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Historical Background

The Demographic Transition

Europe is now beginning to feel the effects from what is called the “Demographic Transition”, a period of marked change in population dynamics, in this case affecting Europe over the last century and a half. This shift, which has since spread to encompass almost the entire 1st world, is characterized by a gradual switch from an environment of high mortality and fertility to one of low mortality and low fertility. In the middle of the 18th century, Germany and her continental neighbors saw a dramatic decline in the death rate.

The death rate in Europe decreased slowly until the 1850s, when it began to be echoed by a drop in the number of births. During this 100-year lag period, however, the European population climbed significantly as the death rate approached, and then dropped below, the birth rate. Though the growth rate was not especially high – sometimes below 1.0% - it was sufficient to swell developing urban environments Europe-wide. The rise in population would have been far higher, had it not been for heavy emigration from Germany, Italy and Sweden, among others, to the nascent United States of America.

Though the decline in the birth rate was initially fairly steep during the late 19th and early 20th centuries, the fall leveled off in the inter-war years. In the space of 50 years, between 1870 and 1920, the number of births in Germany went from 39 per 1000 persons to 20, a drop of almost 50%; however, it was not until the 1970s, more than 120 years after the initial decrease in births, that the rate of fertility would reach that of mortality. Since then, for the past three decades, much of Europe has seen a decrease in the natural population; that is, without immigration, the number of Europeans would be shrinking.

The nature of the respective declines in the birth and death rates in Europe is largely a matter of speculation. Some have hypothesized that the drop in mortality was caused by the advent of modern medicine and sanitation practices; this, however, is unlikely, since the real advances in medicine, such as the discovery of antibiotics, did not take place until at least the late 19th century, as was the case with sanitation and civil planning.

With respect to the decline in the birth rate, numerous causes have been theorized, though none satisfactorily. For example, it has been supposed that improvements in family planning technology and techniques could have caused the decline. However, most advances in this field came in the 1920s, far too late to be applicable; also, all of the relatively primitive contraceptive methods were available long before the late 1800s, when the most serious decreases in the birth rate occurred. Other possibilities, such as a lower rate of marriage, a fluctuation in the mean age of marriage, or an increased illegitimacy rate, all fall flat, as these indicators remained relatively constant during the period, none varying enough to explain, either individually or in sum, the change in European fertility. Some have proposed that a change in the role of women in society has contributed to the lower birth rate; however, in Britain, for example, the percentage of married women in the workforce decreased from 25% in 1851 to 10% in 1931, a trend that was not reversed until after the second World War.

The most likely explanation behind the drop in the birth rate is the drop in the death rate itself. A high birth rate was needed to compensate for a high infant mortality rate, which in the 1800s reached as high as 25% in some parts of Europe. Following the as-yet-unexplained decline in infant mortality, it was simply unnecessary for women to have as many children.

The German Population in the 20th Century

Germany began the 1900s with a population in excess of 56 million. Though the two World Wars dampened the growth somewhat, the population grew to 68 million by 1950, and to 81 million in 1997. The primary force in the expansion of the German population has been immigration, though a relatively high birth rate during the first half of the century and an ever-increasing life expectancy have both contributed to the count. Germany's birth rate, once one of the highest in Europe, peaked in the 1960s at around 2.5 children per woman; it has since declined and leveled off at 1.3 children per woman, a rate insufficient to replenish the native population. Life expectancy has been on a consistent rise in Germany throughout the past 50 years, reaching an average of 75 by the end of the 1990s, a increase of 10 years. This has led to a dramatic shift in the composition of the German population; the elderly population has almost doubled, up to over 15%, and the potential support ratio, i.e., the ratio of elderly to the working-age population, has dropped from 1 : 6.5 in 1950 to 1: 4.4 at the end of the century.

