30 Sep 2013

Europe On Track For An Elderly 'Apocalypse'

By Charles McPhedran

Islands of the elderly in a sea of unemployed youth? That's Europe's future, experts say. It's a pity that demographics aren't a thrilling political vote-winner, writes Charles McPhedran

Emigrants who left Europe for the Americas once longed nostalgically for the “old country”. Today, though, that nickname is a better descriptor of Europe’s population.

Europeans are living on the “greying continent”. Since the post war baby boom ended, the number of children born in Europe has fallen almost continually. From nearly eight million in the early 1960s, the number of newborns has fallen to just over five million per annum today.

That, coupled with better health care and longer life expectancies, has produced a more "mature" Europe. In 2012, as the population aged, the birth and death rates in the EU drew close to level. In the coming decades, many European countries are projected to experience population decline.

Already, the ageing of Europe is apparent across many professions. In the Anglo-Saxon world, the baby-boomers have largely left politics behind for the world of legacy foundations and paid rumination. However, on the continent, older political leaders linger; Silvio Berlusconi is 77, and Angela Merkel, returned to power in the last German election, is approaching 60.

Meanwhile, the ageing issue is provoking increasing concern in European politics. While it is not the stuff of electoral popularity contests, ageing worries are increasingly motivating policy-makers.

Germany, the leading continental power, has been among the first to confront the effects of a greying population. Already, the average age here – at over 42 years – is among the oldest in the world. Only the Japanese and the Italians are older, and both of them have a higher life expectancy than the Germans.

Accordingly, dramatic demographic decline is predicted for the country in the coming decades. The number of Germans is forecast to decline from over 80 million to just under 70 million by 2050. Still, there is little sign that the German government has come up with a plan to deal with the ageing population.

Demographics played almost no role in the recent German election, but perhaps they should have. At least that's what the country’s elites think. While average Germans are more worried about the eurocrisis, surveys find that the country’s decision-makers are more anxious about ageing.

One recent study, conducted by Berlin’s Social Scientific Research Centre, found that German decision-makers rate it as the country’s biggest long-term challenge, but they also believe there is no quick fix to the issue.

German decision-makers feel “a certain amount of helplessness” about demographics, the director of the centre told German daily Die Welt earlier this year. While the demographics issue ought to prompt cooperation on the part of politicians, researchers and businesspeople, there is little sign of that happening right now, she added.

Some politicians – such as the influential former Social Democratic chancellor Helmut Schmidt – have argued that to keep the contribution-based social security system afloat despite a diminishing workforce, Germans will have to accept a dose of austerity.

In a 2010 essay, Schmidt wrote that Germans must accept possible cuts to pensions and a later retirement age. Schmidt added that – given the falling number of workers – only massive increases in taxes and rapid growth could finance Germany’s pension system in the coming decades.

The former chancellor’s essay dismisses calls to overcome ageing by increasing Germany’s population. Schmidt says that Germany has failed to accomplish the “cultural integration” of Germany’s current seven million migrants, “half of them Muslim”.

The German debate on demographics mirrors the discussion elsewhere on the continent. In Italy, whose population is slightly older than Germany’s, the populist Lega Nord has successfully campaigned on the dangers of immigration for years.

Still, Italy, once a country of emigrants, is becoming a country of immigrants. The number of Italian citizens has been steady since the year 2000, but the total population has continued to increase. With the country mired in recession, one of the few growth industries in Italy over the past half a decade has been the market for old-age carers.

More than three quarters of those carers are migrants, says Italian online paper Linkiesta; most of them are from Eastern European countries, such as Romania, Ukraine and Moldova. The privately funded carers, opines the paper, make a “fundamental contribution to the Italian family … and save the state around 45 billion euros per year”.

In Spain, the population is already expected to decline in the coming decade, says Madrid daily El País. Spanish fertility began to decline in the 1980s, and, all things being equal, will not increase again until 2030.

In a 2012 report, the Spanish National Institute for Statistics sketches an “apocalyptic landscape” in Spain, El País opines. Over 500,000 Spaniards departed the country last years, a figure much higher than the number of immigrant arrivals.

