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Sunday, October 24, 2021

Quality matters more than quantity

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If one scrutinizes what has happened in countries whose population is old and economy is stagnant—Japan is an example, or some economies whose health care system is overloaded and devastated by the Covid-19 pandemic, such as European nations, then he or she will understand why governments always wish to retain a young population structure

Encouraging young men and women to get married before 30 years of age, give birth to two kids and bear them before 35 is a crucial point in the “Program to Achieve Appropriate Birth Rate in Areas and Categories by 2030” in accordance with Decision 588 by the Prime Minister. Some incentives have been proposed—tax holidays for two-children families, housing assistance, admission to public schools and reduction of community contribution, to name but a few.

The new stipulations have gained public attention because Vietnam has been traditionally considered a populous nation. Although the family planning policy has been implemented for decades, the Vietnamese population remains young and Vietnam always ranks among the world’s most populous nations.

However, few know that Vietnam has entered the early stage of population aging, when the demography of people aged 65 or older accounts for 7% or higher of the total, or when the contingent of people aged 60 or more accounts for at least 10% of the total. According to estimation by the United Nations, Vietnam has officially experienced the population aging phase since 2014. It takes Vietnam less than 20 years to see her population of people aged 65 or more rise from 7% to 14%. In line with this trend, by 2038, senior citizens in Vietnam will have accounted for 20% of the national population, making Vietnam become one of the nations with the fastest pace of population aging.

According to the national census on population and housing in 2019, Vietnam was home to over 96.2 million people whose average annual population growth rate during 2009-2019 was 1.14%/year, a slight fall over the 1.18%-rate in the previous period of 1999-2009. The rate of married people aged 15 or older was 77.5%. However, the average age of people who get married for the first time has risen by 0.7 year over the past decade to 25.2 years now. Notably, the total fertility rate (TFR) stood at 2.09 children/woman, slightly below the childbirth replacement rate of 2.1 children/woman as has been targeted.

If this trend persists, that the rate of people in the working age declines is foreseeable. Such a decline will not only adversely affect economic growth but also pile pressure on the Government’s budget and welfare programs. The recent decision to raise the retirement age is one of the examples.

If one scrutinizes what has happened in countries whose population is old and economy is stagnant—Japan is an example, or in some economies whose health care system is overloaded and devastated by the Covid-19 pandemic—such as European nations, then he or she will understand why governments always wish to retain a young population structure.

Quality is better than quantity

However, such population growth should not be considered the ultimate goal among economic driving forces. It is undeniable that her abundant low-cost workforce has helped Vietnam attract a considerable number of foreign-invested enterprises. The advantage of a young population has therefore been fully exploited. Yet Vietnam cannot rely forever upon her cheap labor pool.

Naturally, an unskilled workforce often attracts only low-tech projects in labor-intensive industries or polluting sectors. Instead of accepting them as a fate, Vietnam should make efforts to improve the workforce’s skills and its productivity. This is of prime importance considering the possible shift of manufacturing facilities and capital brought about by the trade war between economic powerhouses and Covid-19. To effectively address these problems, it needs to start first with education and healthcare.

In addition, it’s crucial to realize that current unfavorable conditions on healthcare, education and income have to some extent impacted marriage and birth plans of young Vietnamese who have already been dazzled by the fast pace of modern lifestyles in metropolises.

As a result, before actually implementing the new population policy, Vietnam should first improve the quality of her healthcare and educational conditions. Allocations for these two sectors still remain modest in the total budget. Worse, money has been used ineffectively. Why need a higher birth rate if the human development index (HDI) does not improve?

Statistics show that the HDI, which is based on three indicators [health measured by average longevity; intellect represented by mean years of actual schooling and expected years of schooling; and average gross national income (GNI)].

Vietnam’s GNI was 0.693 in 2019, a modest increase only by 0.003 compared with 2018, putting the country in the median group and ranking her at 118th out of the 189 classified countries. Although compared with 1990, Vietnam’s HDI has been raised by 45.9% from 0.475, the growth has been seen slower in recent years. Vietnam should try to improve her HDI and rank among the top-100 before setting a higher birth rate as a goal.

Another absurdity to be tackled: while urban centers have a low birth rate, rural areas have a higher one. For your comparison: TFR of urban centers by the end of 2019 was 1.83 children/woman versus 2.26 children/woman in rural areas. HCMC had the lowest rate, at 1.39 children/woman while Ha Tinh Province scored the highest rate, at 2.83 children/woman. The rate has been remarkably impacted by education, which is evidenced by the lowest rate (1.85 children/woman) among those with a university degree, and the highest rate (2.59 children/woman) among those who never go to school.

The marked discrepancies in different regions have resulted in children given uneven healthcare and educational conditions to develop. It is this reason that accompanying measures for leveling the 50% income difference between urban centers and rural areas, and between mountainous regions and plains, the Government should also have more welfare programs for disadvantaged areas. Investment policies should highlight aims to foster even development in different regions and at the same time partly relieve the pressure mounted on urban centers.

Old people are often thought to be a burden on society. However, if newborns are not well taken care of, physically and mentally, they may suffer enormously later due to poor health, low educational level and unemployment in a time machinery is replacing human muscles. People in these constraints are prone to breach the law and become a heavier burden for society.

The size of a labor pool matters much. Yet its quality, intellect and job skills, matters even much more.

To cope with economic problems caused by old population, the Government should come up with more appropriate policies which enable senior citizens to continue doing suitable jobs. Statistics show that by end-2019, 88% of Vietnamese aged between 25 and 59 joined the labor pool. On the contrary, for those between 15-24 or over 60, the same rate was below 10%.

Improvement of labor productivity should be taken into account. Also, feasible measures should be adopted to lure more overseas Vietnamese and young foreign workers. That would partly tackle the problem of population aging.

It is noteworthy that many of the elderly are wealthy, whose assets are higher than average people in society. Their expenditure may help total demand sustain the positive economic growth and afford opportunities for industries which care for old people. Studies have indicated that people in the 55-77 age group spend twice as much on healthcare than children aged 0-15.

By Ho Le

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