Taiwan's sinking birth rate threatens productivity

TAIPEI Fri Apr 2, 2010 5:21pm EDT

1 of 2. A baby yawns inside the maternity ward of a hospital in Taipei March 31, 2010.

Credit: Reuters/Nicky Loh

TAIPEI (Reuters) - Taiwan is scrambling to raise its birthrate, among the world's lowest, before the sinking number of newborns threatens productivity for its export-driven $390 billion economy.

Taiwan fears it will lack the manpower or brainpower in 10 to 15 years to keep up with industrialized Asian peers and the blooming economies of some Southeast Asian countries.

A crude birth rate of 8.3 newborns per 1,000 people last year puts Taiwan above only Germany, Hong Kong, Italy and Japan, according to estimates by the CIA World Factbook. In comparison, Vietnam has a birth rate of 17.73 and Malaysia 22.24.

"Without a young generation, there's no labor force, then you lose productivity," said Hu Chung-ying, deputy minister of the Taiwan cabinet's Council for Economic Planning and Development. "It's a very worrisome issue."

Japan, despite a rate of 7.64, has soldiered on with automation and encouraging elders, women and foreigners to work. Asian peer Singapore has used baby bonuses for nine years to raise its rate, which was estimated at 8.82 in 2009.

Taiwan's productivity would slide as retirees exceed new workers on the island of 23 million people unless citizens return en masse from abroad or more elderly seek jobs, economists say.

That would cripple Taiwan's hard-fought efforts to compete with Hong Kong, Singapore and South Korea, all known for industrialization and fast growth from the 1960s to the 1990s.

FOCUS ON CAREER, SAVINGS

Taiwanese are shunning births in favor their careers, which often delays marriage or scraps the idea altogether, and to save child-rearing expenses that include babysitters and education from kindergarten to university.

"Women have changed. Women have expectations of a career," said Linda Arrigo, an American-born Taipei university instructor in Taipei with a sociology background. "Women can't handle a career with two children plus."

Housing prices are rising fast in parts of Taiwan while wages are stagnant, adding financial pressure to middle-class couples.

Sunny Yen, 42, is a typical case. She and her husband are middle-class white-collar workers in Taipei. They decided against a second child after realizing that their first would cost T$20 million ($630,000) to raise from diapers through college degree.

"If the financial burden were not so high, people might have more children," Yen said. "The government needs to take more practical measures step by step."

Officials can choose from a number of measures, drawing on examples in Europe, Australia and Asia. Choices include more time off, better access to child care, government financial aid and offers of above-market wages to keep the elderly on the payroll.

Cities and counties in Taiwan will come up with subsidy packages for families with newborns, while the parliament considers a tax break plan, said Hu of the planning council. Scholarships are in the works, Hu said, and more employers are providing nursing rooms for workers.

The government is also studying a plan to offer parents T$5,000 a month for each child's first three years, media said.

The interior ministry expects its 2010 budget to cover the so far unknown cost of encouraging child births. If it needed more, Taiwan could set up a special budget or reallocate resources, said Tony Phoo, an economist at Standard Chartered in Taipei.

In the longer term, Taiwan may allow more migrant labor, supplementing a foreign workforce of about 300,000, mostly from Southeast Asia, he said.

But first, a T$1 million reward will go to whoever submits the best pro-baby slogan.

"If the birth rate keeps going down, the government has got to produce measures," said Liang Kuo-yan, president of the Polaris Research Institute in Taipei. "One, of course, is to encourage more births."

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