Presentation at the Institute for Labor Studies, DOLE, on demographic dividend and having more economic freedom.

1. Demographic Dividends: Gender and
Youth Dynamics of Population
Bienvenido “Nonoy” Oplas Jr.
Presentation at the Institute of Labor Studies, DOLE
The Bayleaf Hotel, Intramuros, Manila
18 November 2013

2. Outline
I. Demographic deficit, demographic
dividends
II. Some Say Big Population is Scary
III. Labor and Gender Policies
IV. Conclusions

3. Source: Barun Mitra, 2011

4. Top 31 Countries in Population Size by Age: the Young and the Ageing
Countries with red numbers generally have demog. deficit, those with green numbers
have demog. dividends.

5. Top 31 Countries in Population Size by Age, the Young and the Ageing
Source: http://www.worldometers.info/world-population/

6. Demographic Deficit Means More Public Debt
• Except for
Norway, Sweden,
Australia, all
developed
countries
expected to have
net debt/GDP
ratio of 100+
percent.
• Big age-related
welfare spending
will punch big
holes on their
younger people’s
pockets.
Source: Standard and Poor’s, “Global Aging 2013: Rising to the Challenge”, March 2013

7. Demographic Dividends Somehow Means Less Public Debt
• Countries with
young popn like
PH, India, Indon.,
are spared from
the burden of
high public debt.
• Net debt/GDP
ratio of less than
100 percent.
• Other emerging
markets with
aging popn are
less lucky:
Russia, Ukraine,
Lithuania, etc.
Source: Standard and Poor’s, “Global Aging 2013: Rising to the Challenge”, March 2013

8. Projected GDP Growth Rates 2013 and 2014, and Latest
Unemployment Rates, Selected Economies, in Percent
Source: The Economist, November 16th 2013
• Other factors at play but high public
debt, costly welfare spending contribute
to more econ uncertainty in the rich
world.
• PH proj. growth rates nearly
comparable to that of China.

9. Percent of Total Population who
are 80 years or older, 2013 and
2050.
• Countries with high elderly population like
Japan, Germany, Italy, France,
Netherlands, Canada, Switzerland, will
need more external support to take care
of their elderly and economic expansion.
Either more robots, or more humans.
• More humans from where? From
countries with many "unwanted
pregnancies" and "surplus/unwanted
children", like the Philippines.
Source: The Economist, Longevity and Economic Growth, July 3rd 2013

10. • China’s depopulation has
begun, decline of 3+ million
people in the working age
population in 2012. Special
credit to “one child policy.”
• They still have a big number
of young workers, true. But
they also have a rising
number of ageing people who
need more healthcare, more
pension, other retirement
benefits.
• Burden of taking care of the
ageing people will really fall
on the shoulders of the
younger population
Source: The Economist

11. Source: Dr. Charles Horioka,
“Determinants and L-Term
Projections of Savings Rate
in Developing Asia”,
37thFAEA Conference, Nov.
28, 2012, PICC, Manila.
•
•
•
Japan, HK, have already
reached the 14% of total
population threshold,
people above 65 years
old.
PH, India, Indonesia,
Malaysia, Vietnam, still
far away.
Econ regression showed
that domestic saving
rates in developing Asia
determined primarily by
age structure of the
population (negative
effect), the level of per
capita GDP (positive
effect).

12. The Philippines Far from a Demographic Deficit Even By 2040
(140 M total popn., about 20 M senior citizens or 14% of total)
Source: Dr. Miguel Ramos, “Overview of PH Retirement Market”, RHC Forum, Manila,
October 29, 2013

13. II. Some Say Big
Population is Scary
World’s Top 12 Population Size:
1950, 2013 and 2050
• By 2050, #9 Russia and #10
Japan in 2013 will be out of
the top 12. Those with clear
demographic dividends are:
• India, to overtake China as #1
by 2050. Pakistan to retain its
#6 position by then.
• Nigeria, to jump from #7 this
year to #3 by 2050. Ethiopia
to rank #9, Congo #12, by
2050.
• Philippines, currently #12 to
rise to #10 by 2050.

