Fewer Children is not good for business

Fewer Children is not good for business.

Last year I was in the Professional Accounting School (PAS) for my professional membership for NZICA

The case study for PAS 2013 was based on Summerset Retirement villages.

Their business model depends on there being at least as many new retirees, as those that die. That is dependent on there being sufficient children being born to replace those that die.

I know from statistics around the world that currently areas of Europe, Asia, and North America have fertility rates that have dropped below replacement. I went to the NZ statistics website to see what the situation is here.  Below are quotes from NZ government statistics website.

If nothing changes, what is basically going to happen is that when those born in the 1960’s start to dominate the death statistics NZ’s population will be in decline. Before then NZ will have already been closing schools because of the declining school age population.

Immigration is not a long term solution as the counties most immigrants come from: the UK is in the same boat as us, and China, with their decade’s long one child policy have a worse problem.

Looking at the worldwide statistics, almost every country that still has a fertility rate above 2.1, it has declined. ( The world Fact book ) there are in fact two countries that have a fertility rate below 1: Macau and Singapore, that means that each generation is half the size of the one before (plus immigration)

 I collected below from NZ stats last year.

Reading this article prompted me to post this to my blog today.

More governments are worried about fertility rates Shannon Roberts | Demography is Destiny | 14 January 2014 The developed world is not reproducing at the rate necessary to ensure the replacement of generations. Read more...

Quotes from NZ government Statistics department:

For most of the 20th century, the number of children has increased. However, in the next 50 years the number of children is projected to decrease by more than 100,000, reflecting the combined impact of lower fertility rates and fewer women in the childbearing ages.

http://www.stats.govt.nz/browse_for_stats/people_and_communities/Children/census-snapshot-children.aspx

New Zealand's total fertility rate has been relatively stable over the last three decades, averaging 2.02 births per woman. During this period, the total fertility rate varied from 1.90 births per woman (in 2003) to 2.18 (in 1991 and 2009). In contrast, fertility rates increased dramatically from the mid-1940s, peaking at 4.31 births per woman in 1961. New Zealand then experienced decreasing fertility over the following two decades.

http://www.stats.govt.nz/browse_for_stats/population/births/BirthsAndDeaths_HOTPYeMar12/Commentary.aspx

(As the average 2.02 births per woman for the last three decades is below the replacement level of 2.1, our population is going to decrease. It has only being going up because of net immigration and longer life spans. )

In the last century, New Zealand went through a ‘demographic transition’ from high fertility and high mortality to low fertility and low mortality. This means that people are having fewer babies and living longer. Since 1977, New Zealand’s total fertility rate has been in the range 1.9–2.2 births per woman. A rate below 2.1 signifies ‘sub-replacement fertility’, meaning that the population will not replace itself in the long run, unless offset by migration.

Although fertility in New Zealand has generally been below replacement level since the 1970s, the population still has considerable built-in momentum for growth. The number of babies born today is partly predetermined by the number of females born 20–40 years earlier, while death numbers are largely predetermined by the number of births that occurred 70–90 years earlier. Thus, despite sub-replacement fertility, natural increase added more than 30,000 people to New Zealand's population in most years since 1990.

This suggests that confusion has arisen between the current fertility rates and natural increase of population, and the long-term effects of sustained sub-replacement fertility. Natural increase in New Zealand will decline steadily over the next few decades, as the population gradually ages, driving an increase in deaths. If sub-replacement fertility is sustained, deaths will increasingly exceed births in many areas of New Zealand.

In countries such as Germany, Hungary, Italy, Austria, Greece, Poland, and Russia, deaths already outnumber births. This reflects the interrelated trends of sustained sub-replacement fertility rates and ageing populations.

http://www.stats.govt.nz/browse_for_stats/population/mythbusters/population-growing-migration.aspx

An interesting article from the Economist on declining fertility http://www.economist.com/node/14743589

 Unfortunately it has a few problems: 1. The assumption that fertility will stabilise world wide – there is no reason to believe it will. 2. For countries with below replacement fertility, it makes no mention of the effect on the economy.  

Below from  http://en.wikipedia.org/wiki/List_of_sovereign_states_and_dependent_territories_by_fertility_rate

A world map showing countries by fertility rate, according to the CIA World Factbook's 2013 data.

7–8 Children   6–7 Children   5–6 Children   4–5 Children

3–4 Children   2–3 Children   1–2 Children   0–1 Children