70 million Population Puzzle

7000万人口的迷思
夏伟文 & 陈薛卉 (8th Sept 2014)

All of a sudden, countries around the world are awakened from the nightmare of dwindling population growth rate. Current population growth rates are seen too low. In contrast to the mid 1960s to mid 1990s era, rapid population growth rate has coined phrases like “Generation-X”, “Generation-Y” and “baby boomers”. During those years, especially in 1990s, South East Asia, Korea and few other countries see “miracle” economic growth in thanks to increasing labor supplies.

Statistics from the World Bank show that population growth rates for year 2013 are lower than average between 1960 and 1990 for all 14 Asian countries selected (see Table 1). Relative lower population growth rate also recorded in 11 out of 14 other randomly selected non-Asian countries. Australia and Germany do not show significant different while United Kingdom recorded positive percentage changes.

Table 1: Selected Population Growth Rates

Country	Average I (1960 - 2013)	Average II (1960 - 1990)	Average III (1991 - 2013)	2013
ASIA
China	1.35	1.77	0.78	0.49
Hong Kong	1.65	2.14	1.00	0.46
India	1.93	2.19	1.59	1.24
Indonesia	1.96	2.34	1.46	1.21
Japan	0.61	0.96	0.13	(0.17)
Korea, Rep.	1.34	1.83	0.69	0.43
Lao PDR	2.19	2.31	2.03	1.85
Malaysia	2.45	2.69	2.13	1.62
Philippines	2.51	2.88	2.01	1.73
Qatar	7.22	7.68	6.59	5.60
Saudi Arabia	3.68	4.55	2.50	1.89
Singapore	2.32	2.19	2.49	1.62
Thailand	1.71	2.44	0.74	0.34
Vietnam	1.79	2.12	1.33	1.05
OTHERS
Australia	1.54	1.71	1.32	1.78
Brazil	1.93	2.42	1.27	0.86
France	0.67	0.77	0.53	0.53
Greece	0.53	0.66	0.36	(0.55)
Germany	0.20	0.31	0.06	0.24
Netherlands	0.74	0.91	0.51	0.29
New Zealand	1.14	1.15	1.12	0.85
Russia	0.36	0.73	(0.14)	0.22
Spain	0.81	0.82	0.80	(0.24)
Sweden	0.47	0.45	0.50	0.77
Switzerland	0.81	0.82	0.81	1.05
Turkey	1.90	2.25	1.42	1.26
United Kingdom	0.38	0.30	0.49	0.63
United States	1.07	1.10	1.03	0.72

Source: World Bank; highlighted are the so-called “miracle economies” of the 1990s

Malaysia population growth rate for 2013 is mere 1.62, which is 1.07 percentage point lower than its population boom years of 1960 to 1990. Is Malaysia’s National Population Policy (1984) to reach 70 million populations by 2100 still ongoing or already been forgotten? Does high population compatible with current Malaysia’s Economic Transformation Policy (ETP)?

Population Control Policies U-Turn

The most stringent population control policy is China’s one child policy which is established in 1979. In November 2013, the Chinese government relaxed the policy by allowing families to have two children if one of the parents is an only child.

Singapore also makes a U-turn. To counter rapid population growth after World War II, Singapore promoted anti-natal policies known as “Stop at Two” (two children family) as well as sterilization during 1960s to 1970s. In the 1980s and thereafter, they completely reversed the population control for “Have Three of More children if you can afford it” program, “Graduate Mothers’ Scheme”, “National Night” on 9^th August 2012 for couples to have babies as their civic duty as well as various incentives. Lack of citizen is believed to be among the main reasons Singapore economy being over-dependent on supply of foreign labors especially from Malaysia and China.

