Empreendedorismo e Inovação Mercado

Brazil’s demographic conundrum

Brazil’s demographic conundrum

The recentlyreleased final statisticsofthe 2010 Census show thatBrazilhasmadeconsiderableheadway in manyareas over thelastdecade. For example, therehasbeen a significantimprovement in thedistributionofpersonaland regional income, a drop in infantmortalityandilliteracy rates, as well as higheraccesstopublicservices.

The CensusalsoconfirmedthatBrazilisundergoing a substantialdemographicchange.

The dippingfertilitygraph

ForecastsindicatethatBrazil’sfertility rate willbeamongthelowest in the world bytheendofthisdecade [GettyImages]

The averagegeometric rate for annualgrowth in thepopulationwentfrom 1.64%, registered in the 1990 Census, to 1.17%, in thelatestsurvey. The mainfactorbehindthisdecreasewasthechange in fertility rate. In 1990, fertility rate wasat 2.38 children per woman; however, in 2010, this rate was a mere 1.86, wellbelowthepopulationreplacement rate of 2.1, andbelowthe rate in severaldeveloped countries.

The change in Brazil’sfertility rate drawsattentionduenotonlyto its similaritywithtypical rates in wealthy countries, butalsototheswiftnessofthefall, whichdroppedfrom four totwochildren per woman in a mere 25 years – in wealthy countries, such a changewouldrequire 60 yearsor more. ForecastsindicatethatBrazil’sfertility rate willbeamongthelowest in the world bytheendofthisdecade.

Owingtothelowbirth rate andtheincrease in lifeexpectancy, the age-groupsofthepopulation are changingrapidly. In 1990, some 35% ofthe total populationwas in the 0-to-14-year-old age group; in 2010, thispercentagedroppedto 24%. In 2025, thatnumberisexpectedtobelessthan 17%. Meanwhile, the over-60 group, whichwasat 7.0% in 1990, grewto 11% in 2010, and, before 2025, it isexpectedtobelargerthantheyoungpopulation. The rapidgrowth rate oftheelderlyisexpectedtobeaccompaniedbythedrop in the total populationbytheendofthe 2030s.

The CensusreportsthatBrazilisonthefasttracktohaving a demographic standard thatistypical in wealthy countries, eventhough it is a country in whichthe per-capita incomeisconsideredlowbycomparison. Andhence, Brazil, in thenear future, isexpectedto face its biggestchallenge in thestruggletoachieveprosperityand social progress, whichentailsdiscoveringthemeanstoencouragingthe per-capita incometogrowwhile it isapproachingtheendofthedemographicdividend, dueby 2023.

“Social securityisalreadyoperatingwith high andincreasingdeficitsevenbeforethe country hastrulyaged” [GettyImages]

The costsofageing

Sluggishgrowth in thepopulationreducestheincrease in demand for basicgoodsandservices, creatingopportunitiesto improve standards of living andpreservingtheenvironment. Nevertheless, ontheotherhand, it alsobears some importantchallenges for economicgrowth.

The firstis fiscal, becausethegrowth in theelderlypopulationmeansanincrease in retirementandpensionpayouts, as well as spendingonhealth, which, in turn, putspressureon taxes andthegovernment’s fiscal capacityto invest. Oneconcernisthatthe social securityisalreadyoperatingwith high andincreasingdeficitsevenbeforethe country hastrulyaged. The combinationof a lowaverageretirement age in termsoftaxcontribution, whichis a mere 54.4 years for menand 51.3 years for women, and a growinglifeexpectancy, complicatesthe fiscal equationeven more.

The secondchallengeissavings, which are lowandneedtoincrease. The problemisthattheagingpopulationtendstobeaccompaniedby a slowincrease in savings, becausethereisthetendency for peopletosave more duringtheiractive age andlessduringtheinactive age.

The risinglackof labor isexpectedtoaffectthepotentialproduction output [GettyImages]

The thirdchallengeisthepotential output. Sincethebeginningofthe 2000s, therehasbeen a rapidslowdown in thegrowth rate oftheworking age population. Whilethenumberofpeopleenteringtheworkforceis still ontherise, suchgrowthhas come to fade. Projections show thatthisnumberwillgrowuntil 2023 andwillsubsequentlyslowdownrapidly. Thisphenomenonisoneofthe causes ofthecurrentlackof labor in Brazil. In fact, thelackof labor, evenifpoorlyqualified, isalready a reality andhascontributedtopostponingorevencancelinginvestments. Thisalso helps explainthesignificantincrease in real wages in theprivate sector andthefall in unemployment over thelastyears. As growth in theBrazilianeconomyishistoricallybasedonaccumulationofproductionfactorsandnotonincreases in total factorproductivity, therisinglackof labor isexpectedtoaffectthepotential output.

The fourthchallengeisrelatedtocompetitiveness. The increase in labor costshasbeenaccompaniedby its growingparticipation in total costs in practicallyalleconomicsectors. The averagecost in US dollars for an hour ofwork in themanufacturing sector hasgrownsignificantly, andisnowcomparabletothatof countries like Taiwan andPoland, for example. Increasingworkcosts help explaintheloss in competitiveness in some manufacturing industries andthegrowing role ofthe commodities sector in theBrazilianeconomy.

For Braziltogrowsustainably, it willhavetorespondandadapttothedemographicchanges. The response isexpectedtobe in theformof a substantialincrease in labor productivity, which, in turn, requires more investments in technology, vocational training, infrastructure, andbettereducation, as well as helpingboosttheproductivityof micro andsmallcompanies, wheremostworkers are employed. Adaptationshouldbemadethroughinstitutionalreformsaimedatreducingmicroeconomicdistortions, increasingpublicandprivatesavings, modernizingthe labor and social securitylegislations, andadjustingthemtothedemographicandeconomic reality ofthe country.

The viewsexpressed in thisarticle are theauthor’sownand do notnecessarilyreflectthepublisher’s editorial policy.

Fonte: http://thebricspost.com/brazils-demographic-conundrum/#.Uhtsf2TXiFf.  Acesso em August 26, 2013.