Time to address declining birth rates in the Middle East
Strong economies rely on the right combination of population demographics, skill sets and resources to achieve remarkable performance. However, in recent years, many countries have recorded alarming, record-low birth rates, with dire and multifaceted consequences. To illustrate the gravity of this issue, countries need a replacement rate of 2.1 children per woman to maintain a stable population size. Nonetheless, in 2021, the fertility rate in many countries was below this figure. For instance, Australia recorded 1.7 births per woman, while Japan had 1.3, the US 1.6 and South Korea broke the world record for the lowest fertility rate at just 0.8 births per woman. The Middle East and North Africa region has also witnessed plummeting birth rates, from 6.2 in 1980 to 2.7 in 2020, according to the World Bank.
The shifting demographic composition is spurring a number of pressing and looming challenges for governments. The most obvious effect is the stark decline in population size, which impacts the size of the working-age population in the imminent future and leads to labor shortages. That, in turn, reduces economic growth, competitiveness and resilience — all of which necessitate governments favoring flexible immigration policies to lure foreign talent. Population decline also causes a noticeable reduction in consumption, an important factor when considering domestic growth and foreign direct investment opportunities.
The confluence of shrinking working-age populations and rising life expectancies also has a negative impact on public finances due to dwindling tax revenues. At the same time, governments are facing rising burdens in terms of financing expensive social welfare schemes, healthcare systems, aged care services and pension systems. To make up for this, governments need to transition and invest in smart automation and technologies to offset the lost productivity and boost economic growth at an acceptable rate, which would require costly investments.
Governments need to take specific, highly targeted decisions to boost their nation’s fertility rates in order to redress this alarming pattern. This starts with identifying the root causes of people’s decisions to defer or forgo having children. Social research in many countries trail the causes to a number of important reasons. For example, high-intensity work demands and work-related stress leaves little time for parents to devote time and care to their spouses and children.
Moreover, stagnating wages and recent precarious economic situations, coupled with rising living costs and soaring house prices, have pressured families into having fewer children in order to make ends meet. History is testament to this trend, with statistics indicating that public health crises and economic shocks have played a huge role in plunging birth rates, as witnessed during the Spanish flu pandemic of 1918-1920, the Great Depression, the two world wars and the recent COVID-19 pandemic. Furthermore, the level of educational attainment and skill sets among breadwinners both have a huge role to play in deferring the decision to have children.
Given these day-to-day challenges, it is imperative that governments enact a suite of policies, programs and legislation to support working populations. A number of solutions are at hand to offset the rising costs of caring for children, such as offering generous childcare allowances, subsidies for children’s education and healthcare services, affordable housing, housing grants, and tax breaks for parents.
Vitally, governments should be responsible for providing quality and affordable preschool childcare facilities and after-school care services for working parents. The Canadian government, for instance, is working diligently to launch a country-wide early learning and childcare system, thanks to an impressive investment of more than 27 billion Canadian dollars ($20 billion) over a five-year period. Almost half of Canada’s provinces and territories have reduced childcare fees to an average cost of C$10 per day, while creating 40,000 more affordable childcare spaces across the country, with plans underway to create a quarter of a million new spaces by March 2026.
To support working parents, governments should devise policy solutions that pave the way for reconciling job duties with family commitments. This includes giving parents options for part-time work, flexible working arrangements and remote work. It is also pivotal that flexible and generous leaves are available for working parents, including for maternity, paternity and childcare.