The demographic dividend of the Philippines: Avoiding growing old before becoming rich
(Part 3)
Will the Philippines grow old before becoming rich? That is the sad fate that has befallen Thailand because of a very aggressive birth control program in the last century (quite similar to what is happening now to China and what happened to Singapore in the 1980s, with the difference being that Singapore was able to become rich before growing old). The answer to that question will be found in what our leaders — both in the public and private sectors — will do in the next 20 years to take full advantage of the new type of demographic dividend resulting from a drop of the fertility rate to below-replacement of 1.9 babies per fertile woman.
As Deputy Executive Director Lolito Tacardon of the Commission on Population and Development pointed out in a recent briefing, such a decrease in fertility rate has a bearing on the age structure so that the dominant sector of the population now belong to the working age group aged 15 to 64, while the dependents, those aged zero to 14 are getting fewer in number. If the country is successful in harnessing the working-age population, there is a great possibility that economic development can be accelerated. In concrete terms, while the Philippines has managed to grow its GDP at 6% to 7% over the last 15 years, with the exception of the abnormal decline during the height of the COVID-19 pandemic, this demographic transition may make it possible for our GDP to grow at 8% or more if we are able to harness the young population productively.
Whereas the emphasis of what was then known as the Commission on Population (Popcom) was to control population growth, the better named Commission on Population and Development should concentrate on the means to accelerate development and allow market forces and the individual decisions of married couples to decide on the number of children they want. The State should stay out of the bedroom.
Although the pill-pushers are unhappy, it is a good trend to see the budget for family planning remaining stagnant and scheduled to be reduced by 2024. As the former Executive Director of the Commission on Population and Development, Juan A. Perez III, complained in an article in this paper (June 5, 2023), the family planning budget has remained stagnant and started to be reduced this year. Unprepared LGUs are now obliged to buy birth control pills and condoms, instead of receiving them for free. The Medicines, Technologies, and Pharmaceutical Services (MTaPS) Program reported that from a high of 50% free contraceptives from government in 2018, the share of free contraceptives went down to 17%. Women are now getting their pills from the local drug stores or boticas as health centers run out of pills. To me, it is a good sign that Popcom has closed its family planning clinic and converted it into an employees’ clinic.
Although responsible parenthood continues to be a valid concept, it is time to adjust to the new reality that the real population bomb is the rapid ageing of the population and that is desirable for Philippine society never to lose its pro-life and pro-children culture. Many parts of the developed and even developing world are regretting having instilled in the minds of especially their women a “contraceptive mentality” which has been proven to be irreversible. For example, for more than 20 years now (even when the founder of modern Singapore Lee Kuan Yew was still alive), Singapore has been implementing all types of pro-children programs which have all failed. Once an anti-birth mentality has been nurtured in a society, it is almost impossible to remove it because a consumerist and materialistic approach to life considers children as an obstacle to the individual fulfilment of the parents, especially among the women. To consumerist couples, it is often a decision to have a child or to buy a Lexus car.
It is thought-provoking to read what a fellow columnist in this paper wrote about population policies over the years. Diwa Guinigundo was one of the technocrats responsible for building the Bangko Sentral ng Pilipinas (BSP) into one of the best central banking institutions, not only in Southeast Asia, but in the world. In his column entitled “Signs and Wonders,” way back on Nov. 19, 2022, he commented on the warning issued by the International Monetary Fund (IMF) in its publication Ageing is the Real Population Bomb by David Bloom and Leo Zucker of Harvard (which we had already referred to in Part 2 of this series). Because of the continuing decline in fertility in many countries all over the world (including the Philippines), policy makers must prepare for the harsh reality of a “dwindling workforce straining to support burgeoning numbers of retirees, a concomitant explosion of age-related morbidity and associated healthcare costs, and a declining quality of life among older people for lack of human, financial and institutional resources.” The Philippines must do everything possible to avoid growing old before becoming rich. Otherwise, using Guinigundo’s own words, we could be “wired to premature destruction.”
In his column, Guinigundo — who was Deputy Governor of the BSP which he served for 41 years — expressed his disappointment that it took very long for the fertility rate of the Philippines to reach the below-replacement level of 1.9 babies per fertile woman. He attributed this phenomenon to “some institutional objections to artificial methods of contraception, other than the natural method for spacing children. Health and economics yielded to faith-based arguments.” He pointed out, however, that the continuing high birth rates did not prevent the Philippines from achieving 21 years of uninterrupted positive growth, from 1999 all the way to 2019, just before the pandemic erupted in 2020. He attributed this to a long string of policy and structural reforms that liberalized the economy (especially during the presidency of Fidel V. Ramos). New industries and business process outsourcing added more push. In fact, I have always maintained that despite a good number of very undesirable political leaders, from top to bottom, we were fortunate that the best and the brightest economic managers (like Diwa himself) were present in every Administration over the last 30 to 40 years. That is why, by 2011 the Philippines was able to discard its notorious reputation as “the sick man of Asia” by consistently growing at a high of 6% to 7%, except for the huge decline in our GDP during the pandemic (from which we quickly recovered).
Where Diwa and I disagree has to do with his view that if we had been more aggressive in bringing down the fertility rate sooner, the economy could have expanded all the more, more job opportunities could have been made available to the labor force, and poverty could have been more decisively reduced — provided appropriate public policy had been put in place. It is this last proviso (provided…) that is the source of my doubt that all the good things mentioned by Diwa would have happened had we reduced the fertility rate sooner. Having been deeply involved in trying to influence public policy over the last 40 years, I can attest to the fact that it was a very slow and painful process to arrive at the critical mass of enlightened economic policies that we now have. Reducing the fertility rate too soon, with still very imperfect policies, would have deprived us, for example, of the “emergency solution” of sending OFWs abroad to earn some 10% of our GDP. It might also have decreased the number of those young people who are among the 1.7 million workers in the IT-BPM sector whose earnings account for another 10% of GDP.
But more importantly, by failing to spread the contraceptive mentality among our population — like Thailand did — we have done a big favor to future generations who, with the fertility rate now already below replacement, will benefit from the fact that we have preserved the pro-birth and pro-family mindset that both the Catholic faith and the Malay culture have instilled in our culture. Because it took us very long to reduce our fertility rate, we have made it easier for Generation Z and their children to avoid growing old before becoming rich.
(To be continued.)
Bernardo M. Villegas has a Ph.D. in Economics from Harvard, is professor emeritus at the University of Asia and the Pacific, and a visiting professor at the IESE Business School in Barcelona, Spain. He was a member of the 1986 Constitutional Commission.
