Ticking demographic time bomb in Germany

News that Germany's birth rate has collapsed to the lowest level in the world and its workforce will start plunging at a faster rate than Japan's by the early 2020s has created a stir in Europe.

Accustomed to viewing Germany as the continent's superpower, European media pounced on the strategic implications of these developments. "Germany's dominance over as demographic crunch worsens," proclaimed a headline in London's Daily Telegraph.

But the German public, long accustomed to such gloomy projections, shrugged off the news. And most German politicians kept their silence, since they know they can do little to reverse their country's demographic calamity.

A study by the World Economy Institute, one of Germany's top academic establishments, has found that the average number of births for every 1,000 people now stands at only 8.2 in the country, slightly below Japan's 8.4 and well behind the 12.5 average in Europe's other big nations such as Britain and France.

If current trends are maintained, Germany's overall population will shrink from its present level of 81.3 million to 67 million in the second half of this century. "We want people to face up to the enormity of the problem," said Dr Andre Wolf, who co-authored the report.

The German government cannot be accused of ignoring the matter. Since 2000, the authorities in Berlin have issued an average of one policy paper a year on demographic issues, and thrown vast quantities of money at the problem. Young families are entitled to generous child supplements and separate parental benefit payments. They also continue to receive assistance with their children's education.

Financial consultants hired by the German government have estimated that up to half of all the country's welfare spending is related to boosting demographics. "But our family policies were largely unsuccessful in reversing declining birth rates," concluded Dr Wolf.

Some reasons for this failure may be purely technical. German welfare entitlement schemes are so complicated that many families are unaware of what they may be entitled to.

There is also considerable evidence to suggest that what families need most is not extra money, but help with childcare. France's emphasis on payments for infant daycare centres and schools, thereby letting young mothers raise a family and keep a professional career at the same time, has proven to be widely popular, as well as efficient in boosting birth rates.

But Germany, which hesitantly introduced a skeletal infant daycare scheme three years ago, remains hesitant to push it, largely because some right-wing politicians in the government continue to believe that the primary role of women is to raise a family.

Whatever the German government does, it is difficult to see how such appalling demographic trends can be overturned quickly: Academic research indicates that fertility rates are affected by longer-term cultural and social behavioural changes.

Germany has the highest percentage of women refusing to produce an offspring - a quarter of women born during the late 1960s and early 1970s have had no children at all.

And the traditional benefits of parenthood are no longer that evident either. Most German couples live together without marriage, and a third of all babies are born out of wedlock. Most adults also do not look after their elderly parents. That job is left to the state.

In short, parenthood is neither a glue to married life nor a cushion for old age.

The impact of such a demographic decline goes beyond the strain it puts on social, medical and welfare spending, and hits right at the heart of Europe's current strategic arrangements.

In the poorer, former communist eastern part of Germany, entire towns are now more or less deserted, as older people die and younger people migrate westwards. That reinforces Germany's political divide.

Immigration is touted as the answer to the declining birth rate. But there are already almost 10 million foreign-born nationals in Germany, around 12 per cent of the total population, and the political backlash against migrants is rising.

The only workable alternative left to the government is to eliminate its public borrowing and increase its Budget surplus in order to avoid a Japan-style trap of high debts and an ageing population. And, because Germany is the fundamental pillar of the euro single currency, Germany's austerity policies are now being exported throughout the continent.

Germany may indeed cease to dominate Europe. But not before Europe helps to pay for the costs of that decline.

Jonathan.eyal@gmail.com

This article was first published on June 4, 2015.
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