14. Source: http://www.w
orldometers.info/worldpopulation/
* 10 Asian countries
in top 20, 4 from
Africa (Nigeria,
Ethiopia, Egypt,
Congo)
* 3 from N. and S.
America (US, Brazil,
Mexico; and 3 from
Europe (Russia,
Germany, Turkey.)
* By 2050, 9 from
Asia (Thailand out),
6 from Africa ( incl.
Tanzania, Kenya); 3
from the Americas;
only 2 from Europe
(Germany out).

15. “Higher family size is
related to higher
poverty.”
Source: Dr. Joseph Yap, Delivered during the Philippine Economic
Society (PES) conference, October 2011.
But the smaller
household size (bet.
0 to 2 or 3 kids) have
higher income partly
because they have a
nanny, house helper,
a family driver, etc.
from households
with plenty of
children at low
salaries. So
productivity of the
smaller households
are higher.

17. III. Labor and Gender Policies
If Various Government Interventions in Labor Market is Absent…
Wages, Benefits
Supply
Demand
Employment
Demand is downward-sloping. As wages increase, demand for labor decreases.
Supply is upward-sloping. As wages increase, supply of labor increases. Ceteris paribus.
Result: many “equilibrium points”, or intersection bet S and D within each firm, each ind.

18. With Various Government Interventions, Distortions are Created
Wages, Benefits
(Pesos per month)
Aggregate Supply
Mandatory
contributions
Min wage law
Ave. equil wage
Aggregate Demand
E2
E*
E1
Employment
(million)
.
E4
E3
E* is equilib and employment-optimizing level. E1 – E2 is unemployment & underempl.
level, temp or permanent. E3 – E4 is additional unemployment & underemployment.

19. Costs of Hiring Workers, Formal Sector
• Wages & bonuses (WB): basic pay, 13th mo. pay,
overtime pay, bonuses & commissions, transpo, etc.
• Mandatory social security contributions (SS):
PhilHealth, SSS, PagIBIG, HMOs
• Other contributions (OC): maternity leaves
• Compliance costs (CS): human resources (HR) office,
law firm/para legal to deal with L disputes.
So total costs = WB + SS + OC + CS

20. Forcing social equality, including gender equality, will further
distort the labor market
Wages, Benefits
Aggregate S 2
Aggregate Supply 1
Gender wage
inducement
Ave. equil wage
Aggregate Demand
E2 E* E1
• E* is equilib and employment optimizing level.
• E1 – E2 is reduction in employment of women
Employment
of women

21. IV. Concluding Notes
• Companies providing more leaves with pay to married
women or single mothers, providing more maternal
facilities in the company, other similar schemes on their
own is an ideal set up.
• But when such set up is to be forced via legislation or
Department Order or similar schemes, assuming similar
productivity levels with male counterparts, companies
will hire less married women and get only single women,
or hire less women as much as possible.
• Government should leave private enterprises whom they
should hire. If a company retrenches people, if not goes
bankrupt, DOLE or Congress will not pay for the salaries
of the laid off workers.

22. • Almost all ratings agencies look at our young and big
population as an asset, not liabilities. There is a limit to
what robots and machines can do, even the most
industrialized, more robotized economies will need
migrant workers to fill up their labor-deficient
economies.
• People are assets, not liabilities. They are producers and
consumers, buyers and sellers. More people, more assets.
The real liabilities – the thieves, murderers, rapists,
extortionists, corrupt officials -- government should get them,
have rule of law.
• To help SMEs, create more jobs, often it is not “what
government should do and provide.” Rather, it is “what
government should NOT do and provide.” In particular,
bureaucratizing entrepreneurship.

23. Heavy regulation & taxation of business and job creation may be good if one intends to
become an employee forever. Many workers do not aspire that. They wish to become start
up SMEs someday to. And these are among the things they will face yearly.

24. • The main function of government is to promulgate the rule of law. To
protect the citizens’ right to life, right to private property, and right to
liberty. To enforce and protect obligations and contracts.
• Lack of respect for the rule of law, lack of protection of property rights
results in big and bad governance. Like the pork barrel scandal.