Future Threats Monitor - 13 December 2011

The world’s attention was drawn to the fact that the global population ticked over 7 billion in 2011, but the rise in population is not an even trend. The increase is being driven by dramatic increases in developing countries such as Democratic Republic of Congo (DRC); developed countries in Western Europe have gently falling, approximately static or slowly increasing populations (discounting immigration). Other countries, such as Ukraine, are facing a different problem entirely; the population there is dropping fast.

In our May issue of Future Threats Monitor we discussed the population decline in Russia, but data from the UN’s World Population Prospects 2010 Revision show that Ukraine’s population is declining even faster than Russia’s. In the two decades to 2010 the Russian population dropped by five million, but the Ukrainian population decreased by seven million from 52 million people in 1990 to 45 million in 2010. This is particularly significant given the relative size of the two populations. Russia’s decline since 1990 represents a drop of 3.4%, but Ukraine’s decrease represents a massive decline of 13.5%.

Statistics from the Population Reference Bureau (PRB) show where the cracks are appearing:

Source: PRB 2011 World Population Data Sheet

Clearly, it is not bad news across the board. Ukraine has a low infant mortality rate at 9.1 (only relatively speaking of course – it is still much higher than in developed countries, where the US has a rate of 6.1, Canada 5.9, the UK 4.1 and Australia 3.9). The average Ukrainian woman gives birth to just 1.4 children, well below the replacement rate, leading to a current population decline of 0.8% per year, much faster than Russia (0.6% per year). In fact Ukraine has the fastest declining population in the world. That is understandable given the context of the low male life expectancy; the life expectancy of 64 is only an average, so while some Ukrainian men live to an old age, many die young, often before they can start a family.

The Ukrainian population is expected to continue to decline over the coming decades. It is predicted to decrease by approximately 28% to 33.4 million by 2050, and to drop below 30 million by the end of the century. But the drop in overall population may not be the biggest problem; rather the ‘shape’ of the population is of greater concern. As can be seen from the statistics above Ukraine’s population is already top heavy; 16% of the population are over 65 but only 14% are under 15. It is a demonstrable pattern that as countries become more developed the life expectancy goes up, but the birth rate is unlikely to increase. The consequence of this is that the number of elderly people increases faster than the number of people entering the workforce who are able to support them.

The inherent danger of a declining population is a smaller workforce, which therefore means lower tax rolls. When the most depleted age group is the young, as is the case here, countries are also deprived of future economic benefits. In the Ukraine, as in Russia, the problem is compounded by a brain-drain, whereby the most educated or skilled citizens emigrate to find better opportunities in the West.

Crisis management

In a World Bank Discussion Paper, Aging and Demographic Change in European Societies: Main Trends and Alternative Policy Options, Rainer Muenz set out three policy strategies than could be implemented to mitigate the effect of an aging population. The first is to increase labour force participation rates. The aim here is to encourage sections of society who are not typically seen as bread-winners, such as women in developing countries, to seek employment. The challenge lies in improving child care facilities, and ensuring that the education system comprises schools that can take care of children all day.

The second strategy is to increase the retirement age. It is inevitable that as life expectancy across the world increases the retirement age must rise to keep pace. But it can be a politically unpopular move, and recent trade union disputes in the UK demonstrate that it can be a difficult policy to implement.

The third strategy is to encourage economic migration. It seems logical that if a population’s fertility rate is below replacement level the shortfall can be compensated for with a proactive immigration policy. However, this can also lead to a skewing of the population shape. In the case of developing countries it can produce a surge in the number of unskilled workers; it can create a situation where a population swells and shrinks with the flow of seasonal or temporary workers. An additional problem for countries like Ukraine is that some developed countries, such as France and the UK, have implemented legislation that offers fast-track immigration to highly skilled applicants. Some experts have argued that this might lead to higher brain-drain with negative implications for developing countries such as the Ukraine, who will see their most skilled workers leaving, and unskilled workers arriving.

Ukrainian analyst Dr. Volodymyr Senchenko has written “There are no accurate statistical data about labour migration in Ukraine, the number of our workers abroad, their incomes and how much money they send to their families. Lots of studies have been carried out in this field over the past several years but they are often contradictory.”

However, Dr. A. Haidutsky of the National Bank of Ukraine has published a complex analysis of both official information and unofficial facts about the issue. According to Haidutsky, there are 4.93 million Ukrainian migrants abroad - not three million or seven million, as some other analysts have suggested. This figure is backed up by a similar piece of analysis performed by the Organization for Economic Cooperation and Development, which gives the number as 4.8 million.

Poland is Europe’s second largest source of labour migrants after Ukraine. One million Poles have benefited from the membership of their country in the European Union, travelling all over the continent to find a better and well-paid job. Ukrainians are coming to Poland to replace them. Also, hundreds of thousands of Ukrainian migrants live and work in Italy (500,000), Greece (350,000) and Portugal (260,000). They say they are treated with kindness and enjoy relatively good working conditions in those countries, particularly in Portugal. So it seems unlikely that the trend of Ukrainians moving abroad to find better conditions is going to change.

SIDEBAR

Replacement Rate

The replacement fertility rate is roughly 2.1 births per woman for most industrialized countries (2.075 in the UK for example), but ranges from 2.5 to 3.3 in developing countries due to higher mortality rates. The total global replacement fertility rate is 2.33 children per woman. Ukraine’s current rate is 1.4.