Shades of grey

Kerala faces difficult and politically inconvenient policy choices on issues linked to its final-stage demographic transition.

in Thiruvananthapuram

IF population trends and hesitant statements by State Ministers are a clue, Kerala is set to face difficult and politically inconvenient policy choices in the near future on issues linked to its final-stage demographic transition, marked by low fertility and mortality rates.

Signs of new dilemmas are already evident in the State. It has one of the lowest population growth rates in India. Its fertility and mortality rates have fallen to very low levels. An average Keralite would live beyond 70 years. All this is leading to a situation making Kerala a State with a speedily ageing population.

At an international seminar on Emerging Fertility Patterns in India: Causes and Implications organised recently by the Centre for Development Studies (CDS) in Thiruvananthapuram, participants were calling attention to the profound demographic transformation taking place, indeed, all over the world. As a result, more than half the worlds population is now living in countries or regions where birth rates are at or below the level needed to ensure the replacement of generations (or 2.1 children per woman, a number known as the replacement rate of fertility, which denotes a stable population).

Nearly one-third of India is witnessing a trend of below replacement level of fertility today [see box]. Our estimate is that by 2021, two-thirds of the districts in India will have below replacement level of fertility, S. Irudaya Rajan, a professor at the CDS who has been studying demographic and migration issues in Kerala for over two decades, told Frontline.

Within Kerala, one of the first States to reach an advanced stage in demographic transition, the continuous decline in the number of births has been accompanied, among other things, by an increase in the proportion of the working population, the highest unemployment rate among educated youth in India and problems associated with their migration in large numbers in search of job opportunities, and a rapid increase in the number of the elderly within the State.

From the mid-1990s, questions were being raised on the economic implications of low fertility and mortality and on how the development achievements of the State could be sustained in the wake of such population trends and in an environment of poor economic growth. Researchers have been saying that the socio-economic implications of the reversal of demographic trends would be far-reaching in a State like Kerala.

A collection of research papers from the CDS titled Keralas Demographic Future: Issues and Policy Options released at the seminar foresees, among other things, significant changes in the age structure in Kerala, including a decrease in school age population, decrease in proportion of the labour force in about two decades from 2001, decline in young working age population, a doubling of older working age population in two decades ending in 2021 and more unemployment among the older age groups than among the youth in the foreseeable future.

Unique ageing scenario

A paper on the unique ageing scenario in Kerala estimates that the size of the population in the age group of 60 years and above in the State is expected to increase from 33 lakh in 2001 to 57 lakh in 2021 and to 120 lakh in 2061. By 2061, the proportion of the elderly would constitute 40 per cent of Keralas total population. Of this, 6.7 per cent would be in the age group 60-69 years; 23.8 per cent in the age group 70-79 years; and 9.1 per cent in the age group of 80 years and above.

Another study by the State Planning Board, published in 2009 as part of a United Nations Development Programme-Planning Commission project, also makes similar projections, that the number of elderly persons (60+) is set to increase from 3.62 million in 2001 to 8.93 million by 2051, an increase of 166 per cent. The study estimates that the growth rate among the elderly will be the highest during 2011-21 and will decline thereafter to a low of 7.5 per cent during 2041-51.

The CDS studies report that the cost of dependency burden of Kerala households will also rise quite rapidly in the future. While the young dependency ratio (defined as the number of persons aged 0-14 per 100 persons in the working age group of 15-59 years) is expected to decline from 41 to 16, the aged dependency ratio (the number of persons above 60 years of age per 100 persons in the working age group of 15 to 59 years) is to increase from 17 to 76 during the period from 2001 to 2061.

Kerala would also have more women than men in the old-age group; also, more aged widows than aged widowers. The proportion of households that do not have aged persons has also been decreasing. Among Keralas 14 districts, there are variations in the proportion of the elderly to the total population, with the highest percentage of elderly population (21 per cent) found in Pathanamthitta, followed by Alappuzha, Kottayam, Ernakulam and Thiruvananthapuram.

The older working age population in the State is estimated to double in number in the 20 years from 2001 to 2021, creating an atmosphere of unemployment more among the older age groups than among the youth in the foreseeable future.

However, unemployment among Keralas young working age population is set to decline in the coming decades, and educated young workers will be able to virtually pick and choose the jobs they want, according to the editors of the collection, Irudaya Rajan and K.C. Zachariah, an honorary professor at CDS. They also believe that the reversal of the demographic trends will ease the pressure on Keralas education and health care systems and offer opportunities for quality improvement of such services.

Migration

It is well known that migration from Kerala to other States in India and abroad had been one of the means by which the State coped with the ill effects of rapid demographic transition in the last 50 years and which helped it realise its human development achievements. Questions are raised on whether migration will continue at such high rates in the future too and contribute to the well-being of Keralas economy. Meanwhile, the State is also seeing a new trend of replacement migration, an increasing flow of migrant labourers from other States into Kerala.

