Home' Trinidad and Tobago Guardian : September 25th 2014 Contents BG18 COMMENTARY
BUSINESS GUARDIAN www.guardian.co.tt SEPTEMBER 2014 • WEEK FOUR
Arthur Kemp is credited
with coining the phrase,
"Demographics is des-
tiny". If that statement is
true, then it is quite likely
that on our current path
T&T is doomed.
As we celebrate our 38th anniversary as a
republic, the future of this country hinges on
a statistic pointed out by the Minister of Plan-
ning and the Economy two years ago during
the release of the last national census.
The minister pointed out that "a population
in which the ratio of persons aged 65 and over
relative to the population aged 15 and younger
(ageing index) is 30 or above may be described
as old". The ageing index of T&T is 43.5, which
means we are a very "old" population.
What are the implications and what are we
doing about it? Is the public aware, do we
even care? I have taken every opportunity over
the last four years to highlight the need for
an immigration policy for T&T, yet no one
seems to be listening.
Many times over the last decade, this column
has raised the issue of our poor demographics
in the context of planning for retirement and
our inability to develop our capital markets
so as to allow for wealth creation where people
can manage their own affairs into retirement
and beyond, instead of depending on the State
for an increased grant or allowance. Instead
of wealth creation, our politics is more about
Demographic issues have far-reaching con-
sequences, will affect the lives of every citizen
and will determine the future prosperity of
this country in a post oil and gas era. Despite
this, it does not form part of the national
debate and gets little more than lip-service
from those in authority. Is it that we do not
understand what is at stake?
It is my strongly held view that demograph-
ics more than any other driver determines the
movement of financial markets and impacts
changes to culture and social "norms". All this
ultimately combines to determine the pros-
perity of a nation.
The number of children born to a woman
living in the United States averaged eight in
1800 and declined steadily to two by 1930. At
the end of that period came what is today
called "The Great Depression".
Following the end of World War II, that
number spiked to four children in 1960 herald-
ing what was known as the "Baby Boom Gen-
eration". As that generation came into the
workforce, it heralded the wealthiest generation
in the history of man. By 2010, the Baby
Boomers began to retire en mass and 1.93 chil-
dren per woman was the new average in the
US. With that change in demographic came
The Great Recession. Is this just a coinci-
Factor in Japan, which is currently in the
midst of a multi-decade economic malaise
marked by chronic deflation. In 1989, 11 per
cent of the Japanese population was over 65.
In 2006, that number moved to 20 per cent
and it is expected to reach 38 per cent by 2055.
Japan has a life expectancy of 84.2 years,
the highest in the world. Overall welfare costs
have risen from five per cent of National
Income in 1970 to 31 per cent in 2012. Will
Japan ever get out of their economic malaise,
given its already high debt burden and poor
demographic? I doubt it and the experience
of the US and Japan are just two examples of
the role that demographics play in an economy.
Demography impacts the structure of the
capital markets as well. A society saving for
retirement will invest and, in the process, the
demand for longer-term securities like stocks
increases. View a chart of the US stock market
from 1980-2000 and appreciate the impact
of that Baby Boom Generation. See what has
happened since then as they move to retire-
ment and shift to fixed income products.
The Financial Analyst Journal is the newslet-
ter of the Charted Financial Analyst (CFA). A
January 2012 article titled "Demographic
Changes, Financial Markets and the Economy"
drew on 60 years of data across 22 core coun-
tries extending to 176 countries depending on
For a typical economy, economic growth is
most robust when the 20-35 age group dom-
inates the population. A one per cent higher
concentration in this age group increases gross
domestic product by 1.4 per cent. Real GDP
per capita growth is driven by this demographic
and individual worker productivity is at its
highest for the 30-40 age group. From age
40 onwards worker productivity begins to
decline and, in an economy dominated by
persons aged 50+, the relationship between
real GDP per capita becomes decidedly neg-
A concentration of persons in the 20-35 age
group in the US during the 1980s and 1990s
meant that productivity and GDP were at its
peak levels. That prosperity in and off itself
allowed more women to enter the workforce
who, in turn, eventually focused on their pro-
This caused social changes and was the
same across much of the developed world.
Today, the average age at which women marry
for the first time amongst the G20 nations
ranges from 31.8 years in the UK to 26.9 years
in the US. I do not have the number for T&T,
but I know Jamaica is at 33.2 years, which
means T&T is likely to fall between the US
and Jamaica. The bottom line is declining birth
rates, an aged population and declining eco-
nomic growth rates.
Globally, we have reached a peak for the
birth of children. In 2013, it is estimated that
there are two billion children between ages
0-14 and this number is expected to remain
constant through to 2030. In the meantime,
we have life expectancy rising across the world.
Populations are growing older, who is going
to care for them, and how will it be funded?
In 1973, the median age in China was 19 today
it is 35. Today, China with a one child per couple
policy has the same median age as T&T. In the
European Union, it is 41.9. An aged index of
43.5, a median age of 34.5 and a negative pop-
ulation growth rate of -0.11 per cent speaks to
a sorry tale for T&T. Our negative population
growth rate is because 6.42 persons leave per
1,000 of population. If you accept the role that
demographics played in some of the countries
citied above, it should be clear our future is
going to be challenged.
According to the 2012 census report, 70.4
per cent of our population is of working age.
However, 520,351 out of just over 1.3 million
people (40 per cent) are over the age of 40 and
ten per cent are over the age of 65 years. Analysed
further, the report indicates that the two largest
age brackets are 20-34 and 45-55 years.
The 20-34 age group leads to greatest
increase in output and GDP, but how many
of ours are in make-work and State-sponsored
programmes? Of the 13 per cent of the pop-
ulation that are in the 15-24 age group, how
many will utilise the funding from the GATE
programme and then leave our shores? How
many from the 20-34 age group have already
What plans are there to cater to the bur-
geoning over 40 demographic that now com-
prises 40 per cent of the population? Where
are our improvements to health care services,
how are their retirements going to be fund-
ed?What are we doing to increase the birth rate
in this country? Are we dealing with crime so
as to attract people to our shores? Do our
immigration policies ensure that immigrants
meet or exceed our existing per capita income
of US$20,000 per annum? How do we manage
the deliberate policies of the developed world
to attract immigrants at the same our higher
Where will the population come from to
provide the productive capacity for our diver-
sified economy if we ever get there? From
where will we get the onshore market size
necessary to allow our manufacturing sector
to profitably innovate and spend on research
and development before testing the export
markets of the future.
Did someone say rapid rail? In 20 years
time, based on current trends, less than 30
per cent of our population will be in the 20-
44 age bracket. Will that be sufficient to sustain
and justify expenditure on such a project or
will we be contented to move from a fuel sub-
sidy to a monorail subsidy?
I can go on and on to emphasise our lack
of planning, but if we continue as we are, then
we are doomed.
T&T: What is your destiny?
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