Demography Crucial for National Progress

President Nursultan Nazarbayev’s state of the nation address on December 14 laid great importance on state support for mothers and children. This is a crucial issue for our society.

This is a pragmatic and visionary approach to solving the issue of the country’s leadership in the 21st century. International experience shows that states with a high population growth can successfully resist any social crises and disasters. Women play a crucial role in maintaining the family which is the basic building block of any state and society. Thanks to the president’s initiatives, the government is implementing effective measures to support families with many children.

A breakthrough came with the introduction of a progressive scale of one-time child benefit (from 30 monthly calculated indices (MCI) for a child up to 50 MCI, or 93,000 tenge ($616.38) for the fourth and subsequent child), and monthly payments for childcare up to a year in the amount of 8.5 MCI for the fourth child. Thanks to economically precise thresholds of payments, the birthrate in some areas has grown by almost 50 percent in three years. In the South Kazakhstan region, it has grown from 21 births per 1,000 people in 2006 to 30 births in 2009.

This is a pressing issue for the North Kazakhstan region, because for 20 years, the region’s birth rate has been falling relative to other parts of the country. This was explained by general depopulation and a major outflow of population from the region, especially of young people. Since 2000, the population of the region has decreased by more than 20 percent, from 716,000 to 576,000. Under such circumstances, the challenge of supporting mothers and encouraging higher birthrates is now more important for North Kazakhstan than ever.

In order to achieve this goal, the Generations Fund regional programme for 2010-14 was launched in 2010. It transfers payments of 160 MCI to personal deposit accounts. Starting on Jan. 1, 2013, this comes to almost 300,000 ($1,990) for each child in the family, where four or more children were born. This programme also applies for adopted children.

At an interest rate of 10 percent with an annual capitalization, up to the legal age, this sum can reach $10,000 per child. With the adoption of the new law on education savings, there will be an opportunity to increase the available interest rates by another 7 percent. It is easy to calculate that 160 MCI or 298,560 tenge ($1,900) at the interest rate of 17 percent with an annual capitalization will appreciate during 18 years to more than $33,000. Therefore by the time the child reaches its legal age and begins independent life, those funds will be able to give them a good start, especially when significant investments are needed to create a family, get higher education and start a new home.

Because of these measures, the birth rate in North Kazakhstan increased by 10 percent, and the region rose in the national ratings by two points, outstripping in 2011 the Kostanay region, and in 2012 the city of Almaty.

We hope that the positive results that we have achieved and our experience will be used in other regions of the country with a low birth rate, and will help create good incentives for the adoption of orphans by our citizens.

No less important for North Kazakhstan has been the macroeconomic efficiency of the Generations Fund programme as the growing savings in banks promote the growth of lending and investment in small and medium sized business.

It should be noted that this programme is not unique. Since the late 1970s, similar tax incentive programmes have been used in the United States. Their author, American economist Gary Becker was awarded with the Nobel Prize in 1992 for his important contributions to family economics. He has said that the birth rate is high in states where the economic benefits from having children exceed the full expenses on their care.

Thanks to such approaches, for the past 30 years, the United States has maintained the highest birthrate in the developed world. Tax incentives encourage the birth rate in the families of rich and middle class Americans. They help cover the costs of parenting and the education of children. Demands for adoption in the United States are so high that there are almost no orphans in the country, and the United States leads in international adoption.

In France, the country with the highest birthrate in continental Europe, there is also a state programme called Big Family which encourages large families. It offers subsidies and tax incentives to large families as part of an overall government policy to stimulate the birth rate. Each subsequent child reduces the tax base of the household, so that a family with four children practically does not pay taxes. This privilege applies to all citizens, regardless of their income, even to millionaires.

In 2012, a Center of IVF (in-vitro fertilization) was opened in the city of Petropavlovsk as part of the Generations Fund programme. This greatly increased the chances of women becoming mothers. Modern scientific achievements, applied in such centres can overcome the problems that previously seemed insurmountable.

The cost of the economic incentives offered through the Generations Fund programme is not great. For each additional one million people in population growth, it does not exceed $600 million. That is less than the cost of the road from Astana to Borovoye.

The task of successfully promoting national birthrates belongs to the national and regional commissions for women affairs, family and demographic policy. At the initiative of the National Commission, the government has recommended that all the regional authorities support the Generations Fund programme. This applies especially to regions that still have low birth rates. The implementation of the programme in these regions will be closely monitored.

Today, there is a clear understanding that the support of the family is an important state function, because it gives confidence in the future. In the face of the global financial crisis, investments in demographic potential are the most reliable and profitable assets and they are not subject to depreciation.

The author is Deputy Governor of the North Kazakhstan region and Chairman of the Regional Commission for Women Affairs, Family and Demographic Policy.

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