Taiwan Today

A low birthrate, longer average lifespan and rapidly aging society pose challenges for Taiwan’s future.

In Taiwan, the birthrate has continued to decline since 1950. It went from every woman giving birth to an average of seven children that year down to 1.03 in 2009, when 191,310 babies—about half of the figure 30 years ago—were born. As the Year of the Tiger according to the Chinese zodiac, a time that many Taiwanese traditionally consider inauspicious for getting married or for delivering children, 2010 was likely to record fewer than 190,000 newborns. In addition to the extremely low birthrate, which is expected to continue for the foreseeable future, longer lifespans and a rapidly aging society will create challenges due to the greatly changed age composition of the population. It is expected that by 2031, or within 20 years, while the total population will stay around 23 million, senior citizens aged 65 and over will account for 25 percent of all residents, a rise from the current 11 percent, while the ratio of young people under the age of 15 will decrease from the current 16 percent to 12 percent of the total population. Also, the proportion of the labor population, or those from 15 to 64 years old, will drop from 73 percent to 63 percent. Notably, even if the labor participation rate and the unemployment rate remain at 58 percent and 5 percent respectively as they are now, the labor population will have a much greater burden. In short, in 20 years’ time every jobholder will have to provide for 0.7 senior citizens and 0.35 children, as well as 0.8 persons without a job in the 15 to 64 age bracket.

Last year, while the number of newborns in Taiwan was at a historic low, they still outnumbered deaths, so that the total population increased slightly, registering a net gain of more than 40,000 people. Nevertheless, with the growing elderly population and accompanying increase in the death rate, Taiwan is expected to see a population decrease in 10 years. As Taiwan, with its limited and mountainous land area, claims a population density of 630 people per square kilometer, a figure that comes second only to Bangladesh among world regions with populations of more than 10 million, some might think that fewer people would be beneficial for the environment and quality of life in Taiwan. While such views sound logical, Taiwan will hardly benefit from a smaller population during the next 20 years, before fewer newborns and more elderly people will bring notable changes to the age composition of the population. Notwithstanding the population increase in the next decade before it begins to decrease gradually, the government must take precautions right now in its policy-making efforts to tackle such problems.

The percentage of young people in Taiwan under the age of 15 is expected to drop from the current 16 percent to 12 percent within 20 years. (Photo by Chang Su-ching)

Longer life expectancy and lower birthrates saw Taiwan become an aging society in late 1993, as citizens aged 65 and older reached 7 percent of the country’s population. That segment of Taiwan’s population was expected to be 11 percent by the end of 2010. While an increase of 4 percentage points in 17 years is not fast, a rapid growth of the aged population is expected to begin from 2015 as Taiwan’s post-war baby boomers reach retirement age. The care and welfare of the elderly will therefore become an increasingly important part of government policy. Since longer life expectancy—an “achievement” of civilization—is an unchangeable trend, lifting birthrates becomes the only option to slow down the aging of the population.

Developed countries encourage childbirth through eight types of measures: childbirth benefits, child or childcare subsidies, sound daycare and babysitting systems, education privileges or subsidies, low-interest housing loans or rent subsidies for new parents, income tax deductions or exemptions, parental-leave allowances and immigration. Different countries have different amounts of benefits and subsidies, as well as different policies in granting them. Some countries grant them only to selected groups such as the economically disadvantaged, while others have more universal policies, which, naturally, require greater funding. Not all measures are for the sole purpose of encouraging childbirth, so a government needs to evaluate conditions and then decide which measure or measures to take and who will be eligible for the benefits. Taking such measures, however, does not guarantee an increase in the birthrate.

Encouraging Birth

As far as Taiwan is concerned, most of the cities and counties have adopted either comprehensive or selective incentive measures to encourage young couples to give birth to more babies. Some of them have been implemented for years, while others have just been introduced recently. For example, the Taipei City Government plans to offer families a one-time payment of NT$20,000 (US$625) per child starting on January 1 this year. Among the eight measures previously mentioned, birth subsidies are the most direct policy. However, it will take time to see if a measure will contribute to an increase in Taiwan’s overall birthrate or at least slow its decline.