The authors say that Kerala is now experiencing the secondary effects of migration of its people during the past decades, which are not so beneficial as the primary effects were. They include (a) the creation of educated youth unwilling to take up low-paid or unskilled jobs, and thus leading to a high unemployment rate; (b) the inflow of migrant workers from other States who are willing to accept low wages and poor working conditions and thus make a significant impact on unemployment and wage rates within, and nullifying some of the potentially positive spin-off effects of emigration; (c) the divisions caused by the increasing economic and political clout of the newly rich emigrants; and (d) rising resentment in Kerala society as a result of unequal opportunities in the emerging migration market.

The recent phenomenon of replacement migration is a result of a rapid decline in the number of workers in the young working ages caused by fertility decline to below replacement level, emigration of a large number of young persons to the Gulf and other destinations, and economic improvement in the State economy which have fostered an aversion to low-paid and unskilled jobs on the part of the youth in the State.

As a result, the potential spin-off effects of remittances on employment are benefiting workers outside Kerala more than workers within Kerala, with much of its remittances being drained off to other States, according to Irudaya Rajan and Zachariah.

In the past 50 years, the major socio-economic problems faced by Kerala related to schooling, maintenance of health and nutrition, and employment for its youth. As the papers in this collection indicate, in the coming years, as a result of the rapid decline in fertility levels, the major problems for Kerala will be of finding gainful employment for both the young and old working age population, maintenance of health and nutrition of the elderly, more so the women (especially widows) among them, providing the elderly subsistence through social security measures, pensions and other support programmes, and effectively managing both internal and external migration in the era of globalisation.

The most important question, therefore, will be whether Kerala, which currently has the largest number of social security and welfare schemes among the States in India, can afford to provide more assistance for its growing army of the elderly, especially in the context of projected trends in fertility decline and their implications now and in the coming years.

Raising retirement age

State policymakers have for long been indicating imminent changes, demonstrating that future governments will be forced to opt for unpopular decisions affecting many sections of society. Such ideas have not gone down well. For example, widespread protests by youth organisations and the opposition followed timid hints dropped by Ministers in the State Assembly recently that the government may have to consider raising the retirement age from (the recently increased) 56 years to 60 years, and introduce a contributory pension scheme to replace the existing statutory pension system eventually.

Finance Minister K.M. Mani told the Assembly in reply to a debate on the Appropriation Bill in mid-July that an explosive situation has ensued in the State with the number of government pensioners exceeding that of serving employees, making the current pension system unsustainable. Nearly 20,000 employees retire every year in Kerala, and letting them leave service early and qualify for pension benefits in a State where life expectancy is high has become an unmanageable burden, he said.

While assuring the State that a decision on raising the retirement age would be taken only after taking into consideration the concerns of service and youth organisations, Chief Minister Oommen Chandy had said: The State government pays salary to 5.34 lakh in-service employees and pension to 5.50 lakh retired employees. On an average, an employee continues in government service for 25 to 30 years, and a pensioner draws retirement benefits for an equal number of 25 to 30 years. Every year, the State needs Rs.7,731 crore to pay pensions alone, and this situation cannot go on for long. Except West Bengal, Kerala and Tripura, all other States have opted for a contributory pension scheme. Kerala cannot continue to be blind to such realities.

Work by the CDS researchers also highlights the fiscal pressure on the formal pension system in Kerala as well as in States such as Tamil Nadu, West Bengal and Andhra Pradesh, where life expectancy and the formal pension coverage rates are high, and fiscal projections indicate it will be difficult to sustain such a system for long. The present retirement age (of 56) is too low for a State like Kerala, where there is already a negative growth in population in a number of districts, Irudaya Rajan told Frontline.

The controversy in Kerala over the retirement age of government employees, with youth organisations up in arms against raising it further when so many young men and women were waiting for employment, is but only a symptom of the demographic transformation evident in most parts of India today (see box).

Fertility decline

Are the reasons for fertility decline the same for every region? Are the challenges relating to demographic transition in Kerala, and the lessons it has learnt as it tries to adapt to them, equally applicable to other States and regions experiencing rapid fertility decline? Irudaya Rajan told Frontline: Reasons for fertility decline could vary for different States or regions. A common factor would be the acceptance of family planning programmes. Demographic changes in other regions in India are less well-studied vis-a-vis those in Kerala. Although fertility decline has not been uniform across India, its effects are likely to be more or less the same for any region. Fertility is falling in almost all developing countries while it is largely stable, or even rising, in Europe and North America. The causes and implications of very low fertility and its impact on ageing, family structures and social systems in the developing countries is not as well-studied or understood as they are in the developed world.