NEWS ANALYSIS: Baby boomers – blessing and curse

Economist calculates what Finland would have been like without postwar surge in births

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By Teija Sutinen
     
      First they were a flood, then they were a stopper, and soon they will be a burden.
      Members of the baby boom generation that came after the war filled the elementary schools, then they took over the available jobs, and now they are rushing to retire at breakneck speed.
      From 1946 to 1949 more than 100,000 of them were born each year.
      In their wake everything seems to have been on the wrong scale. Now this additional load is being painfully trimmed back. There are too many universities, too many military garrisons, too many public sector jobs.
     
Would Finland have been better without the baby boomers?
      Kalle Elo, an economist at the Finnish Centre for Pensions calculates in a recent publication what Finland would have looked like if demographic development had not been as wild as it was after the war.
      In his mathematical exercise, Elo puts the average birth rate in the years 1954-1968 at the level 2.1 – reflecting the number of children that a woman would have on the average during her lifetime.
      Total fertility surged during the baby boom years to 3.5 and remained high for a long time. At preset the figure is under two.
     
For mortality Elo uses the actual situation. He eliminates the impact of migration in order to simplify the calculations.
      Elo’s calculations would mean that in 2008 Finland would have had 4.2 million inhabitants – more than a million fewer than really is the case. The working age population would have started to decline already in the 1980s.
     
Without the baby boomers Finland would certainly have coped, but not as well as it has done now.
      The baby boom meant that the economy grew when the population moved from the countryside, and there were plenty of labour to go around.
      Sharing with others actually worked in Finland. Large numbers of the surplus population emigrated to Sweden.
     
Finland’s welfare society is largely the result of the fact that there have been large numbers of working age people available in recent decades. Now the blessing is turning to a curse, as the proportion of people over 65 starts growing very fast.
      This is partly the fault of the baby boomers, as they gave birth to a very small number of children in the 1970s. They were the first generation whose women postponed having a first child, and who had a variety of birth control methods available.
     
Financing the pension system would have been difficult without the big postwar generation. The population would be clearly older than it is now, so according to Elo’s calculations, pension costs would have surged already in the late 1990s to nearly 30 per cent of wages.
      Now that level is not ahead of us until this decade. However, the nation currently faces a sudden adaption to spending money on pensions – and lots of it. Without the baby boom generation, the growth in the proportion of pension costs would have been more moderate.
     
Immigration is the main reason why the Finnish population is growing.
      The calculations suggest that without the baby boom generation, Finland would have had to have been more receptive toward immigrants, or else the age structure would have turned grey to an unsustainable degree.
      Throughout the years the baby boom generation has had to grow accustomed to the existence of a big mass of people. Next, this generational experience will emerge in a new place again – in Finnish elderly care.
     
Helsingin Sanomat / First published in print 12.9.2011


Previously in HS International Edition:
  Average retirement age has increased in Finland (28.1.2010)
  Baby-boomers to leave behind record inheritances (23.2.2004)
  Retiring baby boomers have considerable purchasing power (2.8.2010)

TEIJA SUTINEN / Helsingin Sanomat
teija.sutinen@hs.fi