DEMOGRAPHIC FORECAST FOR NIKOPOL

Contents
Executive Summary .................................................................................................................................. 3 Glossary..................................................................................................................................................... 4 Introduction ............................................................................................................................................... 5 Why Long-Term Demographic Forecasts? ............................................................................................... 5 Forces Behind Recent Demographic Trends ............................................................................................. 6 Forecasting Population Methodology ....................................................................................................... 8 Assumptions .............................................................................................................................................. 8 Assumption # 1. Total Fertility Rate ..................................................................................................... 8 Assumption # 2. Average Life Expectancy .........................................................................................11 Population Forecast .................................................................................................................................14 Results And Consequences .....................................................................................................................17 Conclusion...............................................................................................................................................20 Appendix A: Demographic Model Methodology ..................................................................................21 Appendix B: Nikopol Demographic Forecast .........................................................................................23

Published with the financial support of the Government of Canada. The views and opinions expressed herein are the responsibility of the authors and do not necessarily state or reflect those of the Government of Canada. . .

Executive Summary The report analyzes the current demographic situation in Nikopol and presents a long-term demographic forecast until 2030. The forecast includes number of population and age-sex structure outlook. To conduct the population forecast, a customized Nikopol demographic model uses historical data on number of population, births, deaths, in- and out-migration. There are three primary assumptions that are required to conduct the demographic forecast: total fertility rates, average life expectancy, and net migration. In this forecast, average life expectancy in Nikopol increases from 73,1 years in 2010 to 75,2 years in 2030 for females and from 62,6 to 65,0 years for males. Therefore gap in average life expectancy between males and females is expected to shrink. The total fertility rate of the average female will increase over the forecast time period from 1,46 in 2010 to 1,68 in 2030. Net migration is expected to continue to be negative. However, net migration is expected to decrease in magnitude and stabilize; the number of people the city loses to net migration every year will improve until it reaches -125 people per year starting in 2017. Despite longer average life expectancy, higher fertility and improved net migration, the total number of population will decrease and the population will continue to age. The number of population will decrease from 123838 people in 2011 by 21.2 per cent and will number 97637 people in 2030. This phenomenon of having improved conditions, but still a declining population is a result of the effects of low fertility rates in the 1990s and early 2000s which will be realized over the next 20 years when these populations enter the workforce and begin to have children. Despite increase in the total fertility rate, fewer babies will be born as a result of the lack of females of childbearing age. The number of babies born will decrease from 1263 babies in 2010 to 789 babies by 2030. There will also be a significant decrease in the number of workers available, especially young workers. From 2011 to 2030, the number of working-age population will shrink by 24 per cent despite the increase in retirement age for females and will number about 55 thousand people in 2030. The young working age population aged 16-30 will decrease by 36 per cent between 2011 and 2030. Shrinkage and ageing of labour force will influence the economic situation in the city. The median age for females and males is 44 and 36 years respectively in 2011 and will grow in next years. The median age in 2030 will be 49 for females and 41 for males. The social and financial burden on the working part of the population will increase, as it will have to keep a greater number of non-working people. In 2011 each 100 working age persons had to support 73 dependents (elderly and children); by 2030, each 100 working age persons will have to support 79 dependents, despite the increase of the retirement age for females.

Glossary Total number of populationnumber of live people, in forecast is measured by January 1 of respective year. Total fertility rate (TFR) the average number of children born by an average female during her life. Age specific fertility ratethe average number of children born by an average female in specific age cohort Natural replacement ratethe total fertility rate at which births compensate for deaths. In such a case, the number of population will neither grow nor reduce, but stay stable. The natural replacement rate is considered to be 2.1 children per female. Number of birthstotal number of babies born by all females in a respective year. Mortality ratenumber of deceased people in a respective year divided by number of people in this year, usually is measured by 1000 people. Age specific death ratenumber of deceased in specific age cohort divided by number of people of the cohort in a respective year. Average Life Expectancynumber of years each cohort is expected to live on conditions that during lifetime of the cohort age specific mortality rate will stay stable. Natural Changebirths minus deaths. This indicator will be positive when births outnumber deaths and negative if deaths outnumber births. This indicator shows underlying population change excluding migration. Net Migrationmargin between number of immigrants and number of emigrants in a respective year. Median agesthe age that divides a population into two half; that is, half the people are younger than this age and half are older. Dependentspeople who are not of working age, including both children and the elderly. Children are considered age 0-15. While the people older than working age depends on retirement ages. It is 60+ for males and 55+ for females before 2012, changing to 60+ during this forecast period according to the schedule outlined by the Ministry of Social Policy of Ukraine. 1 Dependency ratioratio of number of dependents (both children and elderly) per 100 working age people. Working ageworking age until October 1, 2011 was defined as 16-54 for females and 16-59 for males. Over the forecast period, these ages will change to 16-59 for both males and females. The transition period is expected to continue from 2011 until 2021. During the transition period actual age when females retire on a pension will increase 6 month every year from 55 in 2011 to 60 in 2021.

