How Will The Population Decline Impact The Global Economy?
There’s no denying that family dynamics are constantly changing – especially when it comes to how many children people are having. For example, in 1851, an average of 6.2 people lived in each Canadian household. By 2021, this figure had fallen to 2.5.
However, this decline in the size of a household is not only happening in Canada – but in various other countries across the world. People are simply having fewer children.
An extreme opinion on this came after a study from the Institute for Health Metrics and Evaluation (IHME) stated that there are actually positive results caused by a declining population. For example, this can protect the environment as having fewer people around can result in “lower carbon emissions, less stress on global food systems, and less chase on transgressing planetary boundaries.”
However, Joblio believes a population decline doesn’t help the environment, but does have a negative impact on the global economy and is bad for communities.
What is population decline?
It’s normal for the global population to ebb and flow over time. Historically, populations tend to decline during war or famine, before picking up again. However, according to the UN, some of the “richest countries are beginning to see population decline” for reasons that fall beyond what we have seen before.
For example, a recent report stated that “at the global level, population decline is driven by low and falling fertility levels. In 2019, more than 40 percent of the world population lived in countries that were at or below the replacement rate of 2.1 children per woman; in 2021, this share climbed to 60 percent.”
When fewer children are born, the number of people active in the workforce decreases. This has a multi-faceted impact on the global economy.
Firstly, fewer people are available to take on roles in every industry, leading to labor shortages. This results in less consumption, which “leads to fewer sales, and fewer sales lead to lower profits and thus, less economic growth.”
What countries are experiencing population decline?
According to a recent study, experts predict the production decline will occur predominantly in eastern European countries. For example, “from 2020 to 2050, the highest drop in population, 22.5%, will be recorded in Bulgaria.” However, population decline is also having a significant impact on China.
What will be the economic impact of a declining population?
There are many different economic consequences of a declining population. For example
- Rising dependency ratio. The dependency ratio relates to the ratio of those not in the labor force and those within it – with the former being dependent on the latter for economic support. For example, senior citizens are the fastest-growing population group as of late and are classified as ‘dependants.’ They often require additional support from governing bodies, healthcare facilities, and their families. According to a recent study, “rising dependency ratios will impact negatively on future growth, savings, consumption, taxation, and pensions.“
- Labor shortages. As the number of people in the work-age demographic lowers, labor shortages will present themselves more and more frequently. After all, there are simply fewer people actively looking for work. This could mean that many companies (and industries as a whole) are understaffed.
- Reduced spending & demand. As discussed previously, a declining population also impacts the demands for all services. This means that businesses will also begin to lose out on profits.
How can hiring refugees can help.?
“Various studies have found that hiring foreign workers can prove beneficial in curbing the impact of population decline on the job market and, consequently, the economy,” said Jon Purizhansky, CEO and Founder of Joblio.
For example, an IDF report stated that hiring refugees could “reduce population decline, keep the size of the labor force from shrinking, improve age dependency ratios, and produce positive fiscal gains” By resolving staffing crises, the economy can keep moving or functioning as normal.
“As such, it’s clear that tapping into the foreign talent market is an excellent way to bolster local economies. Supporting refugees also comes with the benefit of providing them with safety and security,” said Purizhansky.
At Joblio, we make it easier than ever to help businesses ethically hire foreign talent, as we are already embedded within new immigrant communities. This means we can help fill empty positions within your company sooner rather than later.
To find out more about Joblio, please do not hesitate to get in touch today.