Population Estimates

In 1998, the United Nations Population Division released its most recent update to the body's worldwide population forecasts. In the group's sub-report on Germany, the researches presented five scenarios, each with predictions and simulations of German demographics until the year 2050. Two years later, the German Federal Statistics Office, in collaboration with the Federal Ministry of the Interior, released their own findings, which included some small critiques of the UN study.

The both groups assume a base population of 81.7 million in 1995, the start date for the predictions in the respective sets of simulations. The UN, however, does not differentiate between ethnic German and immigrant populations in this number, nor in any of their calculations, something the German reports take care to factor in.

The German government assumes a birth rate of 1.35 children per woman throughout the study period; the East German rate is expected to increase to 1.35 from 1.1 by 2005, while West Germany's rate is predicted to fall slightly from 1.4 to 1.35 by 2000, with the foreign population living in Germany is expected to have a birth rate of 1.51. The UN study assumes a collective birth rate of 1.64 children per woman, a number the German government dismisses as being far too optimistic.

Both the German government and the United Nations predict that German life expectancy will continue to increase, though at a lower rate than it has over the past half-century: by 2050, average life span will be approximately 78 years for men and almost 85 years for women. Over the course of the simulation period, the difference in the life expectancy of East Germans and of West Germans is predicted to to tend to zero.

UN Scenario I

Scenario I is the mean variant simulation of the United Nations report, meaning that it represents the body's best guess as to how the German population will act over the next 50 years. Scenario I projects an increase in population in the short term, up from 81.7 million in 1995 to 82.4 million in 20052, with a steady decline to 73.3 million in 2050. This assumes a net migration of 11.4 million person into Germany throughout the period, at an initial rate of 240,000 per year until 20053, then 200,000 per year until 2050. The working age population would grow to 56 million by 2005, thereafter declining to 42.7 million by 2050. At the same time, the ranks of the elderly would swell constantly to 20.8 million by 2050, at which time they would comprise 28% of the nation's citizens. This increase in the retirement-age population and corresponding decrease in the workforce pool would halve the potential support ratio, from 1 : 4.4 in 1995 to 1 : 2.1 by 2050. Appendix 1-A depicts the changes in the population structure predicted by Scenario I.

UN Scenario II

The second scenario run by the UN demographers is, like scenarios III, IV and V, not intended to represent the reality of the situation in Germany, but rather its gravity. Scenario II maintains the fertility and life expectancy assumptions of Scenario I, but factors out all immigration from the population predictions. Under these conditions, the population would drop far more rapidly, almost 30% over the course of 50 years; the number of ethnic Germans would decrease from 81.7 million at the beginning of the 21st century to 58.8 million by its midpoint. The working-age pool would experience an even sharper drop of 41%, down from 55.8 million to 32.7 million. While the elderly population would not increase as fast without migration, the precipitous decline in the under-65 group would decrease the potential support ratio to 1.8 by 2050. Appendix 1-B depicts the changes in the population structure predicted by Scenario II.

UN Scenario III

Scenarios III, IV and V are based on maintaining some aspect of the demographic structure in Germany; in the case of Scenario II, the UN Population Division researchers attempted to keep the German population at a fixed level, 81.7 million persons. They found that, in order to accomplish this, the immigration level would have to exceed that assumed by Scenario I (11.4 million at approximately 200 000 per year) by 6.4 million, for a total net migration of 17.8 million over 50 years at a rate of roughly 325 000 per annum. Due to the increase in life expectancy, however, the potential support ratio would still decline sharply, to 1 : 2.3, with 48.4 million Germans under age 65 and 21.4 million above. Assuming this level of immigration, researchers predict that foreigners and their descendants would number 23 million by 2050 and make up almost 30% of the country's inhabitants. Appendix 1-C depicts the changes in the population structure predicted by Scenario III.