From the law, "On Measures to Ensure the Legislative Reform of the Pension System" adopted on July 8, 2011.

Introduction Nikopol is considered a large city (123 838 residents as of 1 January 2011) located in Dnipropetrovsk oblast. This report analyzes the current demographic situation in Nikopol, considers trends from previous years and presents a long-term demographic outlook until 2030 featuring the total population, including its age-sex structure, for every year up to 2030. Detailed population data including annual migration, fertility and mortality are discussed and compared to the experiences in other European countries. The report was prepared within the framework of the International Technical Assistance Project Building capacity in Evidence-Based Economic Development Planning in Ukrainian Oblasts and Municipalities (EBED Project). The EBED Projects main goal is to ensure the sustainable economic development of the Ukrainian oblasts and cities through building the capacity of oblast and city officials to apply quantitative analysis and forecasting tools to improve the economic development planning of their territories (www.ebed.org.ua). The EBED Project is financed by the Government of Canada. 2

Why Long-Term Demographic Forecasts? The goal of this demographic forecast is a reasonable projection of key parameters for population movements and demographic situation in the future, which is the basis for further budget forecasts and plans of socio-economic processes in general. Demographic situation in Nikopol has specifics features both European and post-soviet trends. European trends include shrinkage of natural growth despite increasing average life expectancy, ageing of population, while post-Soviet trends include lack of young adults and larger gap in average life expectancy of males and females. This prospective demographic forecast was designed to address the current demographic problems in the city and overcome the negative effects of demographic development in the future. Besides, demographic forecast is needed for budget and economic forecasting and planning of social and economic processes, namely: manufacturing and consumption of goods and services, housing construction, development of social infrastructure, health care and education, employment, economic activity of the population and the like. The results of our research point to the fact that without actions by the government, the longstanding shrinkage of the population will hamper economic growth in Nikopol, whereas ageing of the population will create an additional burden on the working-age people and city budget.

The opinions expressed in this document are of the authors only and do not reflect the official position of the Government of Canada or the Canadian International Development Agency.

Nikopol will need to develop appropriate measures to offset the effects of projected difficult demographic situation. In turn, such measures should be based on a clear vision of the future that requires long-term demographic projections.

Forces Behind Recent Demographic Trends The population of Nikopol has been significantly declining over past decade. The main reasons for that were low number of births that do not exceed number of deaths. Negative net migration has become an equally large loss to the population in recent years. Share of elderly grows while share of young people has been shrinking over last decade. The population is ageing because of life-expectancy increase and low number of births. There is also large gap in average life expectancy of males and females so in older age cohorts there are greater number of females than males. The recent population developments can be summarized by the following:

1. Improvement in average life expectancy of males and females. Rapid economic development, growth of income, improving work conditions, enlargement of recreation opportunities, improvement of human diet and growth of quality and accessibility of health care services resulted in an increased average life expectancy. At the same time, a big difference in average life expectancy between males and females can be attributed to arduous work conditions of males at metallurgical enterprises in the city. Lifestyles, which is harmful for health and is most popular among males smoking, alcohol abuse, reckless driving, unhealthy diet and lack of excercise - also led to gap between average life expectancy of males and females. Females born in Nikopol in 2010 are expected to live 73,1 years on average, compared to the expected male life expectancy of 62,6 years. In 2010 there were twice as many females of age 65+ than their male counterparts. 2. Low total fertility rate. In the 1990s and early 2000s the total fertility rates (the average number of children a female bears in her lifetime) was very low. This factor still has effects and further implications on population distribution structure of our city. There have been some improvements to the fertility rate in Nikopol over the past 10 years as a result of government financial incentives. The government incentives for birth of a child have grown from UAH 90 in 2001 to UAH 12,5 thousand in 2010. 3 In 2001, a female in Nikopol had 0,97 children on average over her lifetime; by 2010, this rate has made a significant gain to 1,46.

