DEMOGRAPHY IS POLITICS
Soon it will be a business issue, too
DEMOGRAPHY IS POLITICS
Soon it will be a business issue, too
DEMOGRAPHY IS POLITICS
Soon it will be a business issue, too
Population decline is here
The reality of falling populations is now a global issue, not just a local one.
Our starting point may be that ‘only’ 30 countries will experience population decline in 2024, but this list of countries already includes China, Japan, Italy, South Korea and much of Eastern Europe.
Future decades will see this number rise. 2023 saw the apparently dramatic news that global population had now reached eight billion and growth is set to continue for a few more decades, driven largely by increased life expectancy.
But absolute population decline, from as early as 2064, now looks inevitable for our planet. Indeed, it may well be that the global population will never reach the milestone of ten billion, even if the UN’s median scenario still predicts it for 2058.
In the meantime, ageing populations present an ever-increasing set of challenges. For example, the old age dependency ratio is deteriorating fast, meaning that more ageing people will have to be supported by fewer workers.
Population decline gets noticed
New data from Ipsos finds a reasonable degree of awareness that the population is now falling or not growing as fast as it used to.
The pressures it places on pensions and public services mean it is starting to become a political issue."
The pressures it places on pensions and public services mean it is starting to become a political issue and an important national conversation for many countries.
But are these conversations starting too late?
Falling fertility
One of the reasons why demography is politics is that, while the decline in fertility rates may be irreversible, governments have to decide whether to introduce policies designed to slow down or reverse the direction of travel.
The ‘ideal’ number of children measured by Ipsos in a set of countries across the world is 2.1, on average, which is exactly in line with the replacement rate which would make populations stable in the long run.
But people actually expect to have an average of 1.8 children during their lifetime, 0.3 fewer than they ideally would have.
And the latest fertility rate among the 27 countries covered in our survey is even lower, at 1.6, meaning that even those diminished expectations would still, on average, be too 'optimistic'.
In many Western and ageing countries, the sentiment is often expressed that "people don’t want to bring children into today’s terrible world anymore".
Our new data suggests that this may not be the central reason. To illustrate, take a look at the Ipsos data for France. Personal factors ranging from age, individual circumstances, economic considerations and a feeling they already have enough children are more prominent.
Meanwhile, in Malaysia and Indonesia, people expect to have more children than fertility rates predict. This suggests that, in those countries, there still exists a tension between the demographic transition resulting from rapid economic and social change (fast diminishing birth rates) and the cultural values of the population (having many children is a matter of pride).
Personal factors play a bigger role in people's decision not to have children than the state of the world or a lack of desire
Physiological reasons
Financial reasons
Personal situation
Already enough kids
State of the world
Don't want
Source: 29-country Ipsos survey conducted between Nov. 22nd and Dec. 6th. 2023. Total base: N=21.631 adults aged 16+ or 18+. Country base: N=1000 or 500
The largest difference between the expected and the actual number of children is in South Korea, which has the lowest fertility rate in the world (the latest estimation is below 0.8!). This shows that many South Korean women cannot have the number of children they would ideally like to have and are actually faced with more obstacles than anticipated.
Until quite recently, overpopulation and not depopulation was the main concern of academics, politicians and citizens alike."
Until quite recently, overpopulation and not depopulation was the main concern of academics, politicians and citizens alike.
A symbol of this concern was the lasting and global success of Anne and Paul Ehrlich’s The Population Bomb, published in 1968.
The themes developed by the Ehrlichs in The Population Bomb were particularly adept at capturing the public imagination: better access to healthcare and medicines would backfire in the form of unbearable stress on food resources, leading to famine and all sorts of disaster.
Mentions of ’overpopulation’ peaked in the 1970s but didn’t begin to decline until the mid-2000s and only very slowly. Many influential people still champion the reduction of the global population, viewing the current eight billion count as untenable for the long-term survival of the planet. This belief is in harmony with the UN's Social Development Goals (SDGs) and underpins both public and private sector policies on sustainability and environmental conservation.
There was, until very recently, a strong consensus that overpopulation is the main risk to mankind and that birth control and economic progress would contribute to resolving the problem by lowering fertility and diminishing family sizes.
This indeed happened, faster than one had even imagined, and demography stopped being a major theme in the public debate in the past few decades.
But now most definitely, demography is politics.
Demography as a political issue
Demography is transforming into a political issue in the same vein as climate change. What began as a niche discussion among scientists and activists is now gaining momentum as population change becomes a reality.
