TAICHUNG (Taiwan News) — News reports and commentators use polite terms like “demographic decline” and “low birthrate” to describe what would be more accurately described as a “demographic disaster.”

Taiwan’s birthrate has plunged to the point that it is projected to have one of the oldest populations in the world with an average age of 59.6 by 2070 with an average dependency ratio of only 1.1 working-age adults per person over the age of 65.

This data comes from projections made by the National Development Council (NDC) released in 2022, replete with adorably cute graphics totally at odds with the ghastly message the data conveys. There is no good news in their entire PowerPoint presentation linked to the site.

Some things are going to get bad fast. In 1980, the dependency ratio was 14.8:1, in 2022, it was 4:1, but they are projecting it will be 2.7:1 in 2030. In 2018, Taiwan became classified as an "aging society," but their report projects it will be a "super-aging society" by next year.

Non-marital childbirths only make up 3-4% of the total, while the percentage of unmarried women between the ages of 15 and 49 was 50.7%. Though it will likely spike this year because it is the Year of the Dragon, in 2021 the fertility rate was 0.98%, well below the 2.1% commonly cited as the rate needed to keep a population stable. At the end of 2022, there were only around 900,000 children between the ages of zero to four, but around 2.2 million people aged between 40 and 44.

In the statistics used by the NDC, only South Korea faces a bigger challenge, though China no doubt will face an even worse disaster due to its "one child" policy. Presumably, China was not included in the statistics due to their notoriously unreliable data.

As in many things, Japan is ahead of Taiwan on this problem and is currently faring worse than Taiwan, but it is projected that Taiwan’s situation will plunge below Japan’s in 2055.

Japan’s economy and society are undergoing significant changes. Whole industries are shuttering, villages are being abandoned, and millennia-old cultural traditions are coming to an end. Once the world's second-largest economy, Japan just dropped to fourth on the back of a shrinking population.

Making babies

Ultimately it is unavoidable that the economy and society will have to change. One route would be to try to boost the birthrate.

So far Taiwan has been using a mix of strategies that many other countries have been using as well. They have not done much to increase the birth rate, though they may have slowed the rate of decline.

These include both local and national governments handing out subsidies to parents, building social housing to ease the burden on parents, and offering inexpensive government-run childcare nurseries. Normally these only apply to infants, though there has been discussion of extending subsidies for children through to their teenage years.

The fundamental problem is economic. When Taiwan was an agrarian society children were productive assets economically as unpaid laborers on the farm.

In modern urban societies, children may be loveable, but they are expensive, time-consuming, and produce no economic output. They are increasingly out of reach of many whose salaries cannot afford them. Since child labor outside of farms is not an acceptable solution, that will not change.

One option that officials in China are already discussing is a forced “two-child policy,” which is frightening, dystopian, and unacceptable in a free society. The Chinese Communist Party (CCP) does not see its people as anything other than something to be used for their ends, which fortunately is not the case in Taiwan.

The only other option available would be to pay stay-at-home parents a full salary. This creates two problems. The first is that it would be very expensive, far more so than the subsidies they are offering now and the money spent on providing education.

This would require raising taxes, though potentially these could be recouped later once the child grows up, joins the workforce, and starts paying taxes. So this could be viewed as a long-term investment.

The second problem is that if it is successful it would take a lot of working-age people out of an already declining workforce. Worse, to restore not only the loss of their labor but to make up for the past decades of a declining birthrate, each couple would need to raise possibly as many as five or six children.

If paying salaries to stay-at-home parents is the route that Taiwan chooses, they would need to pay high salaries indeed to encourage them to raise so many children and the price tag would rise significantly along with taxes.

The costs would also rise significantly to cover the increased costs of schooling, child-friendly parks, and other infrastructure needed to sustain the influx of children. All of this would need to be accounted for before deciding whether to choose this option.

Big picture debate needed

Would Taiwanese society be willing to foot such a huge bill for restoring demographic balance? It would need buy-in from the public before such a scheme could be implemented.

Big questions need to be raised. What happens to an economy when the number of consumers falls off a cliff?

When the domestic consumer market starts shrinking, what will the value of companies be? What will be the impact on employment?

With so much wealth in Taiwan tied to real estate, how will it retain value when more and more homes lie vacant? What happens when all the currently elderly farmers pass away and there is no one to replace them? Can any semblance of food security be maintained?

How many cultural institutions and traditions will survive when there is no one to carry them forward? How can a society function when 1.1 people are tasked with supporting one retired person?

The costs would be high, but so would the rewards. The question is would the cost-reward ratio be worth it in the end?

There has been little serious holistic, big-picture discussion of the demographic disaster looming ahead. So far, for the most part, only narrow problems have been discussed and addressed in bits and pieces and isolation. Short of the government or a political party putting forth a grand plan to address the demographic disaster, this piecemeal approach is likely to continue.

A whole-of-society discussion of the scale of the problem and to what extent the public is prepared to take on the costs and short-term economic pain for a long-term solution should happen. The sooner the better.

Time is running out.