The elusive fertility rate
Malta has the lowest fertility rate in the EU and is ranked the sixth lowest globally. What can we do about it?
During a recent NCPE conference, I was asked what impact the low fertility rate of 1.08 has on the labour market.
First, let me define two concepts: the total fertility rate and the replacement ratio.
The total fertility rate is the average number of children a woman will have during her reproductive years. The replacement ratio, which is 2.1, is the number of children a woman needs to have in order for a country to have a stable population.
Thus, the 2.1 figure does not increase the population but merely replaces it, keeping it stable. If the figure goes below this 2.1 (Malta’s is 1.08), then the population is not being replaced and the population starts to shrink, unless this is supplemented by population from other countries through immigration.
In the case of Malta, the 1.08 was achieved because one-third of children were born to non-Maltese mothers: without them the figure for Malta would be even lower. But this figure is not enough and our population (born locally) will continue to shrink. What has increased the population in the past years has been primarily due to immigration.
In reality, from 2012 to 2022, the Maltese had fewer children, meaning that there are 5,168 fewer children aged 0-16. On the other hand, there are 11,609 more non-Maltese children in 2022, compared to 2012.
The graph shows that this decrease of the fertility rate has been ongoing for decades. This is not a problem we are facing now but it has been developing for a long time. The rate in 1950 was almost 4.5 but the massive emigration of the 1950s and 1960s, of mainly strong parenthood age persons, led to a drastic decline in the fertility rate.
In mid-1970s, net migration became positive, with more migrants returning than departing. Policies such as the increase in the number of years in education, children’s allowance for the first three children and maternity leave helped to maintain the rate stable for almost three decades but the rate was still only 2, slightly below the replacement level.
Total fertility rateHowever, after 1997, the fertility rate started to dip again and it has been relentless, with the last available figure for 2022 putting it at 1.08.
Malta is the country with the lowest fertility rate in the EU and ranked the sixth lowest globally. In first place with the lowest fertility rate is South Korea, with a figure of 0.72 in 2023. The government there has declared it a national emergency. A number of policies are being implemented to try to encourage more births. The population has been shrinking and the expectations are that the pace will accelerate since there are and will be fewer women of child-bearing age.
The issue of low fertility rate is a problem all developed countries, and many developing countries, are facing and governments are seeking ways to increase the rate. Some research maintains that, once a country goes under 1.4, the process is difficult to reverse.
Even if the present Maltese generation were to be persuaded to have three children, it would take two or three generations to start seeing changes in population size. I have not even discussed infertility, which is also a problem that is increasing.
It is heartbreaking to hear young people having such a bleak outlook on life, saying that they want children but cannot afford them- Rose Marie Azzopardi
How does the fertility rate impact the labour market? That was the original question. From 2012 to 2022, NSO figures show that the Maltese population of persons over 65+ has increased by 26,035 individuals and an additional 2,690 non-Maltese elderly persons. Meaning we need to pay for additional pensions.
At the same time, the number of Maltese persons of working age (16 to 64) has decreased by 14,291, meaning fewer potential Maltese workers in the labour market. In the same period, NSO data on population shows an increase of 99,712 non-Maltese persons of working age living in Malta.
What are governments in different countries doing to have enough persons working to sustain the economy, services and pensions?
Two main methods have been implemented. One is to increase the retirement age (this we did from 60/61 to 65 years) and the second is to open the door to immigration, often depending on the available jobs that cannot be filled in locally.
Other methods are to create family-friendly policies, making it easier for parents to reconcile their life with their work. Governments and employers need to be fair and more generous to see any results from these policies. Research indicates that current policies are not enough to encourage youths to take on responsibilities, which have become too expensive, when they are already faced by unaffordable and small housing units, low salaries, double jobs, long-term loan commitments and many more issues.
It is heartbreaking to hear young people having such a bleak outlook on life, saying that they want children but cannot afford them. This is what the research presented last week told us.
Rose Marie Azzopardi is an economist with a focus on the labour market.