One of the main worries is the sustainability of current welfare state models. In countries where the pension system is funded by a levy on wages earned by employed workers only (e.g., Germany, France, and to a lesser extent, the US, Japan, or Russia), the financial viability of the pension system depends heavily on the ratio of retirees to working individuals. Ageing societies and decreasing birth rates threaten to push this ratio dangerously close to 1:1, potentially exceeding it in the future.
Divergent sides are forming, and it has already emerged as an electoral issue in countries such as Italy and Spain. President Xi of China even highlighted population decline as a concern at China's recent National Women's Congress, encouraging delegates to have more children.
Far-right populist parties often strive to reverse the social progress of recent decades. They aim to limit immigration and stigmatise sexual and gender minorities. Increasingly, they advocate a new form of natalism – ‘neonatalism’ - that emphasises support, not for working mothers, but for mothers who stay at home and have children.
Hungary still allows abortions, but only after a doctor has made the pregnant woman listen to the foetus' heartbeat."
With traditional policies of child and parental support having limited impact*, a new school of thought promises results by adopting a different approach: restrict women's reproductive choices, strengthen the traditional family structure, support established religion, promote cultural cohesion, and discourage immigration. For instance, Hungary still allows abortions, but only after a doctor has made the pregnant woman listen to the foetus' heartbeat.
Viktor Orbán's Hungary has had only limited success with these policies, whose main component were strong financial incentives, with Hungary once being the least fertile nation globally and now doing slightly better than other Central and Eastern European countries. However, the cost incurred is substantial, and the prevention of further decreases in birth rates does not necessarily halt population decrease and the shrinking of the country's available manpower. Emigration and brain drain often more than offset the positive effects of natalist policies.
Argentina's new president, Javier Milei, although a libertarian on economic issues, is committed to rescinding the recent legislation legalising abortion. This stance is also adopted by the self-proclaimed libertarians within the US Republican Party, like Kentucky's junior US Senator Rand Paul.
China's communist government is exerting even more pressure on women: in a country without a universal pension scheme, children have traditionally taken care of the elderly. Chinese women are thus burdened with three increasingly incompatible responsibilities as population decline and ageing impact Chinese society: having and raising children, caring for the elderly, and working to support the national economy. How long Chinese women will continue to bear these monumental responsibilities remains uncertain.
Marketing in the age of population decline
So far, this topic rarely features in marketing literature and news coverage of brands’ strategic initiatives.
Author Larry Light claims that demographic shifts often imply a strategic reorientation of brand portfolios and gives an interesting example: Reckitt Benckiser’s Enfamil, a baby formula, is currently doing well. But this category’s future is, by definition, dependent on birth rates and therefore increasingly uncertain. Yet, Enfamil’s expertise in infant nutrition could be used to generate supplements for ageing populations.
Population decline is set to be the cornerstone of the debate that is shaping up in this century.”
Though local initiatives to develop products, even in emerging markets, have begun to emerge, our trawl of the evidence did not find any global brand not related to healthcare or ageing care having made recent announcements on this topic.
The general idea is that brands aim to serve the underserved in order to continue growing. However, examples are still primarily limited to products associated with maintaining physical health and wellbeing, rather than addressing other aspects of ageing like the need for smaller packaging (both because of weight and because of smaller household sizes), elderly people’s supposed reluctance to change their habits, etc.
Demography is coming back to the forefront of politics almost all over the world. Overpopulation and birth control dominated the conversation about demography during most of the second half of the 20th century. Population decline is set to be the cornerstone of the debate that is shaping up in this century.
Three coalitions are forming:
'Progressive de-populationist’
An alliance of environmentalists and post-materialists who advocate putting the brakes on growth, including population.
‘Progressive re-populationist’
A faction raising the alarm about the potentially destructive effects of population decline on welfare states.
'Socially conservative re-populationist’
An alliance of those who champion a return to traditional values and those who want to find an alternative to immigration from more fertile to less fertile countries, and are prepared to achieve this goal by restricting or even suppressing reproductive choice.
Though demography is thus definitely politics again, it is still far from being a prominent topic in conversations about brand strategy and long-term brand growth, although it probably should be. We look forward to hearing your views and ideas on what feels like an under-explored topic.
Footnotes
*The Effect of Family Fertility Support Policies on Fertility, Their Contribution, and Policy Pathways to Fertility Improvement in OECD Countries - Int J Environ Res Public Health. 2023 Mar; 20(6): 4790 - https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10049131/