As many European countries are gearing up to reform their pension systems it is really all about the demographics. As life expectancy keeps on rising it is only logical to expect the retirment age to expand with some kind of proportionality. In fact, the real conundrum which is creating much grey hair on the heads of demographers and scientists is really how far life expectancy will and can be pushed? Interesting as this topic is this post will deal with the flip side of the coin which is fertillity and why it is low among many European countries and higher in others?
Lets begin with some empirical evidence though to frame the theme. A research paper from February this year has all the relevant data which points to the low fertility in Europe and the rest of the world. Hans-Peter Kohler, Francesco, C. Billari José, and José Antonio Ortega entitled "Low Fertility in Europe: Causes, Implications and Policy Options"; (from School of Arts and Science - Pennsylvania Univerisity).
The global population is at a turning point. At the end of 2004, the majority of the world’s population is believed to live in countries or regions below-replacement fertility, and the earlier distinct fertility regimes, ‘developed’ and ‘developing’, are increasingly disappearing in global comparisons of fertility levels (Wilson 2001, 2004). Several aspects of this convergence towards low fertility are particularly striking. First, the spread of below-replacement fertility to formerly high fertility countries has occurred at a remarkably rapid
pace and implied a global convergence of fertility indicators that has been quicker than the convergence of many other socioeconomic characteristics. Second, earlier notions that fertility levels may naturally stabilize close to replacement level—that is fertility levels with slightly more than two children per women—have been shattered.
(...)
It is clear that current social and economic institutions are not sustainable in light of these trends, and individual’s life-courses already have been—and will continue to be—transformed in response to reductions in fertility and increases in longevity. Adjusting to the demographic reality of the 21st century will therefore constitute a major challenge for policy makers and companies on the one, and for individuals and families on the other side."
For a more boiled down version see the article from the Economist's European columnist Charlemagne - The fertility bust. (walled for non-subcribers!)
The interesting thing for me in this case is not so much the political and economic implication of sustained low fertility although this is clearly very important and interesting, but why we are seing this low fertility? The argument which is mostly invoked in mainstream discourses is that women's entrance into the workforce has wielded a pressure by the family as an institution pushing birth rates down; i.e. the labour force participation argument. The paper mentioned above obviously engages in a thorough discussion of the reasons for the sustainable low-replacement fertility but for example in a European context differences in fertility still has experts (in this case the the Paris-based National Institute of Demographic Studies (INED)) wondering.
Friday, April 28, 2006
Tuesday, April 25, 2006
And in Italy ...
Italy's ANSA news agency reports on the country's continuing demographic changes.
Concerns over Italy's ageing population were fuelled on Monday by the release of a report showing that the country's grey army has swelled to some 11.5 million, or almost 20% of the population.
The report by national statistics bureau Istat said that a record 19.5% of Italians are now 65 or over, making Italy one of the world's 'greyest' societies.
It warned that unless the trend changed, the figure was likely to hit 34% by 2050.
Under-18s account for just 17.1% of the population compared to 18.4% in 1995, Istat said, projecting a fall to 15.4% by 2050 if current trends continue.
It stressed that Italy, which has a population of 58 million, could soon find itself with one in every four people over 65 and only one in every eight under 18.
On a brighter note, Istat highlighted a surge in the birth rate after years of decline.
It said the average number of births per female was now 1.34, well below the replacement level of 2.2 for a stable population but nonetheless the highest rate in Italy in 15 years.
In 1995, the country's fertility rate sank to a record low of 1.19. At one time, Italy had the highest birth rate in Western Europe and in 1970, Italian women had an average 2.5 children each. Istat noted that births were picking up in northern and central Italy in particular. In the north, the fertility rate rose from 1.05 in 1995 to 1.34 in 2005 and in central regions from 1.07 to 1.29.
In the south of Italy, the fertility rate fell from 1.41 to 1.35 over the same period and the regions that currently show the lowest rates of all are Sardinia (1.07), and Molise and Basilicata (1.14).
The report also revealed that the region with the highest life expectancy rate was Marche in the central Adriatic area, where women can expect to live until 84.7 and men until 78.8.
Campania around Naples in the south was the region with the lowest life expectancy rate, put at 81.8 for women and 76.1 for men.
The convergence of the three regions of Italy--North, Center, and South--towards similar fertility rates is perhaps the most noteworthy new fact reported here. The Italian South once was notable for its relatively higher fertility rates, not only in an Italian context but in a world context. No longer.
Concerns over Italy's ageing population were fuelled on Monday by the release of a report showing that the country's grey army has swelled to some 11.5 million, or almost 20% of the population.
The report by national statistics bureau Istat said that a record 19.5% of Italians are now 65 or over, making Italy one of the world's 'greyest' societies.
It warned that unless the trend changed, the figure was likely to hit 34% by 2050.
Under-18s account for just 17.1% of the population compared to 18.4% in 1995, Istat said, projecting a fall to 15.4% by 2050 if current trends continue.
It stressed that Italy, which has a population of 58 million, could soon find itself with one in every four people over 65 and only one in every eight under 18.
On a brighter note, Istat highlighted a surge in the birth rate after years of decline.