In recent years, not only local governments but also the central government have offered childbirth or childcare incentives. For example, the central government has unveiled a new policy that allows couples under the age of 40 to apply for an interest-free housing loan of NT$2 million (US$62,500) twice—one time when they get married and are first-time homebuyers and another if they have a child and need to change to a larger house. This housing loan program has been well received thus far. In addition, starting in May 2009, the central government has rendered subsidies to local workers to encourage them to take unpaid parental leave from their job. Accordingly, a working mother or father is entitled to six months of subsidies to take unpaid parental leave. The subsidies come from the employment insurance program and are equivalent to 60 percent of a worker’s insured salary. Before the subsidy scheme was implemented, only about 3,700 workers applied for unpaid parental leave each year, but after the scheme came into effect, some 3,600 workers have taken unpaid parental leave each month.

Meanwhile, childcare, community babysitting systems and educational subsidies for underprivileged families have all been carried out for several years. Still, these are not universal schemes. A number of other measures regarding child or childcare subsidies or income tax exemptions and deductions are still being studied, mainly because of current financial constraints. All the above-mentioned measures aim to reduce the financial burden on young couples so that they can afford to raise children. As mentioned, however, it will take time to verify if these measures can effectively boost the birthrate.

Finally, with regard to immigrants to Taiwan, immigrant female spouses have delivered more than 300,000 babies over the last decade. In particular, the number of babies born to immigrant women hit a peak of 30,348 in 2003, accounting for 13.37 percent of Taiwan’s overall number of newborns that year. In recent years, the rate has hovered near 10 percent. It is believed that without these “new Taiwanese children,” the birthrate would be even lower.

In fact, the number of newborns in 2010 was likely to be less than in 2009, as 2010 was the Year of the Tiger in the Chinese zodiac. Even allowing for a bump in birth numbers this year, however, the current trend toward lower birthrates is worrying.

The global financial crisis that began in the second half of 2008, in particular, has made quite an impact on Taiwan during the past two years. Over the period, the unemployment rate has risen, income levels have decreased and the population of the poor has grown, while these factors combined have also widened income inequality.

This situation has become more serious alongside long-term population changes. Income inequality—the ratio of the average annual disposable income of the top 20 percent of all households to that of the bottom 20 percent—has increased, for example, since rising unemployment rates and decreasing salaries resulting from the financial crisis reduce the disposable income of poorer families. Also, falling averages in the number of household members will widen income inequality.

On the other hand, the government is providing short-term employment opportunities and more unemployment subsidies to protect the increasing number of underprivileged individuals. The government also offers support to enterprises designed to help them retain their employees during temporary slowdowns or closures of their plants. Meanwhile, the government has launched more schemes to help disadvantaged individuals, such as by providing employment counseling and helping them out of poverty.

The government has had to increase debt to fund such services, however, as it is experiencing shortages in tax revenue at the same time that it must expand spending in these areas. Therefore, management of resources must be a priority for the government, or it will be difficult for it to balance its own budget.

Factors that affect the birthrate are many, including those that are personal, familial, social or cultural. What is most often mentioned, in the personal aspect, is that people mull their economic status and life plans when considering whether they want offspring. In the familial aspect, there are often elderly members of a family looking forward to the birth of a male heir. On the socio-cultural front, whether people value males above females also constitutes a factor in the overall birthrate. Even the traditions of the Chinese zodiac are seen to affect attitudes toward marriage and childbearing—the birthrates over the past 50 years indicate that the number of births goes up in the Year of the Dragon and down in the Year of the Tiger.

Deferring Marriage

What is noteworthy is that the growing popularity of higher education in the past 10 years has led to the deferment of marriage for young people, thereby compressing the period of childbearing. Young people could also be less willing to get married in times of an economic downturn or unstable employment. Other phenomena, such as less respect for traditional family values and the rising divorce rate, could affect the attitude of young people toward marriage and childbearing as well. Therefore, if we want the aforementioned financial measures to be effective in encouraging people to raise children, we must first eliminate the psychological barriers discouraging people from bearing children. This cannot be achieved by spending money alone. Instead, we need to develop a national campaign to encourage young couples to create a future for themselves as well as for their country through childbearing. 

—Translated by Taiwan Review