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Germany's Demographic Challenge. The Decreasing Birthrate and its causes

The "Schrumpfnation" or "Shrinking Nation"

Forschungsarbeit 2014 14 Seiten

Englisch - Erörterungen und Aufsätze

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Germany’s Demographic Challenge

Claim #1: Cost Distribution

Claim #2: Education as the Key

Claim #3: Keeping the Baby Boom Generation

Germany’s Demographic Challenge

In the first half of the 20th century, Germany lost two World Wars, and with that a notable part of its population. Surely, afterwards, the world should feel lucky about the defeat of Nazi Germany in World War II. However, the situation, especially after the second war, looked miserable for the country and the countless innocent people. Families fell apart, millions of soldiers and civilians were killed, and the state became divided into four occupation zones. Moreover, unemployment was spread over the whole country. Still, with decades of hard work and the acceptance of mistakes that certain people had made in the past, the nation revitalized its economy.

With legal insurances for healthcare, pensions, and long-term care, the state established a social safety net for everyone. In the 1960s and 1970s, the social system seemed to be the perfect one. The economy boomed, and the birthrate was consistently growing. Different from now, the role allocation within families was very conservative; men went to work, and women took care of the children. No one suspected that this way of thinking would drastically change someday. About 40 years later, Connolly (2012), a correspondent of The Guardian and Observer’s Berlin, points out that “the problem of ‘Schrumpfnation Deutschland’ (shrinking Germany) will only worsen” (para. 12). Young adults prefer professional careers rather than having children.

The desire for financial independence is certainly one of the reasons for this. The social system’s base, a strong labor force, disappears slowly with a constantly decreasing birthrate. Additionally, due to the medical and technological improvement, the average life expectancy is growing rapidly. Therefore, in approximately 30 years, the increasing number of people who require pension, healthcare, and long-term care will challenge the employed population with enormous costs. Germany’s government started to tackle the problem by rewarding people who have children with the “child allowance.” It is doubtful if this approach will solve this problem. Instead, the government, the people, and employers should work together to solve this issue. The goal is to improve the people’s desire to have more children. In that way, the labor force will grow and the cost distribution will become easier to deal with. Therefore, if Germany’s government and population start to tackle the constant lowering birthrate, the distribution of costs will be better, the insurances for healthcare, pension, and long-term care will remain, and the social system will survive.

Claim #1: Cost Distribution

Germany, one of the world’s most improved economies, is now challenged by a trend, which also takes place in several other European countries--the demographic shift. In approximately 30 years, the regularly lowering birthrate and the average life expectancy will confront the working population with enormous costs. Germany has one of the lowest birthrates in Europe. By increasing the birthrate and immigration, the distribution of costs between the states’ legal insurances of healthcare, pensions, and long-term care will be better.

The thought of how to become financially independent prevails among the young generation very conspicuously. This leads to a general unwillingness to have children, because potential parents put a successful career on first place rather than founding a family. Klingholz (2009), Germany’s most popular expert in respect to demography, mentions that “…the Federal Statistical Office expects that the nation will have around eight million fewer inhabitants by mid-century--a loss that is equivalent of losing the populations of Berlin, Hamburg, Munich, Cologne, and Frankfurt combined” (para. 6). With this population loss, it will be hard to run a system which is highly dependent on its labor force.

Technological and medical developments contribute their part to the critical situation in the Federal Republic of Germany. During the last century, scientists made great progress in healing humans from several types of sicknesses. In the early 20th century, people died because of a cold. Today, dying caused by a cold is very improbable. Technologies, with the new invented machines, are even able to cure most forms of cancer. Eventually, fewer workers need to deal with the increasing costs of statutory insurances. “Today, 20 percent of Germany’s population is older than 65, and 5 percent are older than 80. In 2050, the 65-plus age group will make up 32 percent and the 80-plus group 14 percent” (para. 12). According to Glazer (2008), a contributing writer for the Washington, D.C.-based magazines Congressional Quarterly (CQ) Researcher, Europe expects a reduction to two workers per retiree by the year 2050 (para. 19). Those facts present evidently how serious the demographic change is. Thus, to find a solution, it is important to work out a well thought out plan to distribute the costs better.

