Saudi Arabia’s demographic transition calls for policy response

Global population ageing is a reality across countries. For Saudi Arabia, the Kingdom is at an early stage of changing demographic dynamics to an ageing population and thus has the opportunity to plan ahead. In order to prepare for this, the country will need to adapt policies around pensions, healthcare and education, while exchanging best practices internationally.

Over the last century, a global trend has seen life expectancies rise – with improvements in healthcare and education gradually benefitting a larger portion of the world’s population. As a result, more people now expect to live into their 60s and beyond.

By 2030, this will see one-in-six people in the world be aged 60 years or over – rising from 1 billion in 2020 to 1.4 billion. At the present rate, the World Health Organization (WHO) expects this will double to 2.1 billion by 2050, while the number of persons aged 80 years or over is expected to triple by 2050, to reach 426 million.

This demographic shift in a country's population towards older ages – known as population ageing – began in high-income countries, like Japan where 30% of the population is already over 60 years old. But it is now also becoming prominent in low and middle-income countries.

By the WHO’s reckoning, by 2050, two-thirds of the world’s population over 60 years will live in these countries – necessitating huge shifts in global health and care policies.

With a rapidly decreasing fertility rate, and a longer life expectancy than ever before, Saudi Arabia is beginning to feel the strains of the trend. According to a new study from Strategic Gears, the Saudi fertility rate peaked in 1960, at a rate of 7.2 – but has since dropped to a ratio of 2.2 as of 2020.

Factors that Strategic Gears suggests could have contributed to the fertility rate decline include growth in the participation of women in the Saudi labour force – which is now 33.4%, compared to 15% in the 10 years before the government launched its Vision 2030 plans. With women now more likely to build careers, should they chose to have children, they will likely have fewer than previous generations.

At the same time, higher education, especially among women, is another driver – with more awareness of contraception. Linked to this, a shift in social norms relating to the family has led to a small but consistent decline in the size of the average family – the average household now being 5.8 people, compared to 6.6 in the early 90s.

This in turn has helped women live longer – with the report pointing to doctors noting health-related benefits associated with fertility and delayed childbearing.

During the same period, life expectancy of Saudi’s has nearly doubled since the 1960s. It now stands at 75 years, having been just 46 years in the 1960s – and the UN projects Saudi life will hit 83 years by 2050.

Medical advances and improved healthcare may see this realised, while improvements in home and workplace safety measures like the use of mandatory seatbelts and emergency numbers to prevent accidents and other sources of injury.

Responding to challenges

Strategic Gears however notes that the confluence of these trends brings rise to a number of challenges and opportunities.

Most visibly, the workforce is currently seeing a bulge in men reaching retirement age – while there is a smaller number of younger men to take their place. This will need further adaptation on the part of Saudi’s leadership beyond Vision 2030.

First, more women will need to be encouraged into the workforce, diversifying the labour market to make up for the falling number of male participants. At the same time, the portion of people applying for pension benefits is set to increase, as will the costs of healthcare provision – putting pressure on GDP growth. These challenges will be more complicated to overcome.

According to the study, the Kingdom could also look to the international community for advice. The firm notes that “Saudi Arabia and all other G20 nations would benefit from exchanging knowledge and best practices, maximising positive ripple effects by strengthening global/multilateral frameworks for trade and investment, and improving global cooperation and policy coordination”.

In this manner, the Kingdom will be able to more confidently reshape its public policy to address the problems of ageing and mitigate any possible negative effects of such a demographic shift.