UN Scenario IV

Where Scenario III attempts to stabilize the total population, Scenario IV focuses on maintaining the pool of working-age Germans while allowing other factors to vary. Basing their calculations on the size of the workforce in 1995, i.e., 55.8 million, Germany would require over 25 million immigrants before 2050. This would mean a rate of immigration of almost 460 000 per year, 41% more than required under Scenario II and more than double the rate assumed by Scenario I. In this case, 33 million of those living in Germany would be foreigners or their descendants, 36% of the total 92 million persons predicted for 2050. Despite the heightened influx of migrants, the potential support ratio would still drop, to 1 : 2.4. Appendix 1-D depicts the changes in the population structure predicted by Scenario IV.

UN Scenario V

Scenario V focuses on maintaining the current potential support ratio until 2050, something that would be necessary to prevent the collapse of Germany's national pension system. This is also the worse-case of all five simulations run by the demographers. In order to keep the ratio of elderly to workers stable at 1 : 4.4, Germany would require an incessant immigration rate of 3.4 million persons per year, for a total of 188.5 million by 2050. This would bring the total population within Germany's borders to 300 million, the equivalent of compressing the entire population of the United States of America4, plus another 10 million people, into an area slightly smaller than Montana. By 2050, over 80% of those living in Germany would be immigrants or their descendants. Appendix 1-E depicts the changes in the population structure implied by this scenario. While the conditions required by this model are obviously impossible, this prediction is a stark demonstration of the seriousness of Germany's current situation.

Attitudes of the German Government

While the German government has been aware of the inevitable decline in the population since the mid-1970s, it does not consider the situation problematic. At numerous international conferences and conventions, the nation's leadership has downplayed any concern that the present demographic trends may lead to complications for future generations.

Though the government is not afraid of Germany's predicament, it has been keeping abreast of the situation ever since it was first reported on. In 1974, following the 4th Coordinated Population Prospect (a co-venture between the German federal government and the individual states), an inter-ministerial working group was formed and tasked with investigating and reporting on population issues. The working group spent 10 years studying German demographics and in 1984 released its findings, which analyzed the effects that the predicted population trends would have on issues such as youth and family, the economy, the labor market, the pension system, health insurance, and education. Though the group's report only looked at possible consequences and did not suggest political action, the findings were heard by those in government. In 1989, the German parliament, acting on the working group's data, passed a law designed to reform the pension system, which the researchers predicted would be the area hardest hit. Since then, parliament has installed several committees on demographic change, which are tasked with updating the original group's findings and, unlike the 1974 working group, suggesting courses of political and social action where appropriate.

Impact of Demographic Change on Germany

The National Health Care System

Health insurance is compulsory in Germany. Traditionally-employed Germans, i.e., those working for a firm or the like, as well as those of retirement age, are required to be enrolled in the national health insurance system, with monthly premiums shifting as a function of income; most Germans fall into this category. The self-employed and civil servants are usually members of private health insurance organizations, where premiums depend on age and sex. Beyond these two systems, it is required that one carry a long-term insurance policy.

The increase in the number of retirement-aged Germans has already sparked much debate about the health and long-term feasibility of the current national insurance system. Under the national system, doctors are reimbursed by the state for all expenses incurred in the process of treating a patient, regardless of whether the patient's monthly contributions would cover this. Until recently, visits to a doctor or hospital cost nothing out-of-pocket, and so Germans would frequently go for check-ups and the like, sometimes unnecessarily; this common practice placed great stress both on the national health care system and on the doctors and hospitals themselves. A doctor's budget is set at a fixed amount, above which they will not be reimbursed. This situation has created tension between citizens and doctors and between doctors and the health care system. As the ranks of the elderly swell, this will create even more pressure on the already-stressed system; doctors will be forced to skimp on providing services, and the national coffers will be insufficiently replenished, since pensioners pay lower monthly premiums than do their working-age counterparts.

