Germany’s Aging Population

By Doug Murray

Today it seems like all the attention in German politics goes to the euro crisis, the rise of China’s importance, and upcoming elections in both the United States and Germany.  Germany is largely seen as the strongest and most dynamic economy in the debt-burdened euro zone, which can be attributed to Germany’s success in maintaining an export-driven economy.  However, in order for Germany to maintain its long-term competitiveness, more attention in political discourse needs to focus on the rapidly aging and declining population of Germany.  Although stagnant and negative population growth is a European phenomenon, the future of Germany’s population size and its relative economic strength is of the utmost importance for Germans and Europeans alike.

The projections are staggering: By 2060 Germany’s population is expected to shrink by 20 percent to approximately 65 million people.  With a birth rate of only 1.36 children per woman in 2009, Germany will also witness the size of its working-age population plunge 27 percent to roughly 36 million people.  How can Europe’s largest economy maintain future economic growth when its overall population is shrinking and its elderly population is supported by a smaller working-age population?  Many analysts say it will become increasingly difficult to maintain the current welfare state.  And so far, the current policies to reverse this trend have been rather ineffective.

Between 2012 and 2029 the federal retirement age will be raised from 65 to 67, which is aimed to increase the size of the working-age population.  Other measures to slow this negative trend have included increased financial assistance to families with children, the subsidization of childcare, and immigration reform.  However, these policies have generated little growth.  In order for this trend to be reversed, progressive strides must be made in immigration reform and what some believe is a stigma in German culture against working mothers who leave their children in childcare.

Particular emphasis has been placed on the importance of highly-skilled immigrants, who can contribute directly to Germany’s extensive high-tech sectors.  The current immigration and naturalization policies are not as friendly towards unskilled immigrants, who could help counter Germany’s negative popular growth trend.  Additionally, more emphasis must be placed on changing the German cultural stigma against women pursuing a career and utilizing childcare.  Policies to reverse this trend would be rather ineffective, however, and a general change in the German public’s outlook will take time.  Unfortunately, demographic change has already begun.

The views expressed are those of the author(s) alone. They do not necessarily reflect the views of the American-German Institute.