When analyzing the behavior of the population in any part of the world, one of the elements that is reviewed is the possibility of a population decline, that is, falling into a situation in which the population records of a country or region begin to decrease instead of growing.
This can occur when birth rates are lower than death rates and there is not enough immigration to make up for this difference. In simple terms, it is when there are more people dying than being born, leading to a reduction in the total number of inhabitants and an ageing of the population.
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In the case of Colombia, according to Dane figures, it was initially expected This decline was expected to begin in 40 years, but the most recent updates brought forward the arrival of this phenomenon by at least six years, a situation that will be transcendental in the context of reforms to the pension system that are coming in the medium and long term.
Legacy of Covid
The Fedesarrollo Economic Research Center undertook the task of carefully reviewing the country’s population dynamics and the changes that have been recorded after the pandemic. As a first conclusion, they pointed out that there is a decrease in the estimated population and therefore the population contraction, initially projected for 2065, will now be brought forward to 2051.
Births.
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This report says that during the 20th century, Colombia experienced a notable drop in birth rates, from 27.4 births per 1,000 inhabitants in 1990 to 15.6 in 2015. This decline is attributed to factors such as the increase in the educational level of women, greater participation in the labor market and better access to family planning methods, leading to a point where the birth rate in 2022 was 13.9 per thousand inhabitants.
“The Covid-19 pandemic was a determining event that accelerated the demographic transition process in the country, since the atypical behavior of deaths during this period altered the number of births and long-term life expectancy. According to figures from Dane, in 2020 and 2021 total deaths registered an annual variation of 23.6% and 20.7%, respectively, in contrast to the 0.7% average annual variation in the period between 1990 and 2019,” they added.
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Thus, for Fedesarrollo, this increase in the number of deaths resulted in a historic 5.4% drop in the number of births during 2021, exceeding the average variation in births between 2000 and 2019 of -0.7%, and being the largest drop so far this century. This is without taking into account that the pandemic generated an increase in long-term life expectancy, associated with advances in medicine and improved provision of health services.
Accelerated aging
As a consequence of all this, in recent years, the age recomposition in Colombia has been characterized by an accelerated aging of the population, to such an extent that it is estimated that the population over 60 years of age will represent 25.9% of the total, while the proportion of young people between 0 and 14 years old will decrease to 14.8%.
Elderly
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“Colombia is immersed in a process of demographic transition with important social and economic implications, derived from the trend of population aging. This situation has occurred as a result of the reduction in birth and mortality rates in the country during the last decades,” explained Fedesarrollo.
This population transition, in the accounts presented, anticipates a significantly higher rate of aging than expected before the pandemic. With fewer young adults and more older people, making it clear that Colombia will face significant challenges in its demographic structure and that the average age of the population for 2050 is projected at 42.9 years, a reflection of how the country is moving towards a longer-lived population, which could affect the sustainability of the social security system and the labor market.
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Population bonus
In another chapter, the Fedesarrollo research team introduced two more terms to be taken into account. The first was the dependency rate, an indicator that measures the relationship between the number of dependent people and the potentially active population in the labor market, and on which the demographic bonus depends, which is the second concept raised in the study.
“The demographic bonus is defined as a period in which, For every 100 active people, there are fewer than 66 dependent people. On the contrary, an economy enters a state of demographic tax if it exceeds this threshold of dependency. In this way, the demographic bonus represents an opportunity to boost economic growth by having a larger workforce, which favours the dynamics of the labour market,” they added.
They stressed that Colombia is in a period of demographic bonus that will last until approximately 2047 and that there will then be a transition to a “demographic tax” by 2050, with a greater proportion of the population being dependent and a smaller active population.
Young employees
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“By 2024, the country’s dependency ratio is 58.5, with a potentially active population of 33.25 million people and a dependent population of 19.44 million people. Currently, the dependent population is made up of 59.4% children under 15 years of age, while people aged 60 or older represent 40.6% of this group,” they indicated.
Review the consequences
In addition, they anticipated a recomposition in the dependent population, since young people would represent 36.3% of this demographic group in 2050 and older adults 63.7%. This will pose new challenges in the panorama if the new pension model that is to be implemented is taken into account.
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“It is essential to consider the implications of these demographic changes on the sustainability of the social security system in the country. In terms of the pension system, it will be crucial to promote parametric adjustments in the retirement age, in line with the growing participation of the population over 60 years of age and increases in life expectancy,” they warned in the report.
In this regard, Fedesarrollo concluded by recalling that the labor market reforms being debated must promote access to formal work, to address the high levels of unemployment and informality and promote greater savings among the population, with the aim of taking advantage of the demographic bonus phase that the country is currently experiencing.
They also highlighted that an older population generates a greater demand for health services due to the higher incidence of chronic diseases, so efforts to reform The health system must focus on risk management to optimize public spending in this sector.