In 2005 the size of state financial assistance for the child delivery was equal to 8500 UAH per year, since 2008 this size has been increased for 44 per cent and significant increase of assistance was introduced in the case of delivery of second, third child and more children. In 2011-2012 the size of such payments from the state were increased in average by 84,5 per cent, 22,5 per cent accordingly and till the end of 2012 they will be equal: 28830 UAH for the delivery of a first child, 57660 UAH for the delivery of a second child, and 115320 UAH for the third and following children.

However total fertility rate is still below the natural replacement rate of 2,1. That suggests that the population of the city shrinks if net migration remains negative.

3. Lack of youth under 25. Despite the improvement, the impact of low fertility rates in the past cannot be erased. This phenomenon constantly impacts the distribution of the population structure of Nikopol. Today there is a severe shortage of young people under the age of 25. The share of people under 25 was 25 per cent in January 2011 compared to 29 per cent in 2002. In the future this lack of young people will deepen because of still low fertility rates which do not reach natural replacement rate 2,1, and the lack of positive net migration. 4. Ageing of the population. Increase in average life expectancy combined with low fertility rates in the past has created a new problem: ageing of the population. The median age for males and females is 36 and 44 years respectively in 2011 and will grow in next years. For every 100 working age people in Nikopol, there are 73 dependents (elderly people and children). Since 2002, the number of children dependents has decreased by 22 per cent while the number of elderly has grown by 1 per cent. Meanwhile, the working age population has decreased 12 per cent. 5. Decline in population. Nikopol is experiencing a rapid reduction in the number of resident population. Over the last decade, the number of people in the city has shrunk from 138 218 people in 2002 to 123 838 in 2011, which is a 10 per cent reduction. The main factor of reduction in the number of population was one of natural change in 2002-2006; there has been not enough births to compensate the deaths. Negative net migration became the main factor to population shrinkage in 2009-2010. The current demographic situation in Nikopol is shown in Chart 1, which reflects the sex and age population breakdown in 2011 with one year step up to 90+ years. For example, there are 515 females aged 5 and 569 males of that age in 2011. A distinctive feature of the population age pyramid is a relatively small number of people under 25. In the future, this demographic fall, which has been happening for the last 25 years, will significantly impact the sex and age structure of the citys population. In particular, in the future there will be fewer females of fertile age, which will negatively impact number of births. Another feature is a relatively large share of people aged between 45 and 60. In the next 20 years, that will inevitably lead to further aging of the population as far as these people will enter "elderly cohort and the total fertility rate will be still lower than natural replacement rate.

Forecasting Population Methodology

Chart 1. Nikopol Has a Lack of Youth Under Age 25 (Population by age and sex, January 2011)

The methodology of building demographic forecasts is generally simple. Population in the next year equals population in the current year minus the number of deaths and emigrants, plus the number of births and immigrants. Besides, all get older by one year.

Source: The Main Statistics Office in Dnipropetrovsk Oblast.

The forecasting model takes into account the existing detailed underlying population structure in terms of the age and sex of every citizen. Therefore, only three main assumptions are required to generate a complete demographic forecast: total fertility rate, average life expectancy, and net migration. Once specific assumptions on these three factors have been inputted into the model, a forecast is generated that is based on the existing structure of the population. Details of these assumptions are described below, followed by an analysis of the resulting forecast. See Appendix A for a more detailed description of the methodology.

Assumptions

Assumption # 1. Total Fertility Rate

The total fertility rate (TFR) is the average number of children born by a female over her life. Usually, in order to keep the population, the TFR should be 2,1 (called the natural replacement rate). The TFR in Nikopol was 1,46 in 2010, which is far below the natural replacement rate. However, this rate has significantly grown from 0,97 in 2001 thanks to several target actions by the government aimed at stimulating the fertility. Financial assistance for the delivery of a child

periodically increase with the increase of the subsistence minimum.4 Therefore, it is expected that fertility rates will continue to grow over the next 20 years, but since many of the initial benefits of financial incentives have already been realized, growth in the TFR will be slightly slower than during the recent 10 years. This forecast assumes that by 2030 the TFR will reach 1,68. (See Chart 2.) Chart 2: Fertility Will Continue to Increase (Total Fertility Rate, 2001-2030) It is common for European cities and countries to have a total fertility rate well below natural replacement. The average TFR in Nikopol was 1,39 over 2005-2010 which is the same as the Ukrainian average, but low by European standards. The TFR was still higher than the lowest European country (Bosnia and Herzegovina). Ukraine is ranked 28 of 40 European countries (tied with Belarus) for TFR. The highest TFR is in Iceland (2,10), and the lowest is in

Sources: EBED Project; Dnipropetrovsk Oblast.

