The Maldives is undergoing a notable demographic shift, with fertility rates consistently declining over the past decade. According to the Vital Statistics Report 2024, which analyses data up to 2021, the country’s total fertility rate has fallen to 1.9 births per woman, below the replacement level of 2.1 needed to maintain a stable population. This trend has significant implications for the country’s economy, labour market, and social welfare systems.
In 2021, the Maldives recorded 7,450 live births, continuing a downward trend from 8,012 births in 2020 and 8,611 in 2019. This consistent decline reflects changes in societal norms, including delayed marriage, increasing participation of women in education and employment, and greater access to family planning resources.
Labour Market Implications
The drop in fertility rates directly impacts the future labour force of the Maldives. With fewer children being born, the working-age population is expected to shrink in the coming decades, which could hinder economic growth. Industries such as tourism and fisheries, which are critical to the Maldives’ economy, rely heavily on a robust and youthful workforce. A smaller labour pool could lead to increased competition for skilled workers and potentially drive up wages, raising costs for businesses.
Furthermore, the decline in the number of younger workers may lead to an imbalance in the labour market, with an ageing population requiring higher public spending on pensions and healthcare. This scenario poses a significant challenge for a nation heavily reliant on external revenue sources like tourism.
Healthcare and Social Services Strain
The decline in fertility rates, coupled with increasing life expectancy, means that the proportion of elderly individuals within the population will grow. The report indicates a gradual increase in deaths related to non-communicable diseases such as diabetes and cardiovascular conditions, which could further strain the country’s healthcare system.
Currently, government spending on social security and health benefits accounts for a considerable portion of the national budget. Without reforms or strategic planning, the Maldives may struggle to meet the demands of a growing elderly population while simultaneously addressing the healthcare needs of its working-age residents.
Potential for a “Demographic Dividend”
Despite these challenges, a declining fertility rate can also provide economic opportunities, often referred to as a demographic dividend. With fewer dependents, households may have more resources to invest in education and health, leading to a more skilled and productive workforce. However, this potential can only be realised if policies are implemented to maximise the benefits of a smaller but more capable labour force.
Policy Recommendations
The current data underscores the need for immediate action to mitigate the long-term effects of declining fertility. Policymakers could consider:
- Incentivising Families: Offering financial benefits or subsidies for larger families to encourage higher birth rates.
- Workforce Development: Expanding vocational training and education opportunities to enhance labour market participation, particularly for women.
- Support for Elderly Care: Strengthening pension systems and investing in geriatric healthcare to prepare for an ageing population.
- Attracting Skilled Foreign Labour: Developing clear and efficient immigration policies to address potential workforce shortages.
The Vital Statistics Report highlights critical trends that require careful planning and policy intervention. While the decline in fertility rates may provide some short-term benefits, such as reduced strain on education systems, the long-term economic challenges cannot be ignored. Strategic investments in human capital, healthcare, and social welfare will be key to ensuring the Maldives can adapt to its changing demographic landscape while maintaining economic stability.
