The trend has been going on for around ten years. But a milestone seems indeed to have been reached. According to the latest demographic report published this Tuesday, January 16 by INSEE, the number of births fell by 6.6% between 2022 and 2023 to reach 678,000. If we compare this figure to that of 2010, the fall reaches 20%. At the same time, the statistics institute recorded 631,000 deaths last year, down 6.5% compared to 2022.
Fewer babies are being born, while life expectancy increases. From an economic point of view, this is good news, but only in the short term. “Children, until they are of working age, are quite expensive for society and public finances. On the other hand, this can reflect a certain precariousness and fear of the future,” underlines Hippolyte d’Albis, professor at the Paris School of Economics.
Employment rate of seniors: France lagging behind
Over the long term, however, things become more complicated. The decline in the birth rate will inevitably lead to an aging of the population. Bad news for consumption, the engine of French growth: the savings rate after 70 is more than 25%, compared to 8% for those under 30. This major change will also weigh on the health system. According to INSEE, people aged 60 to 69 spend twice as much on healthcare as the average, and those over 70 four times as much. “If we want to maintain this level of social protection, we will have to tax work more. This means less remuneration for workers and a slowdown in the French economy,” continues Hippolyte d’Albis.
Furthermore, the number of assets will logically decrease. Unless the State activates several levers. Starting with the employment of seniors. France is paradoxically in a favorable situation compared to other countries such as Germany to the extent that it is significantly behind on this subject. In 2022, France was placed in 17th place in the European Union with an employment rate for seniors of 55.9%, compared to 71.9% across the Rhine.
Will productivity be affected? “This is a question that has been particularly studied. Does it decline with age? It is not so clear. With the aging of the workforce, certain functions decrease. However, this loss capacity can be compensated by experience. Be careful, therefore, not to fall into the cliché. What is true is that there is sometimes a loss of desire. But biologically, this is not linked to age”, explains Hippolyte d’Albis. Another major lever: immigration. Foreigners are most often young and immediately available for work. Finally, “there is the employment of women which remains lower than that of men. A set of public policies have already been put in place, but there is still a way to go,” adds the economist.
The retirement system in danger?
As for the retirement system, its balance depends on the ratio between contributors and beneficiaries. If life expectancy increases and the number of births falls, there will be fewer assets to finance the retirement of older people. According to a report from the Retirement Orientation Council (COR), in 1970, there were three contributors for every retiree. In 2000, this ratio was two to one, then 1.7 in 2020. It is expected to reach 1.4 in 2050. The first determining factor in reversing the trend is the retirement age. Postponing it is the most effective way to finance the system, because it mechanically allows for a reduction in expenses and an increase in resources.
As the population ages, the question of automation will also arise. “The challenge in a country where the birth rate is falling and aging is accelerating is to maintain a certain level of production, with fewer workers. Countries which see their population aging more quickly, like Japan, devote significant sums to robotization”, illustrates economist Pauline Rossi.
The golden age of robots, which could arrive in France, will necessarily be accompanied by an evolution of our tax framework, she continues: “We will have to distribute these productivity gains socially because wealth will be created more by capital than through labor.” A new problem, which is also likely to arise with the advent of artificial intelligence.
.