The Pension System

While the predictions for the German health care system are dire, those for the national pension system make them pale in comparison. The German pension system functions in a manner similar to the American system, wherein the current working-age population pays the pensions of the retirement generation. Also like the American system, the structure of this system, that each generation is dependent on the next for support, will make it ever-more difficult, and politically unpopular, to institute much-needed reforms. As the over-65 population increases and the potential support ratio decreases over the next few decades, the work force will no longer be able to maintain the pension levels for their elders. Without significant overhaul and reform, the pension system in Germany will be brought to its knees well before 2050, leaving millions of Germans high and dry, without their previously-guaranteed monthly stipends.

Discussion of Possible Solutions

Demographic Solutions

Since decreased fertility is the chief cause of population decline, it would seem the simple solution to institute programs encouraging larger German families. This has been proposed a few times, though has been rejected immediately by the government and populace at large. Fertility promotion plans were an idea implemented by the Nazis during World War II in an attempt to insure a constant supply of soldiers to enlarge and defend the Third Reich. 70 years later, such ideas have yet too many associations with National Socialism to be so much as debated, regardless of their potential effectiveness or other considerations.

As suggested by the United Nations Population Division study, a increase in immigration would be one way to deal with problems facing the national health-care and pension systems. However, such a “remedy” will solve nothing, and indeed will only exacerbate currently-existing problems. The simple matter of fitting 188 million immigrants into Germany, the number the UN predicts would be necessary to maintain the current systems, is an absolute impossibility. A more sane rate of immigration might patch up the problems in the short term, but would only serve to postpone the inevitable; every immigrant brought in today will age and one day place even more drain upon the pension system. Germany would simply be handing the problem off to the next generation to fix. Beyond these concerns, an renewed influx of immigrants would aggravate the present tension between native Germans and the existing immigrant population. Guest workers, who were brought in to fill a labor shortage in the 1970s, are today facing subtle hostility from numerous groups within the country, who cite the presence of the once-foreigners as the cause of unemployment, crime, and any number of other social ills. As such, any easing of the immigration restrictions is unpopular throughout the German populace.

Reform and Adaptation

Clearly, the best possible course to avoid the destruction of the German national health-care and pension systems is a policy of broad, sweeping reform, implemented unflinchingly throughout both institutions. Because of the severity of the situation, and the drastic nature of the changes that would therefore need to take place, the necessary reforms are extremely unlikely to happen; it has been theorized that Helmut Kohl's government lost the 1998 election because of legislation to slightly reduce benefits in order to prop up the pension system, legislation that was immediately repealed by Chancellor Gerhard Schröder's incoming administration. Considering the nature of the Kohl-era plan, which called for only a slight reduction in benefits, any proposal for reductions in the range that would be necessary to completely save the system would be tantamount to political suicide; one of the German parliament's working groups reported that saving the pension system would require the government to halve benefits or double premiums. Considering that this recommendation was made almost 25 years ago, when the pension was in relatively stable shape, the reductions required now would be far, far more severe.

Thus, a policy of adaptation to the new demographic landscape seems to be Germany's only hope. Already, steps have been taken to adjust to this emerging operating environment, and others are under close scrutiny. For example, the age of retirement has been raised from 60 to 65, a move which will keep more people employed for longer and so providing higher levels of contributions to the health-care and pension systems. Also under consideration are moves to increase productivity, such as providing special visas to information technology workers from developing nations, promoting the participation of women in the workforce, and keep retirement-age Germans in the workforce, both by encouraging employers to offer more flexible hours and increased part-time positions.

Appendix

Appendicies I-A through I-E correspond to the graphs on pages 4 and 5 of the United Nations Population Division report.

Footnotes

  1. In 2002, the UN Population Division reported a collective birth rate in Germany of 1.3 children per woman.
  2. The CIA reported an estimated German population of 82.3 million in 2003.
  3. The same CIA article reported a net migration rate of 2.18 immigrants per 1000 Germans, or approximately 180,000 per year.
  4. 2003 estimates put the population of the United States at just over 290 million.

Bibliography

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