The Main

Statistics

Office in

Bosnia and Herzegovina (1,18). Over the forecast period, Nikopol is expected to experience lower growth in TFR compared to Ukraine and other countries. This is because the financial the economic and employment situation is expected to be slightly more difficult for young families compared with the Ukrainian average. (See Table 1.) Table 1: Total Fertility Rate in Selected Regions Location Nikopol Ukraine Poland Russian Federation
4

2005-2010 1,39 1,39 1,32 1,44

2025-2030 1.66 1.70 1.65 1.73

The increase in the minimum subsistence level will lead to the real growth in payments to families with children, poor families and dependents guaranteed by the government. In 2013 the maternity benefit is to be increased by 6.8 per cent compared to 2012 as follows: for the first child 29310 UAH compared to 27460 UAH in 2012;for the second child 58620 UAH compared to 54920 UAH in 2012; for the third and subsequent child 117240 UAH compared to 109840 UAH in 2012. 9

1,41 Eastern Europe 1,53 Europe 2,10 Iceland (highest TFR in Europe) 1,18 Bosnia and Herzegovina (lowest TFR in 2,52 World Sources: UN World Population Prospects; EBED Project. 5

1.70 1.76 2.10 1.35 2.29

Although the TFR is projected to grow, the number of females of childbearing age in the city will be significantly declining because of peculiarities of population structure; the current lack of females under 25 years old will lead to a shortage of females of childbearing age over the next 20 years. Therefore, increase in the TFR does not compensate for the reduction of females of childbearing age, which will result in a fact that the total number of births will be gradually declining over the period of forecast. (See Chart 3.) The number of babies born will decrease from 1263 babies in 2010 to 789 babies by 2030. However, the females started to give birth later. The number of females who give birth at the age of 20-24 has dropped abruptly (from 42 per cent in 2001 to 34 per cent in 2010) and the number of those who give birth at 25-34 has grown (from 38 per cent in 2001 to 47 per cent in 2010). It is expected that this trend will continue during forecast. (See Chart 4.)

Chart 3: Births To Decline Despite Higher Fertility (Number of live births, 2000-2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

The Nikopol TFR is calculated from the forecasting model using data from the Main Statistical Office in Dnipropetrovksa Oblast. All country data are taken from the United Nations World Population Prospects, 2010 Revision, medium scenario: http://esa.un.org/unpd/wpp/index.htm

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Assumption # 2. Average Life Expectancy Males are more likely to die earlier than females. This is evidenced by the wider "male" part of the inverted triangle in Chart 5: mortality rates among males are higher than among females in all age categories except 90+ cohort. The reasons for the Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk higher male Oblast. mortality are harmful and dangerous working conditions as well as lifestyle choices such as smoking, alcohol consumption, unhealthy eating and low levels of exercise. Chart 4: Females Increasingly Likely to Give Birth Later in Life (Proportion of births by age of female, 2001-2030) Chart 5: Males Face Higher Mortality Rates (Sex and Agespecific mortality rates, 2001-2010 Average)

Sources: The Main Statistics Office in Dnipropetrovsk Oblast; EBED Project.

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There is a big gap in average life expectancy between males and females in Nikopol. In 2010, the average life expectancy of females was 73,1, whereas among the males it was only 62,6. It is expected that the gap will gradually shrink in the following 10 years. The gap between average life expectancies will gradually shrink over the forecast; over the past 10 years, the average sex difference gap was 12 years, but over the next 20 years, it will shrink to 10 years. (See Chart 6.)

Chart 6: Life Expectancy To Improve For Both Sexes (Average life expectancy, by sex, 2001-2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

The female-male gap in life expectancy in Nikopol is still quite large in comparison to other countries. At 12 years on average over 2005-2010, it is the same as the Ukrainian and Russian averages, but it is larger than the Eastern European average. But it is forecast to improve significantly in the next 15-20 years. In 2025-2030, the city will have a sex gap that is similar to Ukraine and the Eastern European average. The reason for this improvement will come from lifestyle changes from males in the city. There have already been significant improvements in male life expectancy over the past 10 years and it is assumed this trend will continue. (See Table 2.)

