This crisis has been lurking for years, but it is rarely discussed. Overshadowed by unemployment, growth, or inflation rates, the demographic crisis is a growing threat to world economies. This is particularly true in the European Union, Australia, Canada, Japan, or South Korea. More than ever, active young populations are needed in order to sustain growth, be it today or tomorrow. In this context, many major powers are competing among themselves to bring in young international talents. Is immigration the key to finding a solution to the demographic crisis?
The demographic crisis: from “Baby Flop” to “Baby Crash”
The Covid-19 pandemic was the ideal culprit. 2020 saw a sharp plunge in birthrates: -8% in the EU, -4.7% in South Africa, -4% in the USA, -3.8% in Israel and Algeria, -3.7% in Australia, -3% in Canada. The phenomenon was labeled as a “global Baby Flop”. At that time, experts were rather pessimistic and predicted a “Baby Crash” in 2021. However, although some countries witnessed a rise in birthrates (mostly due to the expanding vaccination programs, the reopening of borders and economies taking off again), the demographic crisis remains a major concern.
International mobility is on the rise again, supported by proactive policy decisions, like in Canada, where the government is rolling out the red carpet for international talents. Being one of the most welcoming countries for immigrants, Canada presently has a significant labor shortage, even more so for the future. Without foreign labor, there is no economic growth or demographic growth. This is simple math, but it is not well accepted. In the United States, for instance, the Trump administration not only restrained illegal immigration but also hindered legal immigration. Despite President Biden's attempt to put the matter back on the table with very ambitious immigration reforms, the after-effects of President Trump's policies combined with the health crisis have contributed to condemning the US to demographic stagnation. Henceforth, the demographic crisis has affected numerous countries across the world, and it is gaining momentum.
Lessons to learn from South Korea
South Korea is a good example of how the declining demographic rate negatively impacts economic growth and how the State can react to limit these damages through immigration. Experts believe that the South Korean situation is already critical. According to them, the country will drop out of the Top 15 highest-income countries by 2050. Indonesia and Nigeria will take its place because those two countries have a young and active population, a recipe for rapid growth.
An alarming demographic crisis
Is South Korea on the verge of disappearing? Other studies point toward that direction, highlighting the constantly dropping birth rates: 1.05% in 2017, 0.98% in 2018, 0.92% in 2019, 0.84% in 2020, and 0.81% in 2021 and 2022. These are alarming figures, says the United Nations Economic Commission for Europe (UNECE), at the same time pointing out that the minimum fertility rate for demographic sustainability for any given country is at 2.1%. Even more serious is the fact that a fertility rate of less than 1% can lead to a 50% decrease in birth rate in the span of 30 years. At this pace, South Korea could be past history in 2750.
South Korea's fate is probably partly due to the authorities' late intervention in stopping the country's strict birth control policy. That policy was first established in the 1960s (the fertility rate was 6% then) with the slogan, “If you give birth recklessly, you will inevitably become a beggar”. The population got the message. The fertility rate drastically dropped during the 1980s (2.1 % in 1983), but the birth control policy wasn't reconsidered until 2005. By then, the fertility rate was already at 1.08% and continued to drop. The billions of won invested since then (around 200,000 billion won, roughly 15 billion USD) to try to halt the decline have not been successful.
Immigration: The answer to rekindling growth
The Han Duck-soo administration believes that immigration is the answer to their prayers. During the 2000s, the South Korean authorities set up several schemes to ease up access to permanent residency. The country opened up to low-skilled labor in 2004. Sectors like the construction industry, agriculture, fish farming, and manufacturing industry were in dire need of workers. These sectors were considered “tedious” and “filthy” by vast numbers of young Koreans (nothing has changed in their beliefs nowadays). The ensuing soft power of the hallyu (Korean wave of success) was very attractive to young foreigners. South Korea has developed the K-pop visa and the digital nomad visa for them. Korean authorities also encourage international marriages (the number of weddings has been decreasing since the 1990s), and they have invested in setting up assistance centers dedicated to helping foreigners settle in the country, as well as in providing them with free Korean classes. For prospective expats, the opportunities are numerous.
