Bernardo M. Villegas
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Demographic Dividend of the Philippines (Part 1)

             As the whole world faces another economic crisis, with oil and other commodities’ prices reaching record highs, the Philippine economy will be one of the least affected in the Indo-Pacific region, thanks to its huge domestic market which in turn can be attributed to its young and growing population which in 2022 has been estimated by the Philippine Statistical Authority (PSA) to be at 112,037,584, and still growing at an annual rate of 1.36%.  The median age is 23.5 meaning that 50% of the population are less than 23.5 years, with the male median age at 23.1 and female a little older at 24.  There are 72 million Filipinos who are over 18 years of age.  The fertility rate is already at replacement at 2.1 babies per fertile women but the population is still expected to grow in the coming fifty years to reach 153 million in 2075 by which time it will start to decline, if at all. As we shall see in this series of article, it will depend on whether or not the present generation of parents will do whatever is necessary to show to the millennials the joys of family life, counteracting the trends of practically all developed countries that encourage contraception and even abortion, leading to very low fertility rates.

            I was struck by a recent report from Reuters about the “population crisis” besetting Thailand that is still far from being a developed country but is already suffering from the ageing crisis common to the First World.  Reminiscent of what happened to Singapore more than twenty years ago and what is already happening to populous China, the Thailand Government is scrambling to encourage its people to have more babies to arrest a slumping birth rate, offering parents childcare and fertility centers, while also tapping social media influencers to showcase the joys of family life.  This demographic crisis started as early as 2013 when births per woman started to decrease so that in less than a decade births declined by nearly a third.  In 2021, the height of the pandemic, there were only 544,000 births, the lowest in at least six decades and below the 563,00 deaths which included the COVID-related fatalities.  This demographic crisis is worrisome for Thailand because, unlike super-rich countries like Singapore and Japan who are also suffering from very low fertility rates, its per capita income of not more than $6,000 is far below the $40,000 or more of the more advanced countries.  Thailand illustrates the case of a still relatively poor country that is ageing prematurely and thus facing very serious challenges to its pension and social security systems.

            Only less than a decade ago, Thai officials, cajoled by the World Bank, U.S. Agency for International Development and other international agencies were showering praises upon  “Mr.Condom” of Thailand, Mechai  Viravaidya for “making Thailand a better place for life and love.”  Mechai was well known for having founded the Population and Community Development Association in 1974 that aggressively promoted population or birth control by encouraging the use of all types of contraceptives, especially the condom.  He used to sprinkle holy water on condoms to suggest that they are blessed or fashioning them into bouquets and even toys.  Children were encouraged to participate in condom relay races or condom blowing competitions, all meant to help eliminate all stigma.  Today the mood is very different in Thailand.  Thai officials have realized that as an emerging market relying still on cheap labor and a growing middle class its low fertility rate is a tremendous burden to its continuous economic progress.  I would not be surprised if today’s generation of Thai officials are cursing Mr. Condom for this population crisis.  As a senior health official told Reuters: “We are trying to slow down the decline in births and reverse the trend by getting families that are ready to have children faster.  There are plans to introduce policies so that newborns get the full support of the state.  Such plans include opening fertility centers, currently limited to Bangkok and other major cities, in 76 provinces and also using social media influencers to back up the message. 

            From the experiences of other countries that have tried social engineering to reverse the contraceptive mentality, such as Singapore in the last century and more recently China that has publicly repudiated its one-child policy, the ongoing efforts in Thailand may be futile.  Once the contraceptive mentality has set in among married couples and compounded by the consumerist or materialistic culture common now in economically advanced countries, reversing a low fertility rate is an impossible task.  When couples start calculating the costs of children in today’s high-cost societies, economic incentives can hardly work, as experienced in Singapore that for many years tried very hard to convince married couples to have larger families without any success.  Just listen to a Thai couple interviewed by Reuters: “Raising one child costs a lot.  A semester for kindergarten is already 50,000 to 60,000 baht ($1,520 to $1,850) and then it reaches millions later.”  Things begin to look even bleaker when attitudes towards having children are colored by concerns over rising debt and elderly care.

            In the whole of East Asia, the rule is fertility rates are below the replacement figure of 2.1 babies per fertile woman.  Let us examine the comparative figures. China has a fertility rate of 1.7; Hong Kong SAR, China, 1.1;  Japan, 1.4; South Korea, the lowest at 0.9;  Macao SAR, China, 1.2; Malaysia, 2.0;  Singapore, 1.1; Thailand, 1.5; Vietnam 2.0.    Only Indonesia (2.3), Laos (2.6), Myanmar (2.1) and the Philippines (2.4) have fertility rates higher than replacement.   India has a fertility rate of 2.2, still above replacement, and is expected to surpass China in population in the next few years.  Both Indonesia and the Philippines will have an edge over the smaller ASEAN countries in terms of their huge domestic markets which will partly insulate them from the recurring global economic crises like the one that is currently hitting the world economy as a result of the Russian invasion of Ukraine.  In fact, the Philippines stands out as one of the most resilient during periods of world economic crises like those that happened in 1997-2000 during the East Asian economic crisis and in 2008 -2012 during the Great Recession precipitated by the sub-prime crisis that caused the demise of Lehman Brothers.  During these two most  recent world economic crises, the Philippine economy was the quickest to rebound among the East Asian economies.  The major explanation is its large domestic market which compensates for its low export-to-GDP ratio.  In addition, the demographic dividend accounts for the two strongest engines of growth domestic consumption, i.e. the huge dollar remittances (US $36 billion in 2021) from the Overseas Filipino Workers (OFWs) and from the IT-BPM industry US$26 billion in 2021).  These two labor-intensive sources of services exports account for 12 to 15% of GDP.   Not surprisingly, they were the least adversely affected by the COVid-19 pandemic.

            There are die-hard birth control proponents, disciples of Mechai, the Mr. Condom of Thailand.  They are not worried that countries like China that implemented very aggressive birth control policies like the one-child policy may suffer a huge decline in population before the end of this century. There are estimates (Lancet study, July 2020) that China may see its population halved from 1.4 billion today to 732 million by the end of this century.  These apologists for population control say that 732 million would still be one of the largest domestic markets in the world.  What they ignore is that more than 30% of these would be older than 65 years. Instead of a population bomb, you will have a pension and social security bomb, coupled with a horrendous shortage of young people to take care of the ageing population.  It is in this context that we should celebrate our continuing demographic dividend which enables the country to have more than enough people to supply the world with our Overseas Filipino Workers and the Philippine economy with enough young workers to keep our economic engines growing.  The question is how long can we retain this gift of a young, growing and English-speaking population?  To be continued.