The total fertility rate in Lithuania continued to decline last year and is one of the lowest in the EU – similar to Poland, Spain, or Malta, with the number of children per woman barely exceeding 1 last year. To maintain a stable population (without immigration), the fertility rate should be around 2.1, but currently no EU country has approached this level.
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Can money encourage fertility?
Empirical studies show that the declining fertility in developed countries is caused by many factors – not only economic ones but also changed social and cultural norms and priorities. For example, in the last century, it was normal to raise two children in a two-room apartment. Now, for many, this no longer seems like an attractive standard of living quality.
Financial support for families remains an important tool in combating poverty and compensating parents for lost alternative income. However, as a fertility promotion measure, money has a very limited effect. For example, Hungary applies some of the most generous family and child support financial measures, allocating about 5% of GDP for this purpose.
However, fertility is also falling there – from 1.6 a few years ago to 1.3 children per woman last year. This does not mean that families, especially those with many children, should not be supported or that sustainable measures to increase housing affordability should not be sought. But one should not have illusions that this will fundamentally change fertility statistics.
Is low fertility really a big tragedy?
There are several countries in Europe with fewer inhabitants than Lithuania, but we are still far from these countries in terms of competitiveness and quality of life. It is becoming increasingly clear that overemphasizing population size is a relic of last century’s technologies, ideologies, and issues.
Population stability or growth is most often cited as a necessary condition for economic growth and prosperity. Yes, population size is important both as a labor supply and as a factor of overall demand. Still, Lithuania’s small and open economy has grown and will grow not because there are many consumers here – most of our progress and prosperity depend on external competitiveness, the ability to export goods and services to other countries in the world (primarily the EU).
Labor supply is still relevant in some sectors – one in five companies states that their expansion is limited by a lack of employees. However, in the medium and long term, this problem will become less and less relevant. The latest artificial intelligence models are increasingly matching human capabilities and are more and more successfully taking over not only the most boring routine tasks. They are already creating software, analyzing data, composing music, and doing many things that a few years ago seemed to be the exclusive prerogative of human intelligence.
At the same time, an equally impressive technological revolution of humanoid robots is underway. If anyone doubts their progress, I recommend watching episodes of this year’s robot Olympic games. Their cost is decreasing, they are increasingly performing more complex and not only routine tasks, working not only in warehouses or factories but also, for example, in nursing homes.
I have heard some economists speculate that with low fertility “we will not have sufficient military capabilities.” I fear that pulling such arguments out of thin air will not encourage fertility, quite the opposite. By the way, after the robot Olympic games ended, the People’s Liberation Army of China urged researchers to focus on faster adaptation of these impressive technologies for military needs. So, even in this sad reality of life, technology will take over the human role.
It is not the population’s priorities that must change, but the public sector
The entire public sector must adapt to changing demographic realities. It is easier to say “we will encourage fertility” than to undertake essential structural reforms required by a shrinking and aging society. If the state has fewer inhabitants, fewer workers, and fewer taxpayers, the entire public sector must accordingly slim down and become more efficient.
A larger share of employees still work in Lithuania’s public sector than the average in OECD countries. This does not mean they do not create value, but probably no one doubts that there is room for consolidation of the network of state institutions and their functions. More transparent and efficient public procurement, a leaner bureaucratic apparatus, the same artificial intelligence tools in state governance and public service delivery – in the context of such changes, there would be no need to increase taxes or worry too much about the decreasing number of taxpayers.
Quality matters more than numbers
Admitting that having children is a very personal decision, not subject to politicians’ calls, requests, and incentives, one can move on to identifying and solving fundamental problems. Since the number of inhabitants, especially those of working age, will decrease in Lithuania, it becomes clearer where all efforts must be focused – on education. If fewer children are born, there are fewer pupils and students, so we must invest (not only money) in making each of them a competitive creator, decision-maker, and problem solver.
Unfortunately, this is where we have the most unresolved problems. The latest OECD student skills study shows that Lithuanian students’ abilities in mathematics and reading comprehension have worsened in recent years (but it is worth noting that knowledge of natural sciences has slightly improved). What should worry us most is that according to this study, only 8.7% of students in Lithuania achieve the highest achievements (twice less than in Estonia), and one in six students does not reach minimum skills (twice as many as in Estonia).
Unfortunately, so far, the problems revealed in school education have mostly been addressed by lowering the achievement assessment bar rather than seeking the deep causes of deteriorating education. Therefore, a national agreement is needed not on promoting fertility but on the quality of education.
In summary, the country’s demographic structure is important, but population size is neither the decisive nor the most important criterion of the country’s economic success. Quality education, responsible use of public resources, and the implementation of the most advanced technologies – all this can ensure Lithuania’s further progress even without achieving sufficient fertility.
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