SOME DEMOGRAPHIC IMPLICATIONS OF THE GLOBAL ECONOMIC CRISIS: A

CHALLENGE FOR AUSTRALIA

byGraeme Hugo

University Professorial Research FellowProfessor of Geography and Director of the National Centre

for Social Applications of GIS,The University of Adelaide

Presentation to Marketing Week, Holiday Inn, Adelaide

25 August 2009

Outline of Presentation • Introduction• The Economy and Population: A Complex

Relationship• Recent Developments in Australia’s Population

Population Growth- Mortality- Fertility- Migration

Population CompositionPopulation Distribution

• Impacts of the GFC- Fertility- Immigration- Effects on Baby Boomers

• Challenges and Opportunities• Conclusion

Population and Marketing

• Marketing is for people. Usually it is targeted at particular groups of people

• Demand for goods and services is a function of…- need or perceived need, influenced by stage of lifecycle, ethnicity, socioeconomic status etc- availability- ability to purchase or affordability

• Population information is important because it tells us about the numbers, characteristics and locations of population

Population and the Economy

• Complex two way relationship• Over simplified in the

Australian context because periods of rapid growth have coincided with periods of economic growth – eg post war baby boom

• Rapid population growth is not always good for the economy

• Population growth is not just a function of the economy

“Over the next couple of decades nothing will impact OECD economies more profoundly than demographic trends and, chief among them, ageing”

Jean-Philippe CotisChief Economist, OECDMarch 2005

The Treasury Has Discovered Population

• Intergenerational Report 2002

• Intergenerational Report II 2007

• Productivity Commission Report on Ageing 2005

Migration and the Economy

• Also a complex relationship• Much discussion• In Australia most studies

concluded that economic impact of migration positive or at worst benign

• No evidence that locals are displaced from jobs by migrants

• Myths about economic impacts of migration

Contribution of Migrants to the Economy

• Supply particular skills, contribute to increasing productivity

• Also fill low skilled jobs eschewed by Australians (e.g. agriculture)

• Important part of risk taking, entrepreneurial groups

• Crucial in developing economic linkages with origin countries

The Selectivity of Migration

• Migrant populations are never representative of the populations in origin or destination

• Migration is generally selective of the more educated, more skilled, risk takers and entrepreneurs

• Migration selectivity policy also can exacerbate these tendencies by setting particular criteria – eg Australian points system

• Hence migrants to Australia disproportionately represented in BRW 100 most wealthy Australian

Higher Degree Qualification by Australia- and Overseas-Born, 1981-2006

Source: 1981 to 2001 Census One Percent files, ABS 2006 Census

Year Australia-born Overseas-born

Percent of All Higher Degree Overseas-Born

1981 0.44 0.97 43.51986 0.53 1.21 44.21991 0.72 1.58 44.91996 1.07 2.3 44.92001 1.35 3.22 47.42006 1.46 4.59 49.0

Migration and Entrepreneurialism

• Entrepreneurs well represented

among migrants in early post war

decades

• Australian migration had become

more concentrated on skill as

defined by formal qualifications

Australia: Migration Program Outcomes by Stream, 1989-90 to 2008-09

Source: DIAC Population Flows: Immigration Aspects, various issues

How Do Entrepreneurs Migrate to Australia?

• Business Migration Categories –

established entrepreneurs with large

capital assets

• Refugee – Humanitarian Categories

Examples of Vietnamese, recent

African migrants

Pre Crisis Population Trends in Australia

• Rate of growth of population (2008) –

1.91%

Highest since 1971

• High level of immigration (2007-8) –

149,365.

Highest since 1969-70

Projections of the Population of Australia Source: ABS Estimated Resident Population data and Projections 2008

ABS 2005 ABS 2008

2006 Actual 20.7 20.72007 Actual 21.0 21.02021 Projected 23.9 25.62051 Projected 28.0 34.2

Series B

Contemporary Population Growth Rates (% pa) Source: ESCAP 2008; Population Reference Bureau 2007 and 2008; ABS 2008

Population Growth

• Natural Increase – Births-Deaths

• Net Migration – Inmigration-Outmigration

Australia: Total Population Growth Showing the Natural Increase and Net Migration Components, 1901-2008

Source: ABS 1986 and ABS Australian Demographic Statistics, various issues

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,0001

90

1

19

06

19

11

19

16

19

21

19

26

19

31

19

36

19

41

19

46

19

51

19

56

19

61

19

66

19

71

19

76

19

81

19

86

19

91

19

96

20

01

20

06

Year

Pe

rso

ns

Natural Increase

Net Migration

Australia: Expectation of Life at Birth, 1870-2007Source: Hugo 1986 and ABS Deaths Bulletins

