Unlike the developing countries in South Asia and in parts of Africa; Europe is not experiencing population boom as a result of improving living conditions and rising life expectancy. Germany is losing people, especially the young, as the country has a low birth rate but increased life expectancy is pushing the grey population.
Population decline
According to a report published at The Local, "the population of working age people is expected to drop by as much as 34 percent by 2060, forcing greater immigration in order to prop up the country's generous welfare system for elderly Germans. "
That is a staggering statistic. Loss of 34% of the working age population could mean a huge draw back for the German economy and also for German society. As Germany is a international economic powerhouse, this decline could have global impact.
Economic decline?
Data referenced by the report at The Local also states that in the year 2030 there will be 50 retired people to every 100 working, compared today's statistic: 34 retired to every 100 working.
In the context of the generous welfare and pension system in place in Germany, this increase seems a huge burden. Coupled with decline in working age population, this could be a severe blow to the country's economy.
But, just going through recent economic reports from Germany, it is clear that it is bit premature to sound the alarm bells.
Going strong
Simone Meier at Bloomberg said on February 21 that "the International Monetary Fund said on Jan. 25 that the German economy will probably expand 2.2 percent this year after growing a record 3.6 percent in 2010. "
Compared to France's projected 1.6% growth, Germany is doing much better and is growing at a higher rate compared to the Euro zone's average of 1.5%.
In the current environment of global economic slump, Germany's economy has proven to be a bright spot. Although the international economy is slowly recovering from the crisis situation in 2008, it is still a long process.
the ability of Germany's economy to safely weather the crisis and then rise to be on a path to recovery so early is surely a sign that this country's fundamentals are strong.
Early alarm bells
In 2006, Deutsche Welle published an article on Germany's population decline and commented that business leaders are worried about loss of human capital and that it might hinder growth. The same article also quotes leaders who warn that it not sensible to panic about the population decline. Instead the country should think about ways to innovate to match the decline.
Indeed, looking at today's Germany, it does seem that the population decline will guide the economy to innovate and adapt. Alarm bells should go off when the system stops being innovative and tries to stay safe. But for now, it looks like Germany will weather this demographic change.
Bhumika Ghimire - Bhumika Ghimire is a freelance writer and reporter. She is a content producer for Associated Content and writes for OhMyNews.com and News ...
