Wednesday, September 21, 2011

East Asia's Baby Shortage

Asia, or at least East Asia, is fretting about its coming aging crisis. The Asian Development Bank has just published a detailed study of the numbers and their likely impact on rates of economic growth and savings.

For instance, for China from 1980 to 2010 a rising percentage of people in the workforce added 1.3 percent a year to gross domestic product but over the next 20 years there will be a 0.31 percent per year drag. For South Korea the drag will be 0.70 percent and by 2030 36 percent of the population will be aged 65 or more.

But while thought is going into coping with rapid ageing, for example by raising retirement ages, very little attention has been given to trying to reverse one of the two causes – low fertility. Exhortation by governments to have more babies has scant impact. The part of the world that is proudest of family values and generational continuity is facing twin challenges: extremely low fertility rates and an aversion to marriage. What can be done?

Data on marriage and fertility rates in the West compared with developed East Asia throw up intriguing questions about a response.

A seldom-noticed statistic is that all developed countries in the West with fertility rates close to the replacement level of 2.1 children per woman also have at least 40 percent of those births outside wedlock. The highest rates, at over 50 percent, are found in Scandinavia and France, but even the US reached 40.6 percent of births outside wedlock in 2008, according to the US National Vital Statistics report.

In Asian countries with the lowest fertility rates — South Korea, Taiwan, Hong Kong, Singapore and Japan — births outside wedlock are rare. Fertility is also already well below replacement in Thailand and China and extremely low in major cities such as Shanghai, so there is every reason to believe that China as a whole will follow regional patterns even if it sheds the One Child policy. In Western Europe too-low fertility rates, as in Greece and Italy, mostly coincide with low rates, by European standards, of extra-marital births. So could East Asia benefit from being more relaxed about extra-marital births?

In Asia, births out of wedlock are often regarded as a sign of crumbling values. As the phenomenon is still quite recent even in the West, the jury is still out on its long-term consequences. In both the US and UK data show there is a clear link between unmarried and teenage mothers and child poverty. But some argue this is more a function of social problems rather than the lack of wedlock. In countries where teenage motherhood is rare, out-of-wedlock births are at least as common in middle as low-income groups. Job and financial security enable women to choose to have children without being married.

Asian strictures about the decline of marriage in the West would make more impact if marriage was thriving in the East. In family values-focused East Asia one would expect that marriage and procreation would be the almost universal norm. But instead of just marrying later than their parents many are not marrying at all, or so late that they may have at most one child. In developed East Asia, between 15 percent and 20 percent of women have never married or had children by the age of 39.

Marriage remains popular in China but the impending shortage of women due to the preference for male children means that many men will never be able to marry. The shortage may also make women more demanding of benefits from marriage, particularly as employment opportunities are plentiful. Within marriage, fertility is already low, especially in urban China.

European experience suggests that women will want children when economic conditions support child-rearing and social conditions support women’s right to decide when and by whom they have a child. Two things seem to hold East Asians back from having children. First, the opportunity cost of child-rearing is immense due to lack of job protection for nursing mothers, high housing costs, and absence of state help -- all welfare that is the norm in northern Europe. Even where the Asian middle classes, as in Singapore and Hong Kong, can afford foreign maids, the costs of children are often seen as too high for couples with big mortgages and a liking for the latest consumer goods.

Second, if rearing children is to be such a struggle, educated Asian women naturally ask: why bother to get married? For successful career women, finding a suitable man can be a challenge in societies where men often prefer their wives to be less educated than themselves. In Taiwan, South Korea and Hong Kong many local women go unmarried while men marry girls from rural Southeast Asia.

In short, East Asia may either have to follow the European path and let women have children as and when they want, supporting single but employed mothers with welfare and without shame. Or it will have to change male attitudes and devise welfare systems to make having children within marriage less costly. Or both.

Welfare has a bad name in indebted Europe and the US, but welfare that supports a replacement generation is investment, not consumption.

Asia Sentinel By Philip Bowring

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