For a long time, the Argentine economy ran behind measures to plug holes and thinking in the medium term was considered a luxury for “theorists.” The relative inflationary slowdown of recent months (+2.1% the rise in the CPI last May) added to the improvement in the balance of payments that took pressure off the exchange market (the cuckoo of all the financial crises of the last half century) dusted off a new “swan” on the stage that could become black or gray as time goes by: a dramatic change in the composition of the population. Above all, the challenge represented by its impact on the most sensitive sectors: education, public health and the retirement system.
In figures. The IMF review document for the second disbursement of the loan to Argentina highlights the Government’s commitment to fiscal balance and the progress achieved in terms of macroeconomic order is considered very positive. The economist Jorge Colinapresident of IDESA, highlights that there is still a “challenging agenda of pending reforms”, which includes issues previously postponed due to fiscal emergencies and poor electoral viability. “The importance of addressing tax and pension reforms is highlighted in order to give sustainability to the fiscal balance and there is underlying concern that the approach to these transformations will continue to be delayed,” he analyzes.
The first sign that is being generated A new demographic trend is the abrupt drop in the birth rate, which in a decade went from 2.4 children in 2014 to 1.23 in 2024. Life expectancy (the average length of life a person is projected to live at birth) also increased considerably: 72 years old in 1990 became 77 years old today. That is, fewer births and prolongation of people’s lives, which alters one of the main economic variables, “human resources” which in the short term is always taken as an immutable data. But what did draw attention is the speed of said change. For the economist and demographer Rafael Rofmanprincipal investigator of CIPPECthese two phenomena are reconfiguring the country’s population structure, which is beginning to look more and more like that of developed European countries.
In 1950, 9 out of every 100 born died before the age of 5; Today that figure is less than 1. The drop in the birth rate has an immediate impact on population aging in relative terms, since, as there are fewer children, we are older on average. For example, according to a study by the organization Argentines for Educationit is estimated that by 2030 primary school enrollment in the country will have fallen by 27% compared to 2023 (1.2 million fewer students). Every end of the school year and beginning of vacations, the scene is repeated in the City of Buenos Aires, but also in some nearby areas.: the closure or at least the adaptation of schools to falling demand.
To have or not to have. The sociologist María Inés Pasananteof the UCApoints out another fact that he considers worrying: the current fertility rate (children for each woman of reproductive age) fell to 1.4 when the “generational replacement rate” (that is, to maintain the population structure) is 2.1 children per woman. The reason why this figure shows a pronounced decrease is not due to a single factor, such as a postponement of motherhood, a low marriage rate and the increase in the cost of living. It is not something strange on the world stage either: Argentina probably accelerated a trend that the rest of the region had already anticipated (especially in Chile and Uruguay) as a few decades ago marked the path of demographic change in Europe, in which several countries were only able to reverse it due to the contribution of migration. The sociologist Marita Carballopresident of Voices! points out that in a survey of UADE-Voices! By 2022, there was already a growing percentage of women with a higher educational level, access to the labor market and contraceptive methods, postponing or directly ruling out motherhood: “having children” ranks fifth among the factors that Argentines consider important to live a full life. 92% consider it essential to be healthy; 72% value a job that they like; 55%, being able to study and 40%, having free time and traveling. It also highlights that the average age of the first child just 15 years ago was 26 and is currently 32 years old, although the good news is a sharp drop in teenage pregnancy.
However, for Rofman, in the short term, this factor produces a positive effect: a lower total dependency rate, deepening the “demographic dividend”: that is, how much more the active population has to “support” children or retirees. “Therefore, it is possible to increase savings and investment rates and accelerate economic growth,” he explains. In the medium term, however, he maintains that the effect is less clear: on the one hand, the lower number of young adults of working age has a negative impact on the generation of resources that, among other uses, finance retirements. “But if there was a take advantage of the demographic dividend, an increase in productivity is possible that not only offsets this effect, but also reverses it”he points out.
Retirements in the spotlight. This factor also contributed to accelerating retirement defunding because the solution found to reverse the red flag of the pay-as-you-go system was to expand the contributor base: it is estimated that, if there are 4 assets for every liability, the system does not suffer. In Argentina that ratio has already dropped from 1.5; understood as a consequence of the growing informality of activities and the precariousness of another part of the labor market. “The problem with the pension system is that in the short term nothing appears worrying, because the problems are medium-term and, since changes in pension rules have an impact in the future, the changes must be adopted in the short term, even if there is no urgency, so that they have an impact in the medium term,” Colina warns. On the other hand, he adds that when births equal deaths, the population stops growing and the distribution system enters into crisis (because its basis of support is population growth). That point of convergence is getting closer: in 2024 there were 413 thousand births and 376 thousand deaths. “Although this crisis is in the future, changes must be made today”sample.
Finally, this demographic change also puts health coverage for old age under severe strain. “Just as the retirement schemes were conceived with demographic parameters very different from those of today, the central health coverage for old age (PAMI) was designed in 1971, when the number of children tripled those over 60”, Colina adds. The “financial rule” of health coverage is designed for the young population, with an allocation of 9% of the salary for the health of the active and their children in social and prepaid works, but when they retire they are compulsorily affiliated with PAMI (in the national system or the analogous ones in the provincial ones) with 5% of the salary of the assets, with a notable gap in geriatric care that often does not have sufficient social coverage.
This demographic “bomb” could quickly mutate into a new black swan for the Argentine economy with greater need for state financing of a bankrupt system, but also the opportunity to reform its operation when its explosion is not imminent. But also look at it as a window to take advantage of the improvement of school functioning (less number of students per classroom and more quality of attention, for example) or, as Rofman recalled that The future challenge is to improve living conditions and extend the longevity of the elderly while taking advantage of this demographic “recess” before “winter.” But, once again, to do so, the economy needs to have a growth horizon that jumps from the Excel spreadsheet of presentations to the cash register.
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