Our Population Crisis and Its Consequences

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The latest government figures that came out show that we need a sense of crisis as our population continues to shrink and age. Our depopulation is due to rapidly decreasing births per woman which went from 2.1 in 2006 to only 1.7 in 2018 and made worse by significant levels of emigration. Rather than examining why depopulation takes place (for this, see http://www.cbs.cw) I’ll discuss the impact thereof if this trend continues unabated.

According to popular wisdom, smaller populations mean “more to go around” for everyone. Whilst this may be true at your birthday party when you cut up the cake, in the real world it’s another thing. Additionally, abundance doesn’t lead to more wealth for everyone, equitable wealth distribution does. Depopulation diminishes economic growth. Consider these 6 points which are not meant to be exhaustive.

A statistically significant negative relationship exists between population decline/aging and productivity growth.(1) It should be no surprise that an aging workforce is less productive and creative than is the case for younger people.

The research group TAC reported in 2013 that Curaçao suffered from significant brain drain of its qualified personnel. This means that as a nation we are becoming less competitive.

As the population gets older, consumption drops because household income is usually lower after retirement than before retirement. A shrinking population makes economies of scale impossible which consequently affects our competitiveness. Some countries revert in that case to more export, but remember, we have zero trade treaties.

Going forward, larger shares of GDP will be spent on public pensions and public health care placing extreme pressure on public finances. As I’ve said in Parliament in 2015, we cannot expect to keep raising the retirement age which is already 65 years, to guarantee our pension funds.

Diminishing population also increases the likelihood of inbreeding which can result in increased spending on healthcare and undesirable social situations.

Finally, women outnumber men in Curaçao by 8% while worldwide men outnumber women by 0.8%. This huge gender imbalance makes it difficult for women to find a partner/husband. Consequently more women are abandoning Curaçao to look for a partner abroad.

Our demographic problems suddenly appear worse than expected.

What can we do? The ability of public policies to control birth rates appears limited. We need to take in young immigrants in phases to allow us time to expand and optimize our land use and infrastructure to overcome current strains in order to accommodate a larger population. Additionally, key decisions regarding our education system and reforms of our antiquated structures that make any economic development impossible, must be taken.

I’m aware that allowing more immigrants remains a politically sensitive issue. I’m also aware that sitting quiet is not an option. Hopefully our decision makers will start doing more of what’s expected of them, namely shaping our future.

Willemstad, Curaçao

(1) Hisakazu Kato, professor of economics at Meiji University (Japan)

Author: alexdavidrosaria

Alex Rosaria is from Curaçao. He has a MBA from University of Iowa. He was Member of Parliament, Minister of Economic Affairs, State Secretary of Finance and United Nations Development Programme Officer in Africa and Central America. He is an independent consultant active in Asia and the Pacific.

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