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Friday, September 7, 2007

Letter from Europe: Russia's demographic crisis - International Herald Tribune

Letter from Europe: Russia's demographic crisis - Print Version - International Herald Tribune

Letter from Europe: Russia's demographic crisis
By Judy Dempsey
Thursday, September 6, 2007

BERLIN: It is a tragedy touching millions. Sixty years after World War II, Russians are dying younger in peacetime than their grandparents did under Stalin. They are having fewer children, and many are falling mortally ill from alcohol-related diseases.

The alarming trends have accelerated since the collapse of the Soviet Union in 1991, despite the unprecedented growth of the Russian economy, which is expected to increase 7 percent this year, fueled by high energy prices. Russians who should be reaping the benefits of such growth are not.

"A terrible demographic crisis is taking place," said Nikolay Petrov, a specialist on Russian society at the Carnegie Center in Moscow. "Over the next 20 years, Russia will need 20 million immigrants to compensate for the labor shortage. This is the first time in which the population and labor force are declining together. It will have an enormous impact on Russia's economic and strategic ambitions."

Vladimir Putin, the Russian president, has only recently acknowledged part of the problem by promising more money for mothers who have a second child. Petrov said the root causes - cardiovascular diseases caused by alcoholism and smoking - were not being tackled.

Since 1992, Russia's population has fallen 3 percent, to 143.8 million from 148.7 million. Other countries have experienced sharp declines over the same period - in Bosnia, the war reduced the population by 10 percent, while emigration sapped the populations of Armenia and Kazakhstan. In the case of Russia, domestic and social reasons, not war or emigration, are draining the country of its people.

"The drop in population in Russia is unprecedented among industrialized countries," said Patricio Marquez, lead health specialist for Europe and Central Asia at the World Bank and one of the authors of a new study, "Dying Too Young in the Russian Federation." Life expectancy of Russian men is below 60 years, compared with 67 years in 1985 and 63 years in the early 1950s. They are also living 16 years less on average than their male counterparts in Western Europe and 14 years less than Russian women because of their lifestyle.

A report by the World Health Organization showed that heart disease, aggravated by alcoholism and tobacco, account for more than 1.2 million deaths - nearly half the total - each year. Alcoholism, too, is one of the main reasons for road traffic accidents and injuries at the workplace. While alcoholism affects fertility, demographers said, the trend toward increased female infertility is also caused by abortions and the increase in HIV-AIDS and other sexually transmitted infections.

The consequences may thwart Putin's strategic ambitions. Since coming to power in 1999, he has sought to resurrect Russia as a great global power. Thanks to high energy prices, Putin has paid off Russia's debts. He has used the energy revenues to build up a stabilization fund, now standing at $150 billion, to act as a buffer against domestic and global currency turbulences or to supplement pensions. He said last year that he had plans to diversify the economy to make growth less dependent on energy and commodities.

Internationally, Putin has promoted Russia's political and economic interests, opposing independence for the Serbian province of Kosovo and U.S. plans to deploy part of its missile defense shield in Eastern Europe. He is also investing in the armed forces and defense industry. These ambitions require money, which Russia has, but also people and skills, which Russia lacks.

"I am not sure the Kremlin has acknowledged the impact of the demographic trends for realizing these ambitions," Petrov said. "For instance, there will be a serious shortage of army conscripts. Yet the necessary military reforms have not yet been introduced to deal with this." Russia's internal security could be jeopardized as well. Marquez said: "Russia is a vast country with very long borders. Some of the border regions are being depopulated. Who is going to defend the borders?"

The economy, too, will suffer. "There is a big shortage of skilled labor," said Alexander Lehmann, senior economist and specialist on Russia's macroeconomy at the European Bank for Reconstruction and Development in London. "In 2007, Russia's labor force reached a peak of 90 million. It will be 15 million fewer by 2020. This will be a fairly substantial burden on economic growth. It will be more difficult to sustain high growth rates."

Indeed, those who are dying prematurely or falling ill are in the most productive age group. According to the World Bank, the probability of a Russian aged 18 years surviving to retirement age is 50 percent, compared with 90 percent for a British citizen. "This is a major loss for society," Marquez said.

Domestic and foreign companies are already feeling the strain. Wages are rising an annual 12 percent to 15 percent, particularly in urban centers, because of the labor shortage, according to Lehmann. Foreign investors face an even more serious issue: a high rate of absenteeism caused by alcoholism. "For investors it is becoming very difficult to have a good work force free of alcohol. This clearly has serious health and safety implications," Lehmann said.

The World Bank and the National Center for Preventive Medicine in Moscow have estimated that the overall cost associated with reported workdays lost to illness varies between 0.55 percent and 1.37 percent of gross domestic product. This does not include reduced productivity because of ill health on the job.

Apart from paying mothers more to have a second child, the Kremlin has done little. While there are conferences by health experts focusing on Russia's demographic crisis, the authorities are lagging far behind in promoting awareness about alcoholism, modernizing the health infrastructure and improving working conditions. The Finance Ministry refuses to impose hefty excise taxes on tobacco or alcohol because of the power of the consumer lobbies. Law enforcement, particularly over drunk driving, is weak.

"If current rates of ill health and disability continue, the healthy life expectancy of Russian males will fall to 53 years," Marquez said. By failing to act now, before he leaves office next year, Putin will leave behind a much weaker, sicker and less secure country that in the future may be unable to preserve its status as a world power.



International Herald Tribune Copyright © 2007 The International Herald Tribune | www.iht.com

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