Lower Fertility Need Not Lead to Economic Decline

A baby is held by its mother and entertained by its grandfather at a community clinic in northern Bangladesh.

Globally, most people say they want two or more children, but many are having only one, or none at all. According to a senior UN economist, fears of a demographic time bomb are unwarranted.

There is no denying that in many countries populations are ageing and fertility is declining. The latest State of World Population report from the UN sexual and reproductive health agency (UNFPA) shows that around one in five adults worldwide believe they will not be able to have the number of children they want, largely due to economic insecurity, inequality, and a lack of support.

However, Michael Herrmann, an economist and demographer at UNFPA, cautions against panic. “Demographic change is not a crisis in itself,” he says. “It is a reality we need to understand, plan for, and adapt to.”

Demographic resilience

Mr Herrmann, speaking on the sidelines of the Commission on Population and Development meeting at UN Headquarters in New York, advocates for a concept gaining increasing attention: demographic resilience.

This involves helping societies anticipate population changes, adapt institutions, and make better use of human potential. The approach applies to both developing and developed countries, whether populations are growing, shrinking, or ageing.

Some countries benefit from a “demographic dividend”, where a growing working-age population boosts economic growth. Others, further along the demographic transition, can gain a “second dividend” by investing in education, health, skills, and technology to increase productivity.

Shrinking workforce

One of the most visible effects of ageing populations is a shrinking workforce. Many governments have responded by raising retirement ages, a measure Mr Herrmann says is often too blunt.

Requiring everyone to work longer ignores differences in capacity, preference, and life circumstances among older adults. Some may wish to continue working in part-time or less demanding roles. Flexible options can help older workers remain engaged while easing pressure on pension systems.

Population ageing is a defining global trend of our time.

Cash incentives fall short

As birth rates decline, some governments offer cash bonuses, tax breaks, or set fertility targets. Evidence suggests these measures have limited and short-term effects.

“One-off payments do not change long-term decisions,” Mr Herrmann says. At best, they may influence when people have children, not whether they do.

UNFPA’s Youth Reproductive Choices Survey, now under way in 70 countries, takes a different approach by asking people directly why they are having fewer children than they want.

Early findings point to a mix of economic and social pressures. High housing and childcare costs, insecure jobs, and concerns about the future – from political instability to climate change – all play a role.

Unequal gender roles also remain a key factor, with women often carrying the bulk of unpaid care and domestic work. “These are not issues that can be solved with a cheque,” Mr Herrmann adds.

The right to choose

Policies driven by fears of population decline can undermine rights, particularly for women. Fertility targets and top-down measures may come with harmful assumptions, such as limiting access to reproductive healthcare or discouraging sex education.

A rights-based approach instead asks what prevents people from having the children they want. Governments can then focus on practical solutions such as affordable housing, accessible childcare, parental leave for both parents, stable employment, and equal pay.

Ageing and economic impact

Ageing populations do present challenges, especially for pensions and healthcare systems, but they do not automatically lead to economic decline.

Spending on healthcare and long-term care can create jobs, particularly in community-based services. Older people also contribute beyond paid work, including caregiving and volunteering.

The greater challenge, Mr Herrmann argues, is a shrinking labour force. Addressing this requires greater inclusion, bringing more women, migrants, young people, and older workers into employment, alongside investments in education, skills, technology, and infrastructure.

Migration is not a quick fix

Migration is another important demographic factor. In countries facing population decline, low birth rates are often only part of the issue, with emigration playing a major role.

In parts of the Western Balkans, populations have fallen significantly since the 1990s due to outward migration. By contrast, countries such as Germany have avoided population decline largely through inward migration.

However, migration alone is not a quick solution. Without language training, recognition of qualifications, and access to employment, many migrants remain excluded from the labour market.

Listening over panic

Ultimately, Mr Herrmann emphasises the importance of listening.

If most people want two children but have fewer, the solution is not pressure or panic. Instead, it requires understanding people’s realities and shaping policies that expand choice.

Handled well, demographic change can be managed with fairness, confidence, and a long-term perspective.