Accustomed to grappling with a runaway dollar or inflation or the effects of the drought, it might seem odd in a context swamped by short-term thinking to focus on the long term, but provisional data from Argentina’s 2022 National Census is compelling in marking out trends which will affect the economy in less time than might be imagined.
An ageing population with an increased life expectancy, growing job mobility or the window of opportunity still presented by the demographic structure are just some of the factors posing an enormous challenge to three dimensions of economic policy: fiscal balance, the insolvency of the pension system and health spending.
Here’s a look at what we’ve learnt from the great national survey.
The numbers
Almost six months after the initial announcement, there has been a first correction in a figure which had struck the attention of the specialists: Argentina’s total population as measured last year passed to 46.23 million inhabitants, over a million less than announced last August (47.33 million), which had shown a surprising change in the trend of demographic growth between 2010 and 2022.
The total variation is 14.8 percent, which means an annual growth rate of 1.2 percent rather than the 1.45 percent which confirmation of last August’s flawed results would have signified. Apart from the suspense, the delay corrected the data but also stretched out when a precise demographic radiology will be available.
Yet what has become known serves to reaffirm trends which had been insinuating themselves. Economist and demography expert Rafael Rofman warns that apart from giving certainty to the La Matanza numbers being wrong in the 2010 National Census and the incognitos over why the preliminary data had to be corrected, the growth rate shows stability in the evolution since the Censuses of 2001 and 2010 (an annual 1.13 percent).
“Before Argentina was very different from the rest of the region and now we follow the same trend,” comments the specialist.
In that sense he points out that while the breakdown for age groups has yet to be made public, there is data on fertility, which is in decline and specifically where adolescents are concerned, which is positive. This fact and Argentina’s extended life expectancy (now up to 80 years for women and 74 for men) have altered the calculations for a key indicator: the rate of total dependence (i.e. the percentage of total population under the age of 15 and over the age of 65) which has been growing without interruption in the long term and will reach its lowest point around the year 2030.
The explanation is that with fewer births, the percentage of “dependent” persons falls, which has been called the “demographic bonus” but then it will start increasing. Some economists like Rofman see this as an opportunity to change the job profile demanded of the population towards more tasks of personal care.
Distribution
The other inescapable figure is the regional inequality of growth. The 11-and-a-half years between censuses seem to have marked the end of the cycle of forced urbanisation towards the largest cities. Greater Buenos Aires, once the great magnet of internal migration, only grew 9.5 percent (or 0.8 percent annually) as against 17.4 percent (or an annual 1.4 percent) for the country as a whole according to the preliminary data.
Lucas Pussetto, an economist and university professor at the IAE Business School and Barcelona’s Universidad Pompeu Fabra, sees in this trend a key point for economic development and boosting value chains.
“In Córdoba, where I live, the Census counted almost four million people, of whom 1.5 million live in the [provincial] capital and the rest inland but that is a ratio which has changed for the first time. We still don’t know how much of this transfer is a post-pandemic effect or for a different quality of life,” he explains.
The fact that there are poles of attraction for workers can be verified by the distribution of the growth. The most notorious case (apart from the Tierra del Fuego mirage with its total population 49.9 percent up or 3.6 percent annually) is the province of Neuquén. With the period between censuses largely overlapping with the productive explosion of Vaca Muerta shale, its inhabitants grew 31.8 percent (or 2.4 percent annually), almost tripling the Greater Buenos Aires rate and well ahead of neighbouring Río Negro (up 19 percent).
“People go inland because there are more opportunities for growth but they can also live there while working in the metropolitan zone in remote form. If you see a better quality of life, you can work remotely with more free time and more access to housing, friends and family... a very good combo with a ‘spillover’ effect for the rest of economic activity,” explains Pussetto.
The explosive attraction of medium-sized cities in the most competitive productive enclaves is something to be taken into account, despite the export of goods and services being one of the activities most punished by the taxman in this decade. But perhaps empowered by the adoption of new technologies which have permitted the place of residence to be divorced from the workplace, they will benefit from a better quality of life in the aspects most valued in recent years – access to green spaces, less time commuting and the privilege of a healthier way of life.
Consequences
These trends perhaps have direct implications for electoral debate, but they do grant extra time to think through policies before the problems are transformed into urgencies. The ageing population throughout the region, but running ahead of the field in Argentina, implies two focal points to absorb funds: public health and the pension system.
“How to conciliate this inescapable leap in public spending with the demand for a lower tax burden is the dilemma to resolve, which the developed countries also face but with a formal economy and much more wealth,” warns Pussetto.
In Europe, the lack of young people of working age has been solved with different immigrant waves (first with their ex-colonies and the poorer countries of the region, followed by Eastern Europe) which were later stabilised. The dilemma of state intervention versus the free market will thus have an additional restriction with the quantity of considerations which this qualitative change of spending will impose by the sheer weight of reality. Aided only by a bad design and the squandering of funds, even with the demographic bonus in full swing, the financing of Argentina’s pension system absorbs 13 percent of gross domestic product. The future will thus impose additional rigour.
Finally, a challenging scenario is presented – with the corroboration of the notion that “human capital” is as, or even more, important than natural resources for sustainable economic development – fewer young people means a lower probability of generating focal hubs of innovation and social mobility.
In an economy showing signs of profound internal imbalance as the result of stagnation already lasting half a century, these demographic aspects are no mere detail. They constitute the basis for elaborating economic policies which, instead of being a burden, drive economic activity.
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