THE LUCKY CLUB
Why Ireland has demographics on its side
‘Let’s try to avoid being infected with complacency, fashionable cynicism or ideological stupidity...’
Changing demographics will throw up big surprises around the world during the rest of this century, writes Conor Skehan
WHAT do Ireland, the UK, France, Scandinavia and the US have in common, that China, Germany, Spain and Japan do not have? ‘Population replacement’ is the answer.
There are two types of countries: those where there are enough people having more than two babies to replace the old, so that the population can continue to grow; and those that do not.
This is measured by the ‘Fertility Rate’ before migration is accounted for. A figure of 2.1 births per female is a replacement rate. The average fertility rate in the EU is 1.58; France has the highest at 1.87 followed by Ireland at 1.75 and the UK at 1.67, while the US is 1.8. At the other end of the scale lie big countries with very low rates, such as Spain at 1.26 and Italy with 1.28.
This good luck is rarely noticed, appreciated or commented upon by the fortunately fertile countries, but it’s a national obsession in countries with low population growth — such as Spain, Japan, Poland and Hungary
Hungary, which at 1.5 births per female has one of the EU’s lower fertility rates, has just announced new tax and loan benefits for families as part of its government’s efforts to increase the birth rate. It includes measures such as income tax exemption for any woman who has four children or more.
A Japanese municipality claims that its fertility rate increased from 1.4 to about 1.9 in 2017 by offering new mothers a “gift” of 300,000 yen (€2,500), as well as subsidies for child care, housing, health and education.
Some countries have strongly ‘pro-natal’ policies that result in significant expenditure on families and children — with mixed results. This expenditure consists of a blend of cash, tax breaks and services.
France spends the most, 3.7pc of GDP, and has Europe’s highest fertility rate. Finland spends nearly as much, 3.2pc, yet it has one of the lowest.
At 2.3pc, Ireland spends less than the EU average of 2.7pc — yet we have one of the highest rates.
Population contraction brings many challenges. These range from practical concerns about less labour availability and shrinking consumer markets to deeper and more emotional or political issues concerned with changes or ‘dilution’ of cultural dominance. A clear instance of this type of demographic anxiety simmers in Northern Ireland, though in reality the 50/50 balance between the two traditions is likely to remain for a long time into the future — albeit with different age profiles.
Changing demographics are going to throw up big surprises around the world during the rest of this century. India’s population is expected to surpass China’s to become the biggest in the world as early as 2025, while it is estimated that Nigeria will be bigger than the US and become the third most populous country in the world shortly before 2050.
By the year 2100, the 10 most populous countries in the world will include the Congo, Ethiopia, Tanzania and Egypt. These growths will contrast strongly with population losses in other very large countries — such as Brazil (-15pc) and Russia (-14pc) that, between them, will have 52 million fewer people by 2100.
By that time China will have slipped back to be the second most populous country, by having 374 million fewer people than it does now — a loss of more people than live in the entire US today.
China’s huge population loss will occur during a period when their old age ratio will more than double, because of its one-child policy. This will result in hundreds of millions of couples trying to support four parents in addition to their own children.
Ageing countries have different economic patterns and priorities. Patterns of savings, investments and spending change. The type, location and spending on housing also change. Public expenditure priorities change a lot in ageing countries, with less spent on education and infrastructure and more on health and social services.
These figures point towards a growing underlying divergence between different countries. The relative youth of a country has many implications that range from employment and taxation through to culture, attitudes and expectations.
Younger places are more likely to be more vital than those with significantly older populations. This, in turn, can have a deep impact on politics — with older populations usually being significantly more risk-averse and culturally conservative.
In Europe, this trend points to a strong likelihood of a growing difference between a younger north-west and an older south-east. The fracture line passes between the largest EU member states, with France on the young side neighboured by an increasingly ageing Spain to the south and Germany to the east.
Brexit throws a real spanner in the works in this regard, because the UK sits in the middle of the grouping of younger nations that will have demographics increasingly resembling the US, while the rest of Europe will be increasingly like Japan and China.
In future, Ireland will be torn between two sets of divergent policy drivers. We will often find ourselves naturally aligned with a vital, expansionary younger and mostly Anglo American and Scandinavian axis that will often contrast with the EU’s set of more conservative, cautious policies driven by the older Southern and Eastern European states.
Winston Churchill said: “The longer you can look back, the farther you can look forward.” This advice could be usefully followed when trying to map out a future for Ireland in this complex, changing world. We’ve been here before. At many stages during the past 500 years Catholicism has caused Ireland to have values that were more closely aligned with more distant France and Spain than to our nearest neighbour.
However, the similarity of these circumstances needs to be viewed in light of a soberingly significant difference from history: population size. Many are surprised to learn that, for much of the past 500 years, the population of England was usually only about twice that of Ireland — so in 1841 Ireland’s population was 8.2 million while that of England was only 13.7 million — in sharp contrast to today’s difference where our neighbour’s population is over 10 times larger than us.
These factors add to a picture of Ireland moving on a distinctive and often different path from each of our neighbours in a variety of ways.
For starters, we’ll be the only country in the EU that will combine being English-speaking, common-law and young, as well as being one of the best educated and wealthiest.
While potentially exotic, these differences have the potential to create significant friction, as larger and more powerful member states seek greater uniformity.
These positive demographics and a complex web of interlocking relationships will provide Ireland with many opportunities, as well as the resilience of having common cause with such a diverse range of players.
Navigation through this complexity will be difficult, though the experience of our whole-hearted engagement with the EU since 1972, has shown that Ireland’s elected and official representatives have fared well, mostly by the simple expedience of making friends and working hard.
There is no reason to believe that this will change any time soon, unless we become infected with smug complacency, fashionable cynicism or ideological stupidity.
We’re already in the Lucky Club, why change?