We have all been made very aware that the population of the world continues to grow. But predicting to what extent it may fall or rise is difficult because demographers use differing models and assumptions. For example, the Autonomous University of Madrid recently argued that, as a result of a steep drop-off in the number of children being born worldwide, the world population by the end of the century would decrease. Yet this month a UN study, which took into account some alarming figures relating to fertility in Africa, predicted an increase.
No doubt further studies will produce different results, but while we await these we should concern ourselves with a more immediate demographic problem. This is the imbalance which occurs when the rate of fertility changes – causing a serious mismatch between a smaller working population and a larger retired population which has to be supported.
We have to accept the plain fact that, as prosperity spreads across the world, so individuals will turn increasingly to methods of contraception and, as occurs in many cultures, to direct abortion. While the Church will be able to ameliorate this through advocacy of natural family planning, experience tells us that the effect will not be large.
One statistic, very close to home, will illustrate this mismatch: in 2010, in the European Union, there were 3.5 people of working age for every person over 65. By 2050 this will have halved to 1.8. Incidentally, Japan, which started a major contraceptive programme after the war, will have an old age population equal to nearly 80 per cent of their working population at that time. Ironically, the Jesuit sociologist Stanislas de Lestapis predicted some 50 years ago that their contraceptive policy would result in the very economic problems which the Japanese have suffered in recent years.
If you will still be working by 2050, be very afraid. If you will be retired by then, be terrified. Remember that the state old age pension is not paid from any invested fund. The bill is met by the current working population. (Public service schemes like the teachers’ pension scheme are also unfunded and will cause huge burdens for the taxpayer in the future. The pensions liability for retired teachers, police officers and NHS workers is already frighteningly large.) How will you feel when you have to support twice the number of pensioners than is the case today?
But of course you can benefit from pension schemes – either your own or your employer’s. Not long ago many employers’ schemes were “defined benefit”. That is, they paid a guaranteed pension, normally index-linked, based on final salary. Such schemes are rare nowadays. Other schemes depend directly on the money invested – by you or your employer. At retirement your pension pot depends on investment success, and your pension income will be based on annuity rates at the time. The results are appalling at the moment; do you want to take a chance?
Of course you do – hope springs eternal. Good luck, I say. I spent much of my life in the pensions industry, and I was continually amazed by people’s optimism for the future. “Sufficient for the day is the evil thereof” was the motto. I even met one man who declined a pension because it challenged the Scriptural injunction: “Take no thought for the morrow.” I have reduced sympathy for those who chose to burn the candle at both ends and are now in the dark.
But these future demands are based on western society where much progress has already been made in warding off mortality, while our family size decreased. Developing countries have yet to face major problems as greater longevity and dramatically lowered birth rates arrive at the same time. These problems will cause civil unrest, and if reduced family size leads to the abortion of female children (already common in many cultures today), then disaffected, testosterone-fuelled young males will be a danger to us all.
Ironically, one partial remedy for Britain would be to increase immigration. If we are failing to produce enough of a working population to support our pensioners we may be able to borrow workers from elsewhere to do so. The idea that immigrants are layabouts attracted by social benefits is ignorantly broadcast by those of our citizens who are layabouts and attracted by social benefits.
The June 2012 report from the Centre for Economic Performance gives us some interesting information. Not only are immigrants likely to be younger and better educated than their British-born counterparts, but there is little evidence of an overall negative impact on jobs or wages. Immigrants, on average, are less likely to be in social housing than people born in Britain. And as yet there is no evidence of the effect of immigration on house prices and rents. Nor is there any evidence that our welfare state provides better benefits than other EU countries. There are concerns about pressures on schools, but there is still little hard evidence on this.
Indeed, there are potential economic benefits associated with immigrants, arising from their ability to fill gaps in the British labour market – where there are shortages of workers,whether high or low-skilled. While there may be problems of adjustment in the short term, on balance, the evidence for the British labour market suggests that fears about the consequences of rising immigration have little basis.
Far from looking on immigrants as invaders, we should greet them as welcome guests who can save us from the economic consequences of our low birth rate.