining childless in the UK has been constant since 1952, at 18%. Population decline is coming from a very focused change. People are having children later and because of that have less of them. One in seven couples are having trouble with fertility.
A later article looked at the implications of this new forecast for the UK public finances. The ONS now expects there will be 11.6m children of school age (under 16) by 2030. This is 1.5m less than the forecast made in 2014. It will be only 10.7m by 2080. Previous ONS forecasts had assumed a resurgence in fertility by then. A school age population of 14.7m was predicted. The good news for the Government is that the education costs will be less than expected. The bad news is that they will need to close schools and reduce the number of forms. No one knows how to do that.
The Government budget is also helped because improvements in life expectancy are slowing. Remember this is the expectancy at birth. It assumes no improvement in medical science during the life time. There will be less older people to support. The Financial Times suggests that the Government will only need to raise taxation by £13Bn a year in the next decade to cover the costs of the old and the children . This is only 0.4% of national income. The previous forecast had a number five times higher.
The point at which deaths exceed births has also changed. The ONS had expected that point to be reached in 2043. They have now reduced that by 15 years to 2025-26. This is a massive change since the 2018 forecast. After 2025-26, UK population growth will be entirely dependent on immigration. Don’t forget that immigrants help Government finances. They are usually young and their tax helps pay for care for children and the aged. The ONS still assumes at least 200,000 immigrants per year.
The Policy Issues
The finances may be better but the policy issues still loom. All Governments are wrestling with social care for the elderly. The latest ONS forecasts suggest there will be 3.1m people over the age of 85 by 2045. This is 4.3% of the population. They will need support and specialist care. Schools will have to close or reduce in size. Immigration is needed to maintain the working age population and the tax base. This can be a political "hot topic". Housing is always a political issue. Another recent Financial Times article about Japan and its declining population raises an unusual issue: too many houses.
The City of Kyoto is creating a new tax on empty houses. The empty house problem is known as “akiya”. They are homes that have been abandoned due to the death of their owners. Their heirs refuse to manage the homes and instead abandon them. They may be in the wrong place and not fit the heirs needs. Many children are trying to avoid taking on the land taxes that come with ownership. This in turn creates problems of title for the properties. Until now this has meant that the empty houses become a liability for the local authority. They become derelict, often an eye sore and used as rubbish dumps. Kyoto is the first City to try to solve the problem.
This is a non-trivial problem. Current estimates suggest that there are 8.5m empty homes in Japan. This is 14% of the total housing stock. Nomura the investment bank suggests a worst case scenario of 22m homes by 2038 as populations fall. This would be 31% of the total stock, nearly one in three. This is not concentrated in one specific area. Even in Tokyo it is estimated that one in ten houses are empty, according to the Government Survey of Land and Housing. Residential streets will often be blighted by an occasional derelict home. The housing stock now easily exceeds any likely future demand, so fast in the population declining.
It is bad in the dormitory towns that sprang up around Tokyo in the boom days of the 1960’s and 1970’s. In these areas there are many more empty houses and the population that remains is aging fast. The situation is worst of all in the rural areas. By 2040, some 900 towns will no longer exist. The Government is trying to attack these problems. They are encouraging rural tourism. At least one abandoned village has converted into a hikers refuge.
The knock-on effect of this amount of excess housing stock is still being worked on by the policy makers. The cost of demolition is significant and they are looking at tax incentives. Kyoto is targeting some 19,000 abandoned homes that they believe could renovated and sold or rented.
Can Ageing Stay in the News?
In Portugal an election is imminent. The political parties have started a debate on demographics! Young well educated people are leaving Portugal. Over 2000 nurses have left in the last two years. This represents one third of those that have completed training. The population is declining and ageing. Immigrants tend to be less well educated and attracted for agricultural or menial work. There is plenty of topics for the parties to debate. This looks like the demographic transition is finally getting the attention it deserves. Unfortunately politicians will always be politicians. The Portuguese Demographic Association has called on both sides to stop using "soundbites" and focus on the real issues!