Beyond benefitting immigrants and alleviating global poverty, migration can address the economic challenges of wealthy host countries’ ageing populations in ways both obvious and subtle. The most obvious sees not only a boost to the number of working people, but an increase in the younger portion of the population. This is because migrants are often young and they are also likely to have their own families in time. For instance, a modest temporary increase of immigration to Japan, of 4 people per 1,000 inhabitants over the course of 2020 and 2029, would see the number of live births be six percentage points higher by 20604.
Little surprise then that to keep the working age (15-64) population constant by 2050, the UN forecasts that countries will need to ‘import’ many millions of migrants5. Indeed, today many of the smaller, open economies in Asia Pacific do this to some extent or another, including Singapore, Hong Kong, Australia and New Zealand.
The way that they do also highlights that immigration is more than just about ‘replacing’ people. It is about injecting ideas and expertise to strategically boost sectors that are vital to a country’s future. That’s evident in Singapore, where immigration is part of kick-starting areas like biomedical sciences, digital animation, and aerospace.
None of this is to discount the political realities of migration, particularly in advanced economies, given the more sceptical phase of globalisation in which we find ourselves. Yet as the victory of Emmanuel Macron over the anti-immigration Marine Le Pen in the presidential election in France reminds us, anti-immigration outlooks aren’t fated to carry the day. With bold, creative, and compelling arguments, forward movement is possible.
For example, the counterintuitive case can be made that increasing immigration is the best way to ensure the future looks something like the past—keeping pensions financed so today’s workers will enjoy retirement benefits similar to previous generations, as The Economist recently argued. Singapore’s policy suggests another approach: a hopeful message about gaining a new competitive edge in the global economy. The best way to escape ‘us v them’ politics is to convincingly illustrate how immigration is a vital ingredient for a future of shared greater prosperity.
THE WORLD IS CHANGING. DON'T LOSE SIGHT OF THE UPSIDE.
And that brings us back to the big picture. There are a range of factors which may have reduced trend economic growth in many economies over the past decade, but in our view demographics is one of the least worrying. We should not assume that today’s ageing demographic profile necessarily leads to slower growth or economic problems. While many investors, businesses, and financial markets now presume that this is the case, it’s time to think more critically about this issue.
There are plenty of reasons to question conventional wisdom and the definitions of the ‘working age’ population’. Indeed, when Germany’s Otto von Bismarck first introduced pensions for workers over 70 more than a century ago, life expectancy was just 45!
There seems little doubt that scientific and sociological forces influence a country’s demographic and economic trajectory. Countries have powerful tools at their disposal – including education, pension and migration policy – to influence outcomes. The future might well be less aged than you think.