Cuba’s ageing population is widely-acknowledged as a serious problem. Marino Murillo, now Minister for the Economy, has described it as a ‘colossal challenge for the nation’. The bare facts are: in 2021 more people will leave the labour force than will join, in 2026 more Cubans will die than will be born and the number of people over 60 in the country will rise from 2 million in 2012 (18.3% of the population) to 3.5 million in 2050 (36%). More Cuban grandmas and grandpas. What’s the problem?
There are several. An older population means more pensioners and, normally, fewer people able to work. Governments need to spend more on health care, pensions, public transport and old people’s homes but less on education and kindergartens. And they receive less tax revenue, particularly from income taxes as fewer people work. In economic terms, an ageing population normally means a smaller proportion of the population are working age and therefore contributing to the economy.
Cuba is not alone in facing this problem. Countries in Europe such as the UK, Spain and Italy face similar issues. Japan and Singapore do too. The BRICS are also affected; in China, policies to control population growth have led to an older population and the 4-2-1 phenomenon where children from single-child parents reach working age and have to care for two parents and four grandparents in retirement.
Why is this happening? Better health care means people live longer. And more women work more and have children later. In Cuba women can expect to live to 81 and men to 77. About 38% of Cuban women work. But other issues affect the birth rate too. For example in most Cuban cities many generations of one family share a house or apartment with limited space for grandchildren or children. And a high level of emigration, particularly of young people, means the population of Cuba is ageing more quickly.
So what can be done about it? What can the government do to ensure the economy is as healthy as its people? What has been tried and tested elsewhere?
Raising the retirement age is one idea. It keeps more people working and fewer people drawing pensions. In the UK for example, there is no retirement age – people can retire when they like – and the age people receive their state pension will soon rise to 67. Cuba has raised its retirement age; men now retire at 65 and women at 60, five years later than they used to. Should governments go further? A radical approach is to link the retirement age to life expectancy. Alternatively, governments can promote more flexible working to allow retirees, who have a huge amount to offer but may not want to work full-time, to carry on working.
In many countries at different stages of their economic history – the US, Japan, Chine, the UK – productivity has increased. If the current working population produces more, the economy grows and is more able to sustain the country’s pensioners. But that’s easier said than done. To achieve this you need capital investment, to import new technologies and to train your workforce. Cuba’s recent drive for foreign investment, if successful, should partly achieve this. A business environment that encourages entrepreneurship and risk-taking, unleashes creativity and dynamism and facilitates good business decisions helps. So does more flexible working and more interesting and well-paid jobs to keep people in the workforce and incentivise better productivity.
What about encouraging more remittances? Remittances are probably one of the main drivers of growth in the Cuban economy at the moment with up to $3bn a year being transferred from the US. More must be coming from Cuban communities in other countries such as Spain, Canada and Venezuela. The money is invested in small businesses, pays for DIY work on private houses and helps people get by. $3bn isn’t really a lot; other countries receive a lot more. For example, $11bn is sent home to Vietnam each year, Mexico gets $22bn and India receives a whopping $70bn. Remittances account for about 5% of Cuba’s total economy; in Tajikistan, they account for 52%.
Or could people be encouraged to have more children? This is a tough ask and something governments all over the world struggle with. In Russia, women get a cash payment if they have a second child. The French government has introduced measures to encourage couples to have three children and in the UK we have tried to provide better day care for children to allow parents to keep on working. Allowing parents to take more maternity or paternity leave, as they have in Singapore, might also work. In Cuba, housing is key; here, many generations of one family live under the same roof. That can have advantages such as easily-available childcare but it might mean there isn’t sufficient space in the house or flat for the family to grow.
Alternatively, is there a way of encouraging people not to emigrate? This is crucial. Providing the right environment and opportunities for young people – e.g. education, interesting jobs, entertainment, access to the internet – keeps more of them at home. But how to do this in the face of competition from other countries is tough. At least if they do emigrate, they are likely to send home remittances. But if they stay and can work in productive jobs, they’ll bring their creativity, imagination and understanding of new technologies to old problems and help the country develop.
Finally, how about increasing immigration? Coming from London with its very diverse population, one of the striking things about Cuba is the absence of big immigrant populations. Of course there have been waves of immigration in the past – the Spanish, African slaves, West Indians, the Chinese – but not anymore. Immigrants bring new ideas and often work hard to give their families a good start in their new country. Canada has a very high per capita immigration rate – about 250,000 people a year settle there. In Switzerland, a quarter of the population were born outside the country.
These are just some ideas. You’ll have your own. But as Cubadebate reported after a recent Council of Ministers meeting, this is one of the biggest challenges faced by Cuba with an impact on economic, social and family life. It’s a problem many other countries have faced too. And the solution has never been easy to find.