Table 2: Sex Gap in Average Life Expectancy in Selected Regions Location Nikopol Ukraine Poland Russian Federation (highest sex gap in Europe over 20052010) Eastern Europe Europe Iceland (lowest male-female gap in Europe over 20052010) World Sources: UN World Population Prospects; EBED Project. 6
6

2005-2010 12 12 9 12 9 8 4 4

2025-2030 10 9 8 10 9 6 4 5

The Nikopol data are calculated from the forecasting model using data from the Main Statistical Office in Dnipropetrovska Oblast. All country data are taken from the United Nations World Population Prospects, 2010 Revision, medium scenario: http://esa.un.org/unpd/wpp/index.htm

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It is assumed that the increase of average life expectancy of both sexes will be facilitated by the social programs for the elderlies by the central and local governments, healthy lifestyles, development of environmental programs in the city, quality health care services, implementation of new technologies at city industries, and disease prevention activities. The average life expectancy of females will grow and reach 75,2 years by the end of our forecast period, 2030, whereas the male average life expectancy will increase and will be 65,0 years. While life expectancy is set to improve in the city, Nikopol has relatively low average life expectancies by Ukrainian and European standards. Ukraine currently holds the last place in ranking of 40 European countries by the average life expectancy indicator. Nikopols life expectancy is lower than the Ukrainian average. The highest average life expectancy among European countries is in Switzerland. Over the forecast, it is assumed that Nikopols average life expectancy will improve at the same pace as the Ukrainian average. (See Table 3.) Table 3: Average Life Expectancy in Selected Regions Location Nikopol Ukraine (lowest life expectancy in Europe over 2005-2010) Poland Russian Federation Eastern Europe Europe Switzerland (highest life expectancy in Europe over 2005World Sources: UN World Population Prospects; EBED Project. 7 Assumption #3. Net Migration Migration affects population dynamics of Nikopol. In 2011 489 people came to and 1456 left from the city. Thus, the net migration was negative and amounted to -967 persons (0.8 per cent of the total population). However, this large outpouring of the city population is temporary because it is due to the current economic hardships experienced in recent years. There was decline in industrial employment by 17% in 2009 comparing to 2008. The long term expectation on net migration is based on the relative economic strength and diversity of Nikopol compared to other cities in Ukraine where migration is likely such as Kyiv or other jurisdictions in the oblast. Over the long term, the labour market structures will stabilize around an estimated rate of natural unemployment in each economy. Since migration is determined by relative unemployment rates over the long term, the migration forecast too will 2005-2010 66 68 76 68 70 75 82 68 2025-2030 70 72 79 72 74 79 84 72

The Nikopol data are calculated from the forecasting model using data from the Main Statistical Office in Dnipropetrovska Oblast. All country data are taken from the United Nations World Population Prospects, 2010 Revision, medium scenario: http://esa.un.org/unpd/wpp/index.htm

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stabilize. Therefore, net migration over the forecast period is expected to stabilize at -125 people per year starting in 2017. (See Chart 7.) Over 97 per cent of people who moved into the city came from other settlements of Ukraine; the rest came from other countries. A similar pattern occurs among those who left the city: 99 per cent of migrants moved to other settlements of Ukraine, and only a small share left for other countries. The most of the outmigrants to other settlements of Ukraine

Chart 7: Net Migration to Improve (Net Migration, by sex, 2002-2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast. are young adults aged 17-25 who go to get education or find work. Among those who left for other settlements of Ukraine, 56 per cent were females. (See Chart 8.)

Chart 8: Young Adults Most Likely to Leave Nikopol for Other Settlements Of Ukraine (Proportion of out-migration to other settlements of Ukraine, by age and sex, 2002-2010 Average)

Population Forecast Based on forecast made with the above assumptions and methodology, Chart 9 presents population forecast of Nikopol to 2030. It is expected that the population will shrink by 21 per cent, to 97.6 thousand persons: 54.2 thousand females and 43.4 thousand males. Sources: The Main Statistics Office in Dnipropetrovsk Oblast; EBED Project.
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Chart 9: Nikopol Population to Shrink (Total Population by sex, 2002-2030)

Because of low fertility in the 1990s and early 2000s there is shortage of young people in Nikopol. That means the population of Nikopol will continue to age. People older than the working age will make up 30 per cent of the population in 2030, while the proportion of children will remain constant at 14 per cent. Statistics Office in

Currently, Nikopols median age is similar to Ukraine and other European countries. Half of the population is older than 40 and half is younger. But the city is expected to age significantly, at a similar rate to Ukraine and Europe as a whole. In 2030, the median age will still be slightly higher than Ukraine and the same other European countries. (See Table 4.) In Nikopol. the median age in 2030 will be 49 for females and 41 for males. Table 4: Median Age in Nikopol and Selected Countries, 2010 and 2030 Location Median 2010 Nikopol (2011 and 2030) 40 39 Ukraine 38 Poland 38 Russia 40 Europe 38 Eastern Europe Germany (highest median age in Europe in 44 2010) Albania (lowest median age in Europe in 2010) 30 29 World Sources: UN World Population Prospects; EBED Project. 8 Age Median 2030 45 44 45 43 45 44 49 40 34 Age

Sources: EBED Project; Dnipropetrovsk Oblast.

