From baby boom to bust, the delicate balance between economic fluctuations and fertility rates has become increasingly evident. There has been a rising concern about subpar fertility rates and their wider implications on the security and stability of pensioners, the working population, and creativity. 

This is not a question of what came first, in regards to the impact of the economy on the fertility of a nation or vice-versa. Rather, fertility rates and economies have a symbiotic relationship. Consider the youth as a part of humanity’s ecosystem in which they play a critical role in supporting previous generations and in creating a sustainable future for tomorrow’s generations.

The term “fertility rate” may seem ambiguous or the same as birth rates, however, it is not. To clarify, according to the World Economic Forum, birth rate signifies “the total number of births in a year per 1,000 individuals” and fertility rate showcases “the total number of births in a year per 1,000 women of reproductive age in a population.” In this context, fertility rates are a more precise measure. For a nation to consider its population as “stable,” a fertility rate of 2.1 is considered as a requirement.

Looking back at 1963, the global fertility rate was at a peak of 5.3 births per woman, and in 2021, that figure shrunk to 2.3. At a time of political unrest with the Vietnam war, the Civil Rights movements, and the assassination of US John F Kennedy and Martin Luther King, it is safe to say that geopolitics, national, and international unrest was somewhat akin to that of today. 

There are a plethora of additional factors that influence fertility rates, such as political and religious beliefs, and societal norms and values. For example, it is more common today than it was in the 1960’s for women to pursue and prioritize careers and exploring life over starting a family.

In recent history until today, there have been various concerns voiced regarding the possibility of over-population. Those concerns, however, highlight the unsustainable use of natural resources and how rising populations would mean less available resources for them. 

Referencing Plato’s literary magnum opus, The Republic, where he imagines two city-states, one being “healthy” and the other surrendering to luxuries, the latter city-state is devoured by overconsumption and greed. In this context, a rising population does not mean that it will directly harm the environment, but rather a population’s values reflect the ways in which it tends to and uses its environment.

A shrinking population, however, means that older generations are more vulnerable, less innovative contributions to economies and industries, and less human creativity. Tech phenom Elon Musk has fervently expressed his perspective on shrinking populations, stating that “population collapse due to low birth rates is a much bigger risk to civilization than global warming.”

In this context, let’s explore the implications of a shrinking population, and where it is most prominent around the world.

For the past few years, demographers and governments alike have been gripped with the gradual decline of the global population. More recently, two countries have been under the spotlight. Japan and Italy are both grappling with declining birth rates. Factors such as changing societal values, economic uncertainties, and increased urbanization contribute to the decline in fertility. 

The pursuit of career goals, limited financial resources, and the rising cost of raising children have also played significant roles in the decision to delay or forgo having offspring.

Italy’s first female Prime Minister, Giorgina Meloni who was elected in 2022, spoke at a conference in May of 2023 alongside Pope Francis discussing Italy’s struggles with declining births. Pope Francis expressed that, “difficult in finding a stable job, difficulty in keeping one, prohibitively expensive houses, sky-high rents and insufficient wages are real problems… The free market, without the necessary corrective measures, becomes savage and produces increasingly serious situations and inequalities.”

The cause for alarm is rooted in the fact that “fewer than 400,000 babies were born in Italy last year [2022], the lowest since the 1861 unification of the country, highlighting the worsening demographic dynamics in an economy beset by high levels of public debt,” according to the Financial Times. 

In an attempt to reverse the declining fertility rate, Meloni and her cabinet have made a proposal. It includes measures to enable families to have more children by developing a tax scheme that favors households with children, providing aid for young couples to buy their first homes, and nudging communities to offer daycare with no fee to support parents returning to work.

Simultaneously, Japan is experiencing equivocal concerns, as the nation’s fertility rate is at a record low of 1.26 births in 2022. Similar to Italy, residents of Japan are struggling to balance work-life priorities, managing the cost of buying a home as well as raising a child, and a lack of substantial child care policies. Japan’s Prime Minister, Fumio Kishida, expressed his determination to carry out new policies, determining that the nation’s baby bust crisis must be resolved by 2030 to prevent further detriments to its society and economy.

The newly proposed policies aim to tackle issues akin to Italy by supporting households with families. Unique to Japan, the government is looking to cover childbirth costs to provide further aid to families, incentivizing couples to have more children. This plan will be carried out with an investment estimated to be ¥3.5 trillion (€23.3 billion) annually over the course of the following three years. 

There are concerns, however, that the proposed policies are not enough as they mainly focus on financial support, rather than restructuring societal systems. A sociology professor at Tokyo’s Lakeland University, Yuko Kawanishi expressed that “the employment system - broadly defined by seiki (full-time workers and hiseiki (contract workers) - is a key contributor to Japan’s demographic decline. 

The number of mothers with children in the workforce is rising, hitting 76 percent in 2021, 20 percentage points higher than in 2004. Yet, only 30 percent of all mothers are permanently employed.”

While Japan and Italy have been taking most of the ‘heat’ for their shrinking populations, there are more countries ringing the same alarm bells. Aside from Italy, Europe is facing fertility rate concerns in all corners of the continent. Matla, Spain, Albania, and Poland are among the lowest fertility rates in Europe, and Cyprus is nearing the bottom of the list, too.

On a global scale, a low fertility rate has far-reaching implications. As the number of births declines, so does the size of the younger workforce, leading to an aging population. With fewer individuals entering the labor market, economic growth can stagnate. Additionally, an aging population places increased strain on healthcare and social welfare systems. Governments may find it challenging to sustain pension programs and healthcare services without an adequate working-age population to support them.

Cyprus is currently facing its lowest fertility rate ever recorded. In 2021, data shows that it was at 1.3, similar to that of Italy and Japan. Cyprus may be following suit in facing similar challenges. 

Housing prices are quite expensive, and, according to Alex Loizou, CEO of Askwire, “it is unlikely that home prices will drop significantly in the near future.” Additionally, while 73% of Cyprus’ population is employed, the average salary has not changed much since 2009. With rising inflation, young couples likely find it challenging to support themselves as well as a child.

The economic impact of low fertility rates is not limited to social services alone. Decreased birth rates often correspond with a decline in consumer spending. Couples with fewer or no children tend to allocate their resources differently, focusing more on personal fulfillment and experiences rather than child-rearing expenses. 

Shifting spending patterns can have a substantial effect on various industries, such as childcare, education, and the market for child-related products. Conversely, sectors catering to adult entertainment, travel, and luxury goods may experience relative growth.

The intricate relationship between economic fluctuations and fertility rates highlights the profound impact of changing socio-economic conditions on family planning decisions. As countries like Japan, Italy, and others with similar demographics grapple with declining birth rates, the effects reverberate globally. The consequences of low fertility rates extend beyond demographic shifts to encompass economic growth, labor market dynamics, and consumer behavior.

In light of these challenges, governments and policymakers face the task of implementing strategies to mitigate the adverse effects of declining birth rates. These strategies may include measures to support work-life balance, enhance child-rearing incentives, and improve social safety nets. 

By recognizing the interdependence of economies and fertility rates, societies can strive for equilibrium, ensuring a sustainable future where individuals can pursue their aspirations while maintaining healthy population growth.