South Korea also implemented population control policy from 1960s to 1990s but has it U-turned in the 2000s. In the 1970s, its government urged their citizens to have only two children so that they can raise them well and avoid poverty. This was further tightened in 1980s with slogan of “let’s just get one child and raise him/her well”. Dramatic U-turn was announced in September 1994 that seen its population policy slogan in the 2000s changed to “Papa, I don’t want to be alone. Mom, please have my younger sister or brother”. 

Malaysia population policy also made U-turn. To curb high fertility rate in the 1960s, National Family Planning Act (1966) No.42 and National Family Planning Board were established to bring down population growth rate from 3 percent in 1966 to 2 percent by 1985. Yet, from the World Bank statistics, these policies seem less effective. In 1984, Mahathir replaced family planning with the National Population Policy that targeted 70 million populations by 2100. Given World Bank’s estimation of Malaysia’s current population at 29,716,965 and year 2013 growth rate of 1.62%, this target is easily. To be exact, we will achieve 70.78 million populations by about 54 years from 2013 or year 2067.

Big Population: ETP’s Sweat Dream?

Economic Transformation Program (ETP) did not specifically plan for high population. However, it has highlighted concern that Malaysia’s relative small population could limit the number of areas that its economy can specialize in and be truly globally competitive. Big population particularly in Greater Kuala Lumpur (estimated to approximately 6 million) is expected to create economic agglomerations that contributes about RM263 billion (30% of total) to the nation’s GNI.

Figure 1: GDP growth vs. Population growth, Average 1960 - 2013

Figure 1 plots average GDP growth rate against population growth rate for the selected countries as in Table 1. China, South Korea and Philippines are excluded as they are outliers. The figure and statistical interpretation reveal that average population growth rate explained 77.6% of average GDP growth rate. It also shows a positive relationship, hence justifying hypothesis that claims the 70 million population policy can help boost economic growth.

To support rapid expansion towards achieving developed nation status by 2020, Malaysia needs great amount of skill labors both from within and abroad. Huge domestic market base provide economies of scale as enjoyed by country like China also crucial to achieve many Entry Point Projects (EPP) of ETP.

In addition, ETP has even prepared itself for possible aging population. For example, under “Healthcare” National Key Economic Area (NKEA), three of its Senior Living EPPs already planned mobile healthcare service, institutionalized aged care and retirement villages for the old folks. Thus, if our population keeps growing steadily, any aging population’s negative effect can be minimized. In contrast, there will be more young people energizing the economy with their new idea, consumption and labor supply.

Big Population Nightmare

The biggest nightmare from Malaysia’s 70 million population policy should be Malthusian trap. According to Thomas Malthus, population increases are limited by subsistence and misery. On subsistence aspect, food production needs to be increased. So far, Northern Corridor of Economic Region (NCER) has been planned to boost modern and commercial agriculture.

However, Oliver De Schutter’s United Nations Special Rapporteur on the Right to Food – Malaysia (visit date 9 to 19 December 2013) do importantly highlighted some serious concerns. Quoted his report in length, Malaysia’s food trade deficit grew from RM1 billion in 1990 to RM13 billion in 2013. The country is self-sufficient in some food commodities, such as poultry (self-sufficiency rate of 128 per cent), eggs (115 per cent) and fisheries (101 per cent), but not in others, such as rice (71 per cent), fruit (66 per cent), vegetables (41 per cent), beef (29 per cent), mutton (11 per cent) and milk (5 per cent).

National Agrofood Policy 2011 – 2020 does focuses on the issues of food security, competitiveness and sustainability of agrofood industry as well as income level of agriculture stakeholders. Yet, do all our efforts enough to ensure sufficient food for a greatly enlarge population in near future? Many factors can further deteriorate food production such as current unpredictable prolonged drought, fast mutating crops virus, food wastage, haze, use of food for bio-fuel and loss of local interest in staple food plantation due to urbanization and higher profit from commodities agriculture like palm oil and rubber.

Not only food security, does the country create enough job opportunity for the increased supply of labors? Will lots of labor from big population hinder our production to move towards capital intensive to achieve higher competitiveness?