Expectation of Life at Birth

Males Females

1947 66.1 70.6

2007 79.0 83.7

Australia: Expectation of Life at Age 50, 1901-1910, 1970-1972 and 2007

Source: ABS

Year Males Females

1901-1910 21.2 23.7

1970-1972 23.0 28.3

2007 31.4 35.2

Persons Aged 65 Years and Over with Disabilities Source: ABS 2005

Percent of Australians Overweight or Obese by Age and Sex, 2004

Source: ABS 2008

FertilityAustralia: Total Fertility Rate, 1901 to 2007

Source: CBCS Demography and ABS Births Australia, various issues

International Total Fertility Rates, 2005-10Source: ABS 2008 and United Nations 2009

Country TFR Australia 1.8New Zealand 2.0USA 2.1Indonesia 2.2China 1.7Italy 1.4Singapore 1.3Japan 1.3Russian Federation 1.4Greece 1.3

Total Fertility Rate(a)

Source: ABS 2007, Australian Social Trends

Australia: A Country of Immigration

• 24 percent born overseas• 26 percent Australia-born with an

overseas-born parent(s)

• 809,628 persons temporarily present at 30/6/08

• 206,135 incoming permanent settlers in 2007-08

• 56,575 “onshore” settlers in 2007-08

Australian Immigration Policy

• 1947-1971 – Permanent Settlement, Worker Recruitment

• 1971-1995 – Permanent Settlement – Skill, Family and Humanitarian

• 1995 – Report of the Committee of Inquiry Into the Temporary Entry of Business People and Highly Skilled Specialists

Permanent AdditionsSource: ABS 2007, Australian Social Trends; DIAC 2008

Permanent Additions by Eligibility CategorySource: ABS 2007, Australian Social Trends; DIAC 2008

2007-08

• 206,135 Incoming Permanent Settlers

(including Refugee,

Humanitarian and New Zealand permanent

migrants)

• 420,045 Granted Temporary

Residence

Australia: Permanent Arrivals and Departures, 1959-60 to 2007-08

Source: DIMIA Australian Immigration: Consolidated Statistics and DIAC Immigration Update, various issues

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

200,000

1959

-60

1961

-62

1963

-64

1965

-66

1967

-68

1969

-70

1971

-72

1973

-74

1975

-76

1977

-78

1979

-80

1981

-82

1983

-84

1985

-86

1987

-88

1989

-90

1991

-92

1993

-94

1995

-96

1997

-98

1999

-200

0

2001

-02

2003

-04

2005

-06

2007

-08

Year

Nu

mb

er

0

10

20

30

40

50

60

Per

cen

tag

e

Permanent departures Permanent arrivals Departures as % of Arrivals

Australia: 457s Present, Asia-born and Other, 1998 to 2008

Source: Khoo et al 2009 and DIAC Immigration Update, various issues

Overseas Students in Australian Universities, 1983-2007Source: DEST, Students: Selected Higher Education Statistics, various issues

South Australia:Age-Sex Structure, 2001 and 2006

Source: ABS 2006 Census Time Series Profile

60,000 40,000 20,000 0 20,000 40,000 60,000

0-45-9

10-1415-1920-2425-2930-3435-3940-4445-4950-5455-5960-6465-6970-7475-7980-84

85+

Ag

e G

rou

p

Persons

2001 2006

Males Females

Population Composition

• Key to marketing

• Particular Significance of life cycle stage/age

• Other things also important

- ethnicity

- socio economic status

- education

• Composition is always changing, can be tracked

and anticipated

Australia: Age-Sex Structure of the Population, June 2006Source: ABS Estimated Resident Population data

200,000 150,000 100,000 50,000 0 50,000 100,000 150,000 200,000

0

10

20

30

40

50

60

70

80

90

100

Age

Persons

Males Females

Baby Boomers

Wittert, 2006

Baby Boomers 2006Source: ABS

Australia% of Population 25.7% of Workforce 41.8

• In Australia, without migration, the population would begin to decline from around 2030 and workforce ages would begin to decline in between 5 and 10 years from now

• Currently migration contributes 40 percent of workforce growth but this proportion will gradually start to increase so that during the 2010s it will start to contribute all growth of the workforce

Structural Ageing:Australia: Change by Age: 2006 – 2011; 2031 (Series B)

Source: ABS 2008 Projections

-20

0

20

40

60

80

100

120

140

160

180

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80

85+

Age

Perc

enta

ge C

hange 2006-2011 (22.3 m)

2006-2031 (28.8 m)

Labour Force Age Groups and Dependency Rates

Source: World Bank, 2006

Changing Population Distribution

• One of the world’s most urbanised populations 87 percent living in urban areas

• 81.1 percent living within 50km of coast

• Most mobile population in the world

Changing Population DistributionShifts in the Australian Proportion Centroid, 1911-2006

Source: Australian Censuses, ABS 2003, 2004 and 2007

Every five years 42.3 percent of the population move house. Every year

17.0 percent move.