Government and population must work together to improve the birthrate. First of all, people have to lose the anxiety about the costs which come hand in hand with having children. The authorities around “Bundeskanzlerin” Angela Merkel need to recognize that the family policy requires a modification. Cases such as that of N. Fetzer-Hoerning, a management consultant from Frankfurt, show evidently why a change is necessary. She complains that 1,800 euros, as an incentive, is not enough compared to the massive costs that appear by giving children the opportunity to acquire a higher educational degree at private universities (Glazer, 2008, para. 38). So, rewarding the people with kids is obviously not the best method when encouraging people to have more offspring.

As an alternative, employers and government have the duty to figure out ways that might make it easier for parents to combine working schedules with school and kindergarten schedules, or as Klingholz (2009) refers to the statement of Polls, “Where parents have the chance to easily combine family life with a job, where high-quality childcare facilities and full-day schools are the standard, the fertility rate is high” (para. 25). Critics might say this way of solving the problem leads to massive costs for the companies. Naturally, if this approach takes place, there will be economic sacrifices, because it probably requires firms to hire more employees to substitute those who have children. Over a long period, however, this is certainly still healthier for the economy than a falling birthrate.

Besides increasing the willingness of people’s needs to have more children, immigration is the other factor to make it more advantageous to distribute the costs of the insurances. As stated by Klingholz (2009), it is not only essential to expand immigration, but it is also important to migrate people who fill the labor market’s gap with talent, new ideas, and motivation (para. 27). Young, ambitious, and with the will to be part of a progress, Germany and an economy in general need those kind of people. Although migration would boost the birthrate and labor force, one should not forget about the native inhabitants who might also provide a motivational attitude and moreover a high level of skills. What will they think about the state’s invitation for immigrants (Kahlenberg & Spermann, 2012, p. 16)? They probably see migrants as rivalry. However, competition keeps the level at achievements, productivity, and efforts high and makes sure that the economy does not stagnate.

The counter point on this subject is that “Germany’s experience with integrating foreign workers in the past, particularly the country’s large Turkish minority, has proved difficult” (para. 22). Therefore, “many government officials and business leaders are examining Germany’s culture, eager to do what it takes to be hospitable,” acknowledged Daley & Kulish (2013), two authors from New York Times (para. 22). Hospitality is the key word. After World War II, it became Germany’s duty to show the world that things have changed, and no matter which nationality, foreigners are welcome.

The word “economy” describes something that is consistently growing and developing. Consequently, money will not be a solution in the long term, because it is limited. But if the government and the people succeed in increasing birthrate and immigration, it will lead to an endless source that will be able to cover the costs of pension, healthcare, and long-term care.

Claim #2: Education as the Key

As earlier mentioned, Germany’s social security system is highly dependent on a strong labor force and an increasing rate of immigration. Over and above that, education of young and elderly people is of utmost importance to maintain the social system. Quality education guarantees that in the future, the spots of higher positions can be covered by more highly skilled workers. The skilled labor shortage, one of the central points within the demographic change, leads back to several terms. One of them is the issue of outsourcing. A lot of companies expand their production to countries where the worker’s wages are cheaper and therefore more profitable. The trend of expansion causes not only more unemployment for the affected state, but also a strong effect on the highly skilled jobs. Consequently, if Germany wants to keep its social security system, the state and population need to pay more attention to education, increase the productivity, and lower the percentage of skilled labor shortage.

At no point in life can people say they have learned enough. Globalization forces the working human being to keep learning; otherwise, he or she gets behind. Today’s society is surrounded by competition. Kahlenberg and Spermann (2012), two members of the “Institute for Study of Labor” in Germany, are of the opinion that a good education is a great method to prevent unemployment (p. 19). Individuals should always seek for the highest achievement of what they are doing. The goal is to sharpen their own skills, so that they are always ready to compete within the labor market. Education is of utmost importance. It should be a parent’s duty to give this advice to the next generation. That leads not only to positive outcomes for the affected individual, but it is also beneficial for an entire population, especially for stabilizing a social security system.

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Titel: Germany's Demographic Challenge. The Decreasing Birthrate and its causes