Conclusion: The “70 million Population” Puzzle

Having big population is a puzzle as it comes with both benefit and detriment. On one hand, big population may be a sweat dream to future economic growth. On the other hand, unable to address the peril from big population, like food security and job availability, may turn our dream into nightmare. Malaysia should put more effort to mitigate the nightmare to ensure a sweat 70 million population dream.

[Chinese version published at Nanyang Press, 8th September 2014. Available online at http://www.nanyang.com/node/647732. This English version may be slightly different from the Chinese online/printed newspaper version]

Malaysia’s Affirmative Action Policy: How to Distribute the Boxes?

An academic discussion on Malaysia's affirmative policy from the perspective of ethic, equality philosophy and global economic competitiveness.

Published in RMERiCs website on 30th June 2014 as follow:
Part 1: http://bit.ly/1nX01Po
Part 2: http://bit.ly/1nX03Xz

Change policy to increase women’s employment

改变政策提高女性就业
夏伟文(Har Wai Mun) & 张龙翔(Chong Long Xiang) (24th Feb 2014)

In a 2004, Florence Jaumotte released a women labor force participation study report for Organization for Economic Co-operation and Development’s (OECD). She claimed that women choose between supplying labor service not only against leisure but also “home production”, which mainly consist of taking care of (young) children. In Asian traditions, this may even include responsibility to care for elder family members.

Taking analysis approach of “labor supply” versus “home production”, factors that affect women labor participation can be generalized into (i) tradition, (ii) technology, childcare and work condition, and (iii) policies.

Traditions Rope

Tradition is referred to activities or practices passed down from previous generations. In Asia, traditions tend to assigned home production like doing housework, taking care of children and elders to women. Generally, men are viewed as breadwinner, therefore commanded a relative superior standing to women. Malay tradition of Adat Temenggung and Chinese tradition of Confucianism give superior status to men in patriarchal family structure. Hypothetically, these put extra barrier for women to choose work over home production.

If traditions see home production as women’s duty, it also put extra opportunity cost for women if they choose it. How high this opportunity cost depends on how tradition thinking of the family are and how pressing is the needs for women to be available for housework. Higher the opportunity cost, higher salary enticement needed for women to choose working over home production. As a result, only single and/or highly educated female stand considerable chance to participate in labor market. Figure 1a that analyzes and plots data from Statistical Department of Malaysia may confirm it. The trend line in Figure 1a has an upwards slope, thus statistically implying a positive relationship between tertiary education enrollment and female labor participation rate. Nonetheless, Figures 1b shows a surprisingly negative relationship for secondary enrollment and female to male labor participation rate.

Common thought is that women work until they get married or luckier work until they have child. Perhaps, having at least a diploma or degree qualification is an exception. Otherwise, tradition is like a rope that tied down women to home production. Question is does Malaysia’s Economic Transformation (ETP) has plan to relieve traditions barrier for higher female labor participation rate?

 Figure 1a: Tertiary Education Enrollment vs. Female Labor Participation

Figure 1b: Secondary Education Enrollment vs. Female Labor Participation 

ETP does aims to create job opportunities for skilled labor. Projected new job creation for 2020 by qualification are 24% for vocational/certificates, 22% for diploma, 22% for degree, 7% for Master/professional and 3% for PhD. Jobs creation for unskilled worker is projected at 22%. However, no specific action plan targeted specifically to improve neither women education enrollment nor labor participation.

Technology, Childcare Service and Work Condition

Improvement in household technologies, information technologies and work condition are favorable factors to encourage female labor participation. Available of many home appliances and automation in affordable prices like washing machine, cloth dryer, auto vacuum cleaner and microwave have decrease time needed to perform household works. Commercial childcare center, which also provide early childhood education are available but may be unaffordable for the poor.