Australia: Distribution of Population Between States and Territories, Actual 1881-2006 and Projected 2051

Source: Rowland 1982, 25; ABS 2005 and 2007

1881 1947 2006 2051

New South Wales 33.3 39.4 32.9 31.0 Victoria 38.3 27.1 24.8 23.3 Queensland 9.5 14.6 19.8 24.5 South Australia 12.3 8.5 7.6 5.6 Western Australia 1.3 6.6 9.9 11.2 Tasmania 5.1 3.4 2.4 1.6 Northern Territory 0.2 0.1 1.0 1.2 Australian Capital Territory 0.0 0.2 1.6 1.4

Total percentage 100.0 100.0 100.0 100.0 Total number (million) 2.2 7.6 20.7 28.2

Australia: Changing Distribution of the Population Between Urban and Rural Sectors, 1921 to 2006

Source: Australian Censuses, 1921-2006

0

10

20

30

40

50

60

701

92

1

19

33

19

47

19

54

19

61

19

66

19

71

19

76

19

81

19

86

19

91

19

96

20

01

20

06

Year

Pe

r c

en

t o

f P

op

ula

tio

n

Metropolitan Non-Metropolitan Other Urban Rural

Australia: Population Change in Country Towns, 2001-2006 Source: Australian Censuses of 2001 and 2006

Impacts of the GFC

• Fertility• Immigration• Emigration• Effects on the Baby

Boomers

Fertility

• The TFR in Australia increased from 1.748 in 2003 to 1.931 in 2007

• Most of the increase in fertility was in the middle to higher socioeconomic areas

• The GFC could produce a reduction- Increased job insecurity- Confidence- Housing concerns- Debt concerns

• It could also produce stability- women using a downturn in the economy to spend time out of the workforce

Impacts of the Global Financial Crisis in Australia

• Decrease of 14 percent in skilled migration intake in 2009-10

• Increased return migration of Australian expatriates

• Reduction in immigration intake• Increased global pressure for migration• Changes in Talent Wars Scenarios• Problem of scapegoating of migrants

At times of economic downturn there is a tendency for countries to adopt

protectionist policies both with respect to trade and migration. While the response is understandable, the global experience

has not been that making substantial reductions in migration has not had the desired consequences for improving the economic prospects for local workers.

Why are Migrants Needed Even During the GFC?

• Skill shortages• Labour market segmentation• The value added effect of diversity in a

globalising world• The fact that they will be needed once

economic growth is restored and the ability to turn the migration tap on and off is limited

Need to Recognise Long Term Structural Causes of Migration

– Increasing global differentials in economy and

demography and the forces of globalisation

Advantages of Migration in a Globalising Economy

• Premium on skill in global economy• Migration communities ‘hard wire’

Australia into the global economy• All high income countries will be

competing for migrants. Australia’s experience of multiculturalism gives it a significant advantage

Average Household Net Worth by Age of the Household reference Person, 1994-2007, Australia

Source: Australian Bureau of Statistics, Newsletters - Age Matters - Issue Number 1, December 2002 and ABS 2007, p.37

Australia: Changes in Participation Rates of the Older Population in the Workforce,

1970-2009Source: ABS Labour Force Surveys

Percent Participation

May 1970 June 1999 May 2009

Age Group Males Females Males Females Males Females

55-59 91.5 28.7 72.9 44.1 77.7 63.2

60-64 79.2 14.9 46.9 17.6 58.7 42.7

65+ 23.2 3.6 9.7 3.2 14.7 5.6

Australia: Persons with No Superannuation Coverage, 2007

Source: ABS 2009, 18

Australia: Persons with Superannuation in the Accumulation Phase, Total Superannuation

Balance, 2007Source: ABS 2009a, 19

The Australian Population Dilemma

• In the short to medium term population growth is necessary to replace baby boomers in the workforce

• In the long term we must recognise the environmental constraints of Australia and their exacerbation by climate change

• In the short term also need to adapt to the global financial crisis

Conclusion

• Australia is better placed demographically than other OECD nations to deal with the recession

• However policy with be crucial• We need to have a national

discourse on the future of Australia’s population in order to develop short term, medium term and long term goals