The age-old conundrum

We hope that the country's planners and policymakers heed the warning from the survey by the SA institute of Race Relations that South Africa's fertility rate is declining. The think tank predicts that the fertility rate is expected to drop below the replacement level.

Like Japan and some ageing European countries such as Germany SA - according to the survey - will be greyer in 2040. The population of 65-year-olds is expected to more than double from five percent now to 12 percent. This contrasts sharply with the 21 percent decline people aged between 0 and 14.

This poses two policy challenges for the country. First, many citizens depend on social grants. By 2009, almost a quarter of South Africans, 13 million, were receiving state social benefits every month.

More than 70 percent of these beneficiaries are children. Therefore, the expected increase of an older population - taking into account poverty and unemployment - will exert pressure on the already strained state coffers. A similar situation in Germany had led to policy analysts calling for the rise in retirement age to ease the pressure from state social welfare. 

The cost of taking care of the welfare and health of the increasing number of senior citizens will also multiply. We don't think this will necessarily be counterbalanced by the decline in the younger population. Second, for a developing country such as SA, the decrease in the younger population means a declining labour force - notwithstanding high unemployment.

This means that we will have to import our labour, largely depending on economic migrants. Alternatively if the demand overwhelms the supply, our labour costs will rise, pushing up input costs and thwarting any prospects of economic growth. For SA, unlike rich countries, the declining fertility rate does not necessarily translate into a healthy economy. However, these challenges could be tackled through strategic planning and better policies. We must ensure that while the country is becoming older and wiser, it remains productive.

(Editorial Comment) The Star, 19 January 2012