However, much remains to be done. A segment of the Korean population does not favor an increase in the immigration rate. Expats and long-term residents speak of day-to-day racism. In early 2021, the Lee Luda chatbot created controversy following its racist, sexist and homophobic comments. The chatbot shot to popularity (more than 700,000 users aged 10 to 30), but Scatter Lab, its Korean manufacturer, voluntarily removed the product in January 2021. The government itself seems to have conflicting positions. Despite the revamping of the law governing dual citizenship (2011), only a meager 149 skilled foreign nationals acquired it in 2020. This could be explained by more stringent criteria than for foreigners having Korean roots. In the same vein, during the Covid-19 pandemic, foreign nationals got to hear the double talk of the Korean authorities.
The global race to attract international talent
Despite all this, South Korea needs to restore its growth urgently. The Korean Ministry of Economy and Finance has had to lower its estimates: economic growth would only be 1.6 % this year compared to 2.5% in June 2022. Bang Ki-seon, the first Vice-Minister of Finance, admits: “The downturn in the real economy is happening right now…”. Elsewhere in the world also, growth is slowing down: around 1% in the United States, 0.3% in Germany (barely escaping the recession), and 0.7% in France. These three countries, among many others, rely on immigration to kick-start their economic growth.
In Canada, immigration forms part of the country's working mechanism. The 2022-2024 immigration plan targets 447,055 new permanent residents this year and 451,000 in 2024. In July, Australia will extend the validity period of work visas for international students who have a bachelor's degree, a master or a Ph.D. (this was announced in autumn 2022). Those having a bachelor's degree can stay for a further 4 years; holders of a master's degree, 5 additional years, and Ph.D. students, 6 years. Japan, which is presently working on removing the controversial Technical trainee development program for international workers, recently announced that it could broaden the scope of the work permit for qualified workers without any limits on the duration of stay. Germany is working on an immigration reform policy that will allow it to attract more international talent. As for Finland, the Nordic country is rolling the red carpet for foreign talents, with 50,000 expected by 2030, then 10,000 annually.
Expats and prospective expats can get their traveling luggage ready. Their presence is expected and even highly desired by countries facing labor shortages. But they should not look at immigration on a purely economic aspect.
Much room for improvement
Even if all these countries apparently have only the need to reinforce their workforce in mind, the major issue remains the demographic question. However, despite red alarms ringing on the demographic front, governments often send mixed signals. In France, for instance, immigration remains a taboo subject. Dwarfed by the chaos of the pension reform, the legislation “for controlling immigration and improving integration” has cropped up again with the same mantra: “tighten the rules”, “exercise more control” and “make integration a must”. The project aims to regularize undocumented workers in sectors experiencing labor shortages (construction industry, hospitality sector, etc.). According to associations fighting for the rights of foreign workers, these regulations leave little or no room for human development and well-being. They believe that France keeps on making unilateral decisions, with the State doing the thinking for others without even taking the time to listen to what they have to say. For associations, the Bill is too “mechanical” and does not consider that those workers are “human beings”, and that these humans are not here to merely do “the dirty work” but rather to build a life in France. Integration is indeed a two-way process.
What should we expect in the long run?
This, in fact, is really at stake in terms of expected population and economic growth through immigration. But, of course, this has to be associated with other much-needed measures. Fighting racism and discriminations are too often overshadowed by financial considerations. The promotion of equal rights for women, the lack of childcare facilities, and the issue of old-age poverty are equally important.
Experts believe that governments should also take into consideration the ecological anxiety factor. Although it seems that “all is going well” in their lives, young people no longer have the desire to marry and have children. In Finland (ranked first on the World Happiness Index 2023 for the sixth year in a row and named the Happiest country in the world), people are not having more children than elsewhere. Young people are more pessimistic than previous generations and no longer aspire towards the same ideals. Authorities are therefore expected to consider these factors when planning for the future.