Statisticians believe that in the coming decades, Spain will be an ageing society with “an increasing number of illnesses due to ageing … surrounded by islands of unemployed young people”.

In fact, at least in the short-term, Spain and the rest of Southern Europe’s economic malaise may have fixed Northern Europe’s problems with ageing.

EU migration to Germany reached a 17-year peak earlier this year, reported Italian daily Il Fatto Quotidiano in May. The number of Italians and Spaniards arriving in Germany in 2012 jumped by 40 and 45 per cent respectively, the daily wrote.

Yet there is one exception to Europe’s baby bust. France, almost alone among European nations, is expected to experience domestically driven population growth in the coming decades.

Despite the crisis, the French birth rate has stayed steady. Official studies have found that France’s Scandinavian style support for mothers, including crèches, in addition to its high government spending on family policies, has created the conditions for lots of children.

So while today’s Europe centres on Berlin, tomorrow it may be run from Paris – thanks to the much-lampooned, child-producing French welfare state.

ABOUT BEST OF THE REST: It's a big world out there and plenty of commentators and journalists are writing about it - but not always in English. And not surprisingly, ideas about big events of the day shift when you move away from the Anglosphere. Best of the Rest is a fortnightly NM feature by Berlin-based journalist Charles McPhedran. Charles reads the news in French, German, Spanish and Portuguese and reports on what the rest of the world is saying about the big stories.  

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Posted Tuesday, October 1, 2013 - 13:20

Well, the Europeans - and the Japanese - are the older and the wiser.

I see them just as a step ahead of the rest of the world - as usual.

The world is overpopulated and population decline has to be on every country's agenda sooner rather than later.   Once you have overcome this one blip of 'aging', times will normalize.

Meanwhile, it is not at all difficult to change the social insurance systems to make each generation responsible for their own.   They just have to resist the temptation from those who would like to parasite along without making a contribution.

Posted Tuesday, October 1, 2013 - 13:23

There would be leaders more recent than Schmidt who have asked whether multi-culturalism failed Germany or Germany failed multi-culturalism. At least, they're open to the idea of migrants meeting their labour needs, a situation preferable to the one where a society simultaneously complains about supposed over-population and about a lack of children.

Although finding people who speak German may not be easy, Germany shouldn't struggle to find labour for its traditional industries. It gets migrants from southern Europe. It already targets countries like India and Russia for specialist visas.

Family-friendly policies does not simply mean high government spending. Any migrant who wants to have children in Germany may find that childcare is not the only challenge. Landlords can be loathe to lease to families.

Spain looks like the opposite situation. There are plenty of Spanish speaking people, who would be familiar with Spanish traditions and culture. Spain has encouraged migrants from South America in the past. If Spain is facing decades of high unemployment, it won't be encouraging migrants to use it as a "backdoor" to northern Europe.

Posted Tuesday, October 1, 2013 - 16:46

At the IUSSP conference in Manila in 1981 I presented a paper to the population policy section which explored the wide range of incentives used by European governments to influence the total fertility rate (the best single indicator).  Several governments had very generous incentives, all of which were singularly unsuccessful in bringing the TFR up above replacement level.  I argued then that managing the inevitable population aging and eventual decline in total population (in the absence of net immigration) was the sensible policy objective.

There are always fluctuations in the TFR in response to a variety of factors.  Notwithstanding Mr McPhedran's argument, France is no exception.  The French TFR actually declined marginally between 2007 and 2011 and although the 2012 figure (the latest available) of 2.08 was an increase on earlier years it was still below replacement level (2.10).  Whether that relatively high level (by the standards of the past 40 years) will be maintained cannot be predicted with any confidence at this stage.  The historical record would strongly argue for managing static or declining populations as the most likely policy option to be successful.

Immigration is not feasible for most European countries as the experience of Germany, Italy and the UK among others are making very obvious, with major increases in social tensions among the negative consequences.  The reality is that childbearing is only one option among many for modern women and given a real choice it is far from their first choice.  

For a species addicted to "growth" in all its forms, that may be difficult for politicians to grasp and plan for.  Nothing has happened since my 1981 paper to persude me that we are experiencing an historically unique change in social circumstances and the sooner we adjust to that idea the better our policy choices are likely to be.