The

Main

The Nikopol data are calculated from the forecasting model using data from the Dnipropertovska Statistical Office. All country data are taken from the United Nations World Population Prospects, 2010 Revision, medium scenario: http://esa.un.org/unpd/wpp/index.htm 15

A relative ageing of the population can be clearly seen in Chart 10, which presents the sex and age population pyramid in Nikopol in 2030. It should be noted that the number of adults of working and fertile age is relatively small as well as number of children while number of people of older age groups are higher.

Chart 10: Small Middle Age Population in 2030 (Total Population by age and sex, 2030)

Chart 11 shows total number of males and females in different age categories, and compares Source: EBED Project. the age curves for 2011 and 2030. This chart reflects both significant reduction in number and serious aging of Nikopol population. The results presented in Chart 11, demonstrate the demographic situation as follows: the number of working and childbearing age people in general tends to shrink while share of elderly population grows. There is also reason to believe that the population will continue to decline after 2030. The fertility and mortality assumptions together determine the natural change of the population; that is, the change in the population excluding effects of migration. The rate of natural change can be either positive (when the births exceeds deaths) or negative (when deaths exceeds births). During 2000 to 2010, the natural change of the population was negative, but decreasing in magnitude (-1353 in 2000 and -965 in 2010). Over the forecast, this number will become increasingly negative until 2025 with some improvement after that. (See Chart 12.)

Chart 11: Nikopol To Experience Demographic Shift To Ageing Population (Total Population by age, 2011 and 2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

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Chart 12: Deaths Will Still Outnumber Births (Natural change in population [births deaths], 2000-2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast. Results And Consequences Ageing of the population will affect the number of elderlies, school and pre-school age children and working age people; changes in the population will determine economic and budget situation in upcoming years. 1. Larger share of elderly population. The most important characteristic of demographic forecast for Nikopol is ageing of the population. The working age people will experience more pressure to support the elderlies and children. (See Chart 13.) The retirement age for females will increase over the forecast period from 55 to 60 and this will dampen the negative economic and fiscal impacts of the ageing population since females will stay in the workforce for a longer amount of time. This means they will continue to pay income taxes and will delay the receipt of pensions. Despite the working age population gaining these extra females, the proportion of working age population will still decline over the forecast period. Chart 13: Workers To Support Increasing Number of Dependents (Proportion of various age groups, 2011 and 2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

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In 2011 each 100 of working age people had to support 73 non-working age persons, and by 2030 this figure will increase to 79 non-working age persons per each 100 of working age people. That will affect not only the social situation of the working age people, who will have to provide more for the non-working persons, but also the balance of budget accounts. Revenues from personal income tax of the working age people will need to be used more economically over a longer period of time. Moreover, in the future the older people will require more medical and social services, better access to doctors and hospitals, to relevant services and social institutions. The number of elderly people age 65+ generally require more medical care. This population is set to increase 11 per cent over 2011-2030. (See Chart 14.) This population will make up 23 per cent of the population by 2030, which will put a major strain on health care budgets.

Chart 14: Population Aged 65+ To Increase (Population Aged 65+, thousands, 2002-2030)

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

2. The size of young labour force will decrease. The size of the labour force will decrease over the forecast and this will have large consequences on the future economic potential of the city. From 2011 to 2030, the number of working-age population will shrink by 24 per cent, or 17100 less people despite the increase in retirement age for females. Under the surface of these numbers, there will be even a greater demographic shift in the labour force.

Chart 15: Young Workers To Decline Disproportionately (Selected working age populations, thousands, 2002-2030)
46- 90 80 70 60 50 40 30 20 10 0 31-45 16-30

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Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

The average age of the workforce will increase significantly and there will be a lack of young workers and an abundance of older workers. The young working age population age 16-30 will decrease by 36 per cent, or by 8900 people! Therefore, it will be Chart 16: Preschool Age Population To Decrease challenging for firms to (Number of children aged 0-5, 2002-2030) recruit the workers they need for economic growth to occur. The transfer of skills from the experienced to the new entrants will be hindered by the fact that there are so few new entrants. (See Chart 15.) 3. Number of children of preshool age will decrease. The number of children will Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast. also change the need in schools and kindergartens, Chart 17: Change In School Age Population and according to teachers (Number of children aged 6-16, Thousands, 2002-2030) and tutors. The number of preschool age children (05) has been increasing, thanks to recent gains in the fertility rate. However, these increases is expected to peak in 2012 when the decline in the number of childbearing age females makes a strong impact. For the remainder of the forecast, the preschool age population declines. By 2030, there will be 2855 Sources: EBED Project; The Main Statistics Office in less children aged 0-5 Dnipropetrovsk Oblast. compared to 2011. (See Chart 16.)