Early childhood education has been allocated two “Entry Point Projects” (EPP) in National Key Economic Area (NKEA) for education. Availability of foreign maids and/or elderly parents that can help to take care of some household work and childcare may help free up women to participate in labor force.

Information technology and increasing job opening of freelance, part-time and flexible work hour should greatly facilitate female participate in both labor market and home production.

Reforming Policies

Tax and childcare support

In term of tax, Malaysia does not have much encouragement to increase labor participation among women. Working wife can claim for personal relief of RM9000. If they did not work, the working husband can claim wife relief of RM3000. There is no relatively favorable tax treatment of second earners, which is given in countries like Austria, Czech Republic, France, Mexico, Portugal, South Korea, Spain and Turkey.

The more attractive motivation is the salary women can earn if they work. Therefore, tax policies should be reformed to (i) give favorable tax treatment for second earners, and (ii) ensure salary of Malaysian workers, particularly working mother is not being discriminated and high enough to beat cost of living plus extra expenses to take care of their household tasks. In addition, childcare subsidies could be given since there are empirical evidences from some research that claim its effectiveness. According to OECD Economic Studies No.37 (2003/2), child benefits increase the disposable income of families with two children. Countries with biggest increment include Hungary (21%), Austria (18%), Luxembourg (17%), Belgium (15%), Czech Republic (12%) and Germany (12%).

From company perspective, revenue expenditure incurred in providing childcare benefit to employee is deductible. This may encourage company provide childcare facilities but how many company has done it? To what extend the childcare facilities in the office can help working mothers? How about giving long maternity leave, parental leave and childcare leave to help women to reconcile work and family life? The same OECD studies reported variety degree of paid leave entitlement across its member countries. Countries that offer long paid leaves for mothers include France (73 weeks), Slovak Republic (59), Hungary (58), Finland (55) Denmark (42) and Sweden (40). Australia and United States do not have paid leaves while New Zealand only offers it recently. International Labor Organization suggested 14 weeks maternity leaves. In Malaysia, materiality leaves is 8 weeks only.

Public preschool

Availability of ample public kindergarten is also important to boost female labor participation as well as lessen the burden of poor citizen. Indeed, having national-wide free preschool education has been proposed by President of United States, Barack Obama in early 2013. He argued that poor family who cannot afford preschool for their children may put their children at a permanent disadvantage. Providing preschool also reduce the needs of women to take care of their child at home. Yet, free public preschool may be in conflict with ETP on education where private education institutions play big roles in every level of education. Solution could be as simple as government put a legal obligation for private education institutions, especially those preschool operators to offer certain percentage of intake places as free for the poor.

Flexible hour or Part Time Jobs

Flexible working hour arrangement, especially those jobs that can be work from home are getting more and more popular. A check through Wikipedia found some interesting information. In 2003, the United Kingdom government introduced legislation that gave parents of children under 6 years of age, or the parents of disabled children under 18, the right in law to request a flexible working arrangement from their employer.

Alternative to flexible work time is part time job. For women that have young children, working part time is preferable particularly if childcare is less affordable. There are no data for part time employment in Malaysia. For other countries, data from World Bank revealed higher percentage of part time job participation for women as compared to men. For a random selection of 22 countries, female part-time employment as percentage of total part time employment is over 50% (see Figure 2).

Figure 2: Female Part-time Employment (% of Total Part-time Employment) for 2010

Austria recorded 80.6% percentage. Among countries with high percentage include Switzerland (80%), Germany (78.7%) and Spain (76.2%). Part time job also has its disadvantage such as low job security, poor wages, no training and lack of other employment benefits and rights. Thus, any policy to encourage part time should come with plans to ensure proper working condition and human rights.

Conclusion

Women can be an asset to our economic growth if their labor participation is increase significantly. To achieve that, we need to change some of our traditions and reform policies.

[Chinese version published at Nanyang Press, 24th February 2014. Available online at http://www.nanyang.com/node/601914. This English version may be slightly different from the Chinese online/printed newspaper version]