Fertility rates are falling year by year all over the world. LThe Organization for Economic Co-operation and Development (OECD) plans consequences for the demography and economy of the countries that make it up, especially in Europe, where the decline is more pronounced. The decline in the birth rate will continue, the OECD warns.
A study by the Organization for Economic Co-operation and Development (OECD) has just confirmed the continued decline in the fertility rate of the population of the countries that make it up.
A significant drop from 3.3 children per woman in 1960 to just 1.5 in 2022. The figures revealed sound alarming, as the same study reveals that the current fertility rate is below replacement average, estimated at 2.1 children per woman.
In Europe, the situation is worse. Births there hit an all-time low in 2022, with just 3.88 million children surviving.
According to data for 2022, the fertility rate in the countries of the European Union was 1.46, significantly lower than the world average, which is estimated at 2.27.
The OECD study specifies that Malta will have the lowest fertility rate in 2022 with 1.08, while France had the highest rate with 1.79.
The decline in the birth rate will affect all OECD member countries
This situation, not elsewhere, is not without consequences for the countries’ economies of the OECD. Such a low number of births means that the share of working people quickly becomes smaller than the share of pensioners.
Research data show that in the sixties of the last century, there were six employed people for every pensioner. In 2022, this share is estimated at around three people of working age for every pensioner.
Forecasts do not predict an improvement, as the decline in this ratio will continue to reach two workers for every retiree by 2035.
As a direct consequence, the OECD foresees a significant impact on state systems, such as social security. The latter will find it increasingly difficult to reach retirement.
In the United States, for example, the US Social Security fund threatens to dry up by 2030 if the government does not intervene.
This decline in the share of workers will also affect the economy of the countries of the organization.
American study of the Federal Reserve Bank of St. Louisa found that over the past decade, labor shortages have been reported approximately 7,000 times during the earnings calls of publicly traded US companies.
Also, the CEO of BlackRock (an American multinational company specializing in asset management) predicts that this drop in labor supply is likely to give more bargaining power to employees, leading to higher wages.
Which will stimulate inflation, she adds.
Faced with this situation, which is getting worse every year, solutions are emerging.
France is implementing an entire “demographic weaponization plan” including fertility tests and extended parental leave.
Promoting gender equality and a fairer distribution of work and responsibilities within households can also be a solution, according to Stefano Scarpetta, Director of Employment, Labor and Social Affairs at the OECD.
For its part, Goldman Sachs highlights a solution that could come from Generative Artificial Intelligence (AI).
Along with improving productivity, artificial intelligence could increase global GDP by 7% in ten years, she believes.
Finally, the OECD study predicts a continuation of this fertility decline that requires foresight to deal with it in the future.
For Stefano Scarpetta, this decline “is not just a simple temporary anomaly”, but a new situation that must be taken into account.