4. Number of children of school age will fluctuate. The number of school aged children (aged 6-16) has been falling drastically over the past 10 years due to low fertility rates in the 1990s and early 2000s. However, this trend is set to stabilize and even reverse itself. In 2013 we
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will see the lowest point of this population, then it will increase until 2021 before declining again. Overall, the net effect will be a loss of 934 students in 2030 compared to 2011. (See Chart 17.) 5. General shrinkage of population. That will require changes in the city infrastructure demand for different types of housing and public transport infrastructure load will change. For example, a decrease in the total population could lead to a decrease in the number of public transportation units. It could also lead to a decrease in the load on the automobile roads of the city and their deterioration, which in its turn can cause a decrease in expenses for their repair. However, the positive effect on the budget due to these factors is far outweighed by the negative impacts of population ageing. The shrinkage of working age population will require growth in labour productivity in order to ensure economy growth. Otherwise decrease in labour force will have negative effect on whole city economy.

Conclusion Any forecast is a more or less probable course of future processes. Analytical forecasts usually have a look of assessment of the demographic situation parameters in the future, which is derived taking into account the current population structure and making future assumptions on fertility rates, average life expectancy and migration. The results of the forecast may contribute to prevention of negative trends or development of appropriate actions to mitigate their consequences. The results of the analysis have revealed a trend for gradual shrinking and aging of population in Nikopol. These factors will affect the economic and budget situation in the city, as income from the working age population will decrease, and expenditures for elderlies will increase. Therefore, social and financial burden on the working part of the population will increase, as it will keep a greater number of non-working people. All these factors have an impact on economic and budget situation in thecity. Shrinkage of the workforce, especially younger workers, will negatively affect the economic development of the city, namely the work of local industries and other areas of the economy. Due to the potential for less employment, the income tax payments to the budget will reduce. It will certainly be reflected on the social and cultural development of the city. Shrinkage in population will also bring some relief: less traffic congestions, less demand for kindergartens and the most likely for utilities. However, these factors will not offset the decrease of tax revenues from labor and increase expenditures for the elderlies.

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Appendix A: Demographic Model Methodology A customized demographic model was built under the EBED project for the city of Nikopol. It is a cohort-component demographic model which is the most widely used type of model in demography. 9 Population data for both the city and oblast were gathered from the Main Statistical Office in Dnipropetrovsk Oblast . Some data are not available for the city, so had to be estimated using oblast data. A Nikopol population database was built containing historical data on a number of different areas: 1. Total population and its breakdown by age and sex (2002-2011), 2. Total births and births by the age of the mother (2000-2010), 3. Total deaths and its breakdown by age and sex (2000-2010), 4. In-migration, its breakdown by age and sex, and its breakdown by foreign and domestic (2002-2010), 5. Out-migration. its breakdown by age and sex, and its breakdown by foreign and domestic (2002-2010). Together, these five datasets are used to describe the important population characteristics of the city. A demographic model was then built that forecasts all of these detailed datasets out to 2030. There are three components of population change in a demographic forecast: births, deaths and migration. Some of these changes contribute positively to population growth, and some are negative contributors. (See Diagram 1.) Diagram 1: Positive and Negative contributors to Population Growth
Positive Contributors Negative Contributors

Births Total Population Growth In-Migration

Deaths

Out-Migration

Source: EBED Project. The model is based on the principle that the population of a cohort of a certain age and sex this year is equal to the population of that same cohort last year, minus deaths of that cohort, plus net migration of that cohort. For example, the population of 40 year old males in January 2011 is equal to the population of 39 year old males in January 2010, minus deaths of 39 year old males
9

"The cohort-component technique is widely used because it provides detailed information on an area's future population, births, deaths, and migrants by age, and sex. This information is useful for many areas of planning and public administration." (Klosterman, Richard E. 1990. Community and Analysis Planning Techniques. Rowmand and Littlefield Publishers, Inc. Savage, Maryland.)

