The Coming Dark Ages?

Can Russia Remain a Great Power?

Is its demographic predicament too large to overcome?

Marcus Roberts
Mercatornet


In the Second World War the people of the Soviet Union suffered enormously. By official counts (estimates) the number of Soviets who died was about 27 million people – an eighth of the pre-war population. Such a catastrophe continues to have effects through the decades. Fewer people after the war had fewer children, as these children grew up, they had fewer children and so on. Demographers call it a “wave” of population troughs and crests that undulate through the subsequent generations; its effects are still being felt in the successor states to the Soviet Union.

After Russia’s population stabilised at about 144 million people for about ten years (and was then boosted by the addition of over 2 million Crimeans – remember that?), it is once again shrinking as more Russians die than are born. Last year there was a decline in the number of Russian births by 11 percent. This decline in the number of births is set to continue: by 2032 the number of women in prime childbearing age is expected to decline by 28 percent from today’s figures, meaning that there will be fewer babies being born in the years ahead. Unless something drastic happens, the United Nations is expecting the Russian population to decline by 17 percent to 119 million by 2050.   

This state of demographic affairs is of concern to the newly re-elected Russian president, Vladimir Putin. As Bloomberg reports, Putin said that:

“‘Preserving the nation of Russia and the wellbeing of our citizens is the essence of everything,’ he said in his state of the nation address last month as a chart detailing the statistical “war echoes” loomed on a screen overhead. ‘Falling behind is the main threat. That’s our enemy.’”

In this speech to Parliament, Putin laid out a number of demographic and economic goals for his fourth term. These included propelling Russia into the top five economies. But he is battling some immense demographic headwinds.
The mortality rate for working-age men is still at third world levels due to preventable diseases and workplace accidents. And although the life expectancy of both men and women is increasing, longer lives mean higher pension costs that Russia, which is limping out of the longest recession in two decades, is already struggling to meet.

While Putin has done a lot to halt Russia’s demographic decline, there is still a large discrepancy between the size of its oldest and youngest age working aged population cohorts. There are about 70 percent more Russians in the oldest bracket of workers, 55 to 59, than in the youngest, 15 to 19. By comparison, the gap is about 30 percent in Japan and less than 10 percent in both the US and the UK. That means that there are awfully large number of elder workers who will not be replaced when they retire in the next few years. This discrepancy is starving the economy of young employees and making it harder for the government to improve efficiencies in services such as health care, policing, public transport and education.

As Luc Jones, commercial director of the Antal International recruitment agency in Moscow, says: “The employment situation in Russia is going to get a hell of a lot worse before it gets better.” According to Valery Elizarov, the head of the demographics department at Moscow State University, Russia is currently shedding a million workers a year.

A new monthly stipend for first-time parents may encourage procreation, (see Polish policies in a similar direction here) but little can alter the current contraction in the workforce. A rise in the currently low retirement ages (55 for men and 60 for women) would help, but this is a politically fraught move that has been seen as urgent by many for years without anything being done about it.

The concern for Putin and Russia is that fewer workers mean fewer consumers and, ultimately, a smaller economy. The population drop alone is enough to knock as much as 1 percentage point off GDP growth in each of the coming years, according to Renaissance Capital. Johnson of Bloomberg Economics is more conservative, putting the cumulative drag on GDP over the course of this Putin term at 2.5 per cent. And that will necessarily have a negative impact on Russia’s ability to project power throughout Europe and the Middle East.  A negative impact that Putin would be desperate to avoid if he wants it to remain a great power.