The fertility and mortality trends in Wales have led to a growing number of deaths compared to births since 2015/16. The Total Fertility Rate in Wales fell below the replacement rate of 2.1 in 1974 and has stayed below that level since then, reaching just 1.5 births per woman in 2021.
The population of Wales is predicted to have a higher proportion of elderly people, a slightly lower proportion of working-age individuals, and a diminishing proportion of young people. This poses a real risk of population decline, particularly among younger and working-age groups, especially if immigration decreases.
These factors together present significant risks to the economic and fiscal well-being of Wales. Potential impacts include changes in demand for goods and services, such as public services, a shrinking labor force, a smaller tax base, and reduced funding from the UK Treasury.
The trend of population aging and the risk of population decline are not unique to Wales. Several countries, including Italy, other European countries, and Japan, have started exploring various policies to address these trends.
The Welsh Government commissioned the Wales Centre for Public Policy (WCPP) to conduct a review and synthesis of the best available evidence on how other countries are addressing the fiscal challenges of population aging and decline, especially in terms of policy approaches to maintaining and increasing the size of young and working-age populations. This work focused on three key responses to potential population aging and decline.
- Enabling and encouraging fertility
- Retaining people, especially young and skilled workers
- Attracting inward migrants, especially young and skilled workers
One of the main findings of the report is that policies that support families, such as parental leave and childcare, have strong evidence of increasing fertility rates. However, these policies will only have a long-term impact on the tax base if the children choose to stay in Wales as they enter the workforce. Therefore, the retention of the population and inward migration will also play crucial roles.
A senior research fellow, Amanda Hill-Dixon, mentioned, “Our evidence review has revealed specific steps that the Welsh Government can take to address the challenges of an aging and declining population in Wales. The changes in Wales’ population, including declining births and an aging demographic, require careful consideration from the government and public services to assess their impact on the economy, public services, and communities.
“While these changes may present opportunities such as reduced environmental pressures, they also pose risks including a reduced tax base and increased demand for health and social care services. We have examined the evidence on international approaches to increasing the population, future tax base, and workforce.
Other countries’ approaches to boosting fertility generally fall into two categories: socio-economic measures that encourage parents to have children, such as baby bonuses, parental leave, and childcare provision; and medical interventions that ensure parents are physically able to have children, such as Assisted Reproductive Therapy. Regardless of the approach, policies should aim to enable people to have the desired number of children.
“Overall, evaluations of family policies worldwide suggest that one-time pro-natal incentives like baby bonuses typically have minimal long-term effects on fertility rates. On the other hand, combinations of family-friendly interventions such as childcare support, work-life balance, and flexible work arrangements can have a significant impact.
“However, any increase to the fertility rate in Wales will take many years to have a desired impact on the tax base and only if those children decide to remain in Wales into their working lives. As such, population retention and attraction of migrants is key.
“In terms of retaining young and working-age populations in Wales, graduate retention schemes could focus on work placements and on simplifying attraction and retention processes. Local Authorities also have a role to play in attracting people to their areas through relocation grants and other incentives, and by helping to foster strong pull factors such as jobs, housing, public services and leisure.
“It would also be advisable to involve many stakeholders in devising repopulation schemes to better determine where and which groups the local economy needs.
“Our evidence review has shown that there are concrete steps which the Welsh Government can take to enhance the extent to which Welsh communities are places in which people want to and are able to have children, but also where people want to remain throughout their working lives.