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in 2010, plus net migration of 39 year old males in 2010. This is the case for every age and sex group in the model except for people aged 0. The population aged 0 is calculated based on population of females of childbearing age and the age-specific fertility rates. Therefore, the model requires three main assumptions: the total fertility rate, the average life expectancy and net migration. Inputting a total fertility rate assumption into the forecasting model results in an automatic calculation of age-specific fertility rates by sharing out the total fertility rate based on historical trends. The resulting calculation for the total number of babies born is the multiplication of the age-specific fertility rates to their corresponding populations of females in those ages. Inputting the average life expectancy assumption results in the automatic calculation of the age-specific mortality rates in a similar fashion. The resulting calculation for the total number of deaths is the multiplication of the sex and age-specific mortality rates to their corresponding population cohorts. The net migration assumption is conducted by simply estimating the total number of inand out-migrants (broken down by domestic and foreign migration) for each year of the forecast. Once these three assumptions have been made, the model calculates the forecast. Changing these assumptions can change the forecast results. However, most of the population forecast results are generated by the underlying structure of the population and can only be varied to a limited extent by changing these assumptions. For instance, there were very low fertility rates in the 1990s and as a result there will be very few childbearing age females in the future. Therefore, changing the total fertility rate assumption does not always have a big effect on the births forecast. This is because the births forecast depends on the underlying population structure, namely the number of childbearing females. The model keeps forecasts realistic by having the existing underlying structure of the population built in. Since each cohort must be calculated one year at a time, the model works by cycling through a process. It observes the underlying population structure and then factors in the assumptions to generate the next years population structure. (See Diagram 2.) Then the process starts again for the next year of the forecast; this continues out to the year 2030. Diagram 2: Model Forecasting Process

Assumptions: fertility, mortality and migration

Total population

Forecasted births, deaths and migration

Source: EBED Project.

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Appendix B: Nikopol Demographic Forecast

2000 2001 2002 138218 2003 136577 2004 135021 2005 133828 2006 132450 2007 131261 2008 129586 2009 127653 2010 125802 2011 123838 2012 121913 2013 120027 2014 118314 2015 116779 2016 115375 2017 114104 2018 112886 2019 111652 2020 110402 2021 109135 2022 107857 2023 106570 2024 105277 2025 103981 2026 102685 2027 101397 2028 100123 2029 98867 2030 97637 991 2344 -1353 944 2285 -1341 1020 2326 -1306 67.3 2242 2494 -252 -1.2% 1067 2362 -1295 67.0 2005 2266 -261 -1.1% 1148 2458 -1310 66.7 2322 2205 117 -0.9% 1117 2492 -1375 65.9 2092 2095 -3 -1.0% 1275 2398 -1123 66.5 1862 1928 -66 -0.9% 1327 2378 -1051 66.0 1305 1929 -624 -1.3% 1370 2423 -1053 65.6 771 1651 -880 -1.5% 1375 2292 -917 67.3 499 1433 -934 -1.5% 1263 2228 -965 68.4 652 1651 -999 -1.6% 1282 2228 -946 67.9 489 1456 -967 -1.6% 1234 2209 -975 68.0 506 1406 -900 -1.5% 1185 2187 -1002 68.2 606 1306 -700 -1.4% 1140 2165 -1025 68.3 706 1206 -500 -1.3% 1100 2144 -1045 68.5 856 1206 -350 -1.2% 1058 2119 -1062 68.6 1006 1206 -200 -1.1% 1017 2101 -1084 68.7 1081 1206 -125 -1.1% 978 2078 -1100 68.9 1081 1206 -125 -1.1% 940 2058 -1118 69.0 1081 1206 -125 -1.1% 903 2036 -1134 69.2 1081 1206 -125 -1.1% 871 2017 -1146 69.3 1081 1206 -125 -1.2% 844 1999 -1155 69.5 1081 1206 -125 -1.2% 820 1981 -1162 69.6 1081 1206 -125 -1.2% 800 1964 -1164 69.7 1081 1206 -125 -1.2% 786 1950 -1165 69.9 1081 1206 -125 -1.2% 777 1934 -1158 70.0 1081 1206 -125 -1.3% 776 1919 -1142 70.2 1081 1206 -125 -1.3% 778 1903 -1125 70.3 1081 1206 -125 -1.3% 783 1883 -1099 70.5 1081 1206 -125 -1.2% 789 1860 -1071 70.6 1081 1206 -125

Sources: EBED Project; The Main Statistics Office in Dnipropetrovsk Oblast.

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