It said the average number of births per female was now 1.34, well below the replacement level of 2.2 for a stable population but nonetheless the highest rate in Italy in 15 years.
In 1995, the country's fertility rate sank to a record low of 1.19. At one time, Italy had the highest birth rate in Western Europe and in 1970, Italian women had an average 2.5 children each. Istat noted that births were picking up in northern and central Italy in particular. In the north, the fertility rate rose from 1.05 in 1995 to 1.34 in 2005 and in central regions from 1.07 to 1.29.
In the south of Italy, the fertility rate fell from 1.41 to 1.35 over the same period and the regions that currently show the lowest rates of all are Sardinia (1.07), and Molise and Basilicata (1.14).
The report also revealed that the region with the highest life expectancy rate was Marche in the central Adriatic area, where women can expect to live until 84.7 and men until 78.8.
Campania around Naples in the south was the region with the lowest life expectancy rate, put at 81.8 for women and 76.1 for men.
The convergence of the three regions of Italy--North, Center, and South--towards similar fertility rates is perhaps the most noteworthy new fact reported here. The Italian South once was notable for its relatively higher fertility rates, not only in an Italian context but in a world context. No longer.
Ericsson Offers Redundancy To Workers In The 35 to 50 Age Group
by Edward Hugh
Well, I think this certainly is news. And it fits in with the findings of ongoing research from Italian economist Francesco Daveri. See especially working paper 309: "Age, technology and labour costs", which examines the case of Finland and especially Nokia (available on this page, abstract pasted at the bottom of this post).
Now here's the abstract of the Francesco Daveri and Mika Maliranta, Age, Technology and Labour Costs research:
Is the process of workforce aging a burden or a blessing for the firm? Our paper seeks to answer this question by providing evidence on the age-productivity and age-earnings profiles for a sample of plants in three manufacturing industries (“forest”, “industrial machinery” and “electronics”) in Finland. Our main result is that exposure to rapid technological and managerial changes does make a difference for plant productivity, less so for wages. In electronics, the Finnish industry undergoing a major technological and managerial shock in the 1990s, the response of productivity to age-related variables is first sizably positive and then becomes sizably negative as one looks at plants with higher average seniority and experience. This declining part of the curve is not there either for the forest industry or for industrial machinery. It is not there either for wages in electronics. These conclusions survive when a host of other plausible productivity determinants (notably, education and plant vintage) are included in the analysis. We conclude that workforce aging may be a burden for firms in high-tech industries and less so in
other industries.
There is one logical and inescapable conclusion from all this, if "workforce aging may be a burden for firms in high-tech industries and less so in other industries" then this implies a move down, not up, the value chain for those societies with rapid ageing.
Well, I think this certainly is news. And it fits in with the findings of ongoing research from Italian economist Francesco Daveri. See especially working paper 309: "Age, technology and labour costs", which examines the case of Finland and especially Nokia (available on this page, abstract pasted at the bottom of this post).
Ericsson, the telecoms equipment maker, on Monday offered a voluntary redundancy package to up to 1,000 of its Sweden-based employees between the ages of 35 and 50. The unprecedented move is designed to make way for younger workers.
The world's biggest supplier of mobile phone networks, which more than halved its headcount during a dramatic restructuring programme in 2000-02, said the measure was necessary to ensure the competitiveness of the company in the next decade.
"The purpose of this programme is to correct an age structure that is unbalanced," said Marita Hellberg, global head of human resources, told the Financial Times. "We would like to make sure we employ more young people in order not to miss a generation in 10 years' time," Ms Hellberg said.
According to Ms Hellberg, Ericsson's age structure had become too heavily biased to the 35-50 age group in the aftermath of its restructuring programme.
Employees aged between 35 and 50 with a minimum of six years' service are eligible for the voluntary redundancy package that comprises 12-18 months' salary, a SKr50,000 ($6,600) pay-out and the chance to participate in a career change programme.
Now here's the abstract of the Francesco Daveri and Mika Maliranta, Age, Technology and Labour Costs research:
Is the process of workforce aging a burden or a blessing for the firm? Our paper seeks to answer this question by providing evidence on the age-productivity and age-earnings profiles for a sample of plants in three manufacturing industries (“forest”, “industrial machinery” and “electronics”) in Finland. Our main result is that exposure to rapid technological and managerial changes does make a difference for plant productivity, less so for wages. In electronics, the Finnish industry undergoing a major technological and managerial shock in the 1990s, the response of productivity to age-related variables is first sizably positive and then becomes sizably negative as one looks at plants with higher average seniority and experience. This declining part of the curve is not there either for the forest industry or for industrial machinery. It is not there either for wages in electronics. These conclusions survive when a host of other plausible productivity determinants (notably, education and plant vintage) are included in the analysis. We conclude that workforce aging may be a burden for firms in high-tech industries and less so in
other industries.
There is one logical and inescapable conclusion from all this, if "workforce aging may be a burden for firms in high-tech industries and less so in other industries" then this implies a move down, not up, the value chain for those societies with rapid ageing.
Subscribe to:
Posts (Atom)
