By Darius Munro
Alarmingly, Portugal’s fertility rate is 1.35 children per woman and has been below the replacement level for 30 years. In order for a country to sustain its population levels, there must be a fertility rate of 2.1, and the consequences of a low birth rate can be dire according to some economists, as government services, which are funded by the younger, working population, are faced with a shrinking tax base.
It could be stated that Portugal’s predicament is a microcosm for a much larger problem affecting Europe as a whole, since there are no European countries with fertility rates above the replacement threshold.
However, Europe is also a microcosm of a worldwide problem, as countries such as Iran, South Korea and Brazil are all below the replacement rate, and the effects now being felt by European countries should serve as a warning.
The latest warning has come from Portugal as many European news outlets have reported on the recent 14% drop in births experienced since the crisis, which has only accelerated this long-standing problem.
The economic consequences of such a drop are aggravated by the increasing life expectancy in Portugal, as the retired population is set to become a quarter of all of its citizens by 2030.
Political economist José Tavares of the Nova School of Business and Economics in Lisbon describes the lowering tax base as “one of the biggest problems we face as a nation” and states that it could be a “disaster”.
Joel Kotkin believes that the reason this issue weighs more heavily on southern Europe is that their economies are simply less productive. He points to how Germany curbed declining domestic demand by building a “highly productive export-orientated” economy, which would fund their welfare state.
Other Mediterranean countries, on the other hand, based their growth on real estate and tourism, making the countries highly dependent on foreign investment.The result is a spiral of economic decline, as there is not the population to sustain government expenditure and there are not the employment opportunities even if there were such a population.
Anthony Faiola of the Washington Post points out another, less quantifiable result of the demographic winter, which is that the lack of young minds in the economy will result in decrease in dynamism and innovation. This operates as a further catalyst to the lack of employment opportunities as less innovation means less new businesses.
Ana Gonçalves of the Association for Large Portuguese Families criticised what she called an “absence of policies to deal with this reality”.
Nonetheless, could Portugal boost its fertility rate if it wanted to? Many countries in Northern Europe have tried to offset such problems by encouraging immigration; however, Maria Mendes, president of the Portuguese Demographic Association, states that even if immigration were to increase again, “it wouldn’t be enough to sustain the population”.
Moreover, demographic analyst Jonathan V. Last calls raising fertility “a very heavy lift” and describes the results of pro-natalist policies as “mixed at best” as for every success story there are plenty of failures.
Russia and Turkey are examples of such failures, as Putin began policies such as instituting “love benches” and issuing mothers http://www.0,000 for their second child. Economists have tried to quantify the impact of such policies as Jan M. Hoem of the Max Planck Institute for Demographic Research in Germany shows that for every 25% increase in pro-natalist spending, there is a 0.6% short term fertility increase. This is far below what is necessary to turn the demographic tide.
Darius Munro is a former student of the International School of the Algarve, currently an undergraduate pursuing an LLB at the University of Aberdeen, UK. His interests include Business, Marketing, Economics, Music and Sports.
