Münster (upm/kn)
Final article in the dossier: Germany needs a sustainable strategy and can learn from other countries<address>© stock.adobe.com - tai111</address>
© stock.adobe.com - tai111

Boldly facing demographic change

Final article in the dossier: Germany needs a sustainable strategy and can learn from other countries

In contrast to what experts have long been predicting, Germany’s population will not be shrinking in the coming years but will remain constant. This development is primarily due to immigration. In its study entitled “The demographic state of the nation”, the Berlin Institute for Population and Development predicts that there will be around 82.3 million people living in Germany in 2035 – just under one percent fewer than today.

Does this sound the all-clear for the oft-expressed fear that the population will shrink and that in Germany the average age will rise? No, it doesn’t. “Society is continuing to get older, and demographic change in Germany is not progressing homogeneously – there are big regional variations,” says Frederick Sixtus, who coordinates the “Demografie Deutschland” project at the Berlin Institute for Population and Development. Some of the five federal states in eastern Germany, says Sixtus, will have to face considerable population losses. Also, rural areas in the west – as well as structurally weak former industrial locations in the Ruhr Area and the Saarland – will also see a drop in population numbers, he forecasts. By way of contrast, cities in both east and west such as Frankfurt/Main, Leipzig and Munich, which are popular anyway, can expect to see so-called ‘migration gains’ – especially in the form of young people and those entering the jobs market.

The strongest demographic drop in Germany can be seen among the 20 to 64-year-olds, i.e. among the working population. The reason is that the baby boomers – born in the postwar years with high birth-rates – will be going into retirement in the years up to 2035. “From 2030 onwards, twice as many people will be retiring as will be entering the labour market,” Sixtus explains. So the 65-plus age-group will be markedly bigger. This development will have an impact not only on the labour market, but also on social systems. “We are dependent on labour from abroad in order to counter the increasing lack of skilled workers here,” he explains. “That is why, above all, immigration presents opportunities.” What is important, he says, is that those regions affected by demographic change should be made fit for the future. “The public, and the municipalities, must be in a position to solve problems such as digitalization. And politicians must create the conditions which make it possible to find such solutions locally,” he says.

The phenomenon of declining birth-rates and the resultant ageing of society affects not only Germany, though. It is something which is happening worldwide. Different countries handle the resulting challenges in different ways.

Using automation to counter the lack of skilled workers

Japan is facing an unprecedented ageing problem. The decline in the working population represents a serious problem. In its world population forecast published in 2019, the United Nations predict that the number of Japanese people aged 65 or over will almost double from 18 million in 1995 to 34 million in 2045. To counter the lack of skilled workers, Japan is placing its bets not only on the proportion of women at work remaining stable, on older people continuing to work and on employing foreign labour, but also on technological progress. Economic productivity is to be held at a constant level through further developments in artificial intelligence and in robotics. Unlike Europe, for example, Japan does not see automation and robotics as a threat to jobs. Today it is already quite normal to be served only by robots in restaurants, hotels and shops, as well as at airports and banks. If Japan succeeds in integrating new technologies in work processes to an even greater degree, this might be an example for other countries to follow which have similar demographic structures.

Fully-funded premium pensions make a difference

Sweden reformed its pension system back in the late 1980s because of demographic change. As in Germany, the pensions system there has three components: state pensions on a pay-as-you-go basis, occupational pensions and private pension schemes. With the state pension, Sweden finances a basic pension for everyone, paying out more or less the same to all recipients. The difference is the so-called premium pension. For this, the state automatically deducts 2.5 percent of pre-tax income. The money is invested in capital markets. Every contributor can select for him or herself where the money is invested. There is a range of state-run and private funds to choose from. In addition to the additional fully-funded premium pension, the Swedish government links retirement age to life expectancy. “The guideline in Sweden – and in Denmark too – is that if life expectancy increases by two years, the retirement age is raised by one year,” explains Prof. Heinz-Dietrich Steinmeyer, emeritus professor at the Institute of Labour, Social and Commercial Law (Department II) at the University of Münster. “It must be acknowledged that the Scandinavian countries are tackling the demographic problem boldly.”

Immigration as a recipe for success

No other country in the world lets in so many immigrants per head of the population as Canada. With its immigration policy, the country is pursuing its aim of attracting well-trained, qualified labour from abroad – to its long-term benefit. While Canada almost only used to allow Europeans to immigrate, that changed with the introduction in 1967 of a points system, which has been revised several times since then. “At that time, Canada was facing some fundamental challenges not entirely unlike the situation in Germany today: far-reaching demographic change, declining birth-rates, a lack of skilled workers, and pressure to increase innovative abilities in the economy,” says Prof. Oliver Schmidtke from the University of Victoria. Canada practically reinvented itself, he says – moving away from a white settlers’ society and towards a globally oriented, cosmopolitan country of immigration.

Author: Kathrin Nolte

This article first appeared in the University newspaper, issue No. 5, 6 July 2022.

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