Sunday, September 03, 2006

German demographics ... food for thought!

The FT had a really telling article about the demographics of Germany I couple of days I thought I would share with you. It is well known that Germany is getting older and that the country's TFR rate is well below replacement levels (1.3). This means that as we go along the relationship between old and young people (can also be operationalized as the dependancy ratio) will change markedly. For visuals of the general outlook of German demographics check out this figure (found under 'population development').

What I am interested in here is especially immigration since this as we have argued before represents a viable solution to amend the effects of a declining and ageing population but as the FT reports Germany does not look good on this parameter either ...

(From the FT linked above)

'The exodus of Germans being lured away from home is greater today than at any time since statisticians began collecting figures about population movements in the 1950s.

Last year, for the first time since 1968, more people left Germany than arrived, according to Destatis, the federal statistical office. It estimates that 144,815 Germans left the country last year because of high unemployment, better opportunities or, in some cases, tax.''

(...)

German demographers were shocked in 1987 when the latest census put the population at 82.4m – 1.3m lower than projected. But a more unpleasant surprise could be in store for Germans as work for the next census gets under way this week. The previous emigration record of 1956 was breached in 1994 and, after several years of decline, the outflow began rising again in 2001, and continued to rise up to 2004, although 2005’s figure of 144,815 was slightly down on the year before.

“There has definitely been an increase [in German emigration] over the past two to three years,” said Christina Busch at the Raphael-Werke, an organisation that counsels would-be emigrants. “What worries me is that 99.9 per cent of those I see have qualifications. Many have children. Some even have good jobs. And most want a clean break – they do not intend to come back.”

Architects, engineers, lorry drivers, scientists and social workers are leaving in droves, according to figures. The outflow of doctors towards Scandinavia is such that the medical faculty of Erlangen University recently started offering Swedish courses to its students.'

(...)

'For former East Germany, the outlook is particularly grim. Another IAB study estimates the region’s population will drop from 15m to 9m by 2050.'

In my opinion this is really one to watch out for especially amidst all the talk of a sustained recovery in the Eurozone. But even in its own right and looking at Germany alone we can already see that some serious challenges lie ahead for policymakers as the effect of the Germany's relative demographic decline is kicking in.

10 comments:

Robert said...

Any indication as to whether these out-migrants represent a cross-section of German society, or only part of it (in which case, after they have left, they will stop leaving). I have heard anecdotally that many former East Germans, having moved west, have decided to keep moving.

Edward said...

"Any indication as to whether these out-migrants represent a cross-section of German society, or only part of it"

This is very hard to say Robert, all any of us have here I think is anecdotal evidence. But the worrying thing from Germany's point of view is the educational profile of these people. They are qualified, and they are 'uprooting'.

The other part of the picture is those who aren't moving, they are unemployed and over 50. It is hard to see any dent being made in this picture whatever the reforms, hence the gloomy prognosis in the FT quoted survey that unemployment numbers may only start to reduce after 2020, when there are less people in the 55-65 age group presumeably. Meantime the whole pensions system might go bust.

The 3% increase in VAT for next year is only the thin end of the wedge (which, in this case, is a tax wedge). As tax rates and insurance contributions keep rising, and earnings stay flat, it is entirely possible that this outward flow will not halt but actually accelerate. Hard to say at this point, but the problem is already big enough to require a response from the German government.

Incidentally the latest round of business surveys all seem to show that while there is a large surplus supply of unskilled workers (who aren't moving) there is an increasing problem in finding skilled personnel.

S.M. Stirling said...

Most countries with lots of immigrants have a substantial return outflow.

Is there any evidence of, say, Turkish immigrants or their children in Germany returning to Turkey? The economy there has been expanding rapidly, and skills would be in demand.

Anonymous said...

Such movement is indeed heared off these days. But I can't offer numbers.

Anonymous said...

First, there must be a typo in that FT article. The German population in 1987 was 60+ million, not 80+ million. Reunification hadn´t yet happened back then. Or do they mean 1997?

And second, how much of that emigration is to other EU countries? You know, freedom of movement inside the EU?
Any idea of how many British or French citizens "emigrated" to other EU countries? Just to get a comparison...

That´s not to say that there aren´t problems, mind you. Just a slight reminder that some British and American media like to publish articles about sclerotic "Old Europe".

Detlef

Edward said...

Detlef,

"First, there must be a typo in that FT article."

Yeah there's obviously something very odd about that figure and that date.

"Any idea of how many British or French citizens "emigrated" to other EU countries? Just to get a comparison..."

No, we don't have this data at this point, it would be interesting to have it. I have seen articles in the US press about young French professionals getting work experience in New York, but they mainly seem to want to return, as do many young Spaniards who do the same. And of course young Brits always have been footlose and probably always will be.

So I think we are all still at the data collection stage here.

The big point I think is that in both the British and French cases the population is actually increasing, and set to do so in both cases quite considerably. In addition, for example, the UK just took on board half a million extra young able people from Eastern Europe in just two years.

The German case is quite different. Your population is already declining, and it is ageing substantially at the same time. And then we have this kind of evidence that some people are just packing up and leaving (and this isn't the first of these kind of articles, they have been around for a while now).

So what really worries me is the defensive attitude many Germans seem to adopt in this context, as if this was an England/Germany football match or something. No-one here has an interested in having a go at Germany, quite the contrary we are all quite concerned.

Your welfare system is evidently creaking around the edges and there are real sustainability issues looming unless there is a change of course.

And what is needed to achieve that change of course is a move out of the defensive mode, a move out of denial and towards an acceptance of the problem and an attempt to formulate policies (which isn't going to be easy) that try to get hold of the problem at the roots.

Thirty years ago when some people started to raise the low fertility issue most said nah, nah, this will never happen, people will start having children again. Well they didn't, and now we are thirty years on, and too many people are still saying 'nah, nah, it really isn't that serious', and just now it isn't, but leave it another ten years and the point of no return may have been reached, so people need to wake up now.

The Titanic turned when it had finally taken on enough water to move across from one bulkhead to the next. Then it all happened pretty quickly.What I am saying is that size up to a certain point offers an advantage, protection, but you cross that point and size becomes a definite impediment, steering problems get obverdetermined, and the whole thing simply slides out of control. As the emergency room doctors say as all the vital system indicators move out of control, watch out we're losing her.

Edward said...

Stirling

"Is there any evidence of, say, Turkish immigrants or their children in Germany returning to Turkey? The economy there has been expanding rapidly, and skills would be in demand."

Again we don't have the data, but Turkey has zero net migration these days, which means that some must be coming in at the same time as some are still going out.

Obviously the idea that Turks who have got some training and experience in Germany are then going back is very plausible. Obviously the labour market conditions aren't better since Turkey still has very high unemployment (and especially so after the June currency 'correction'). But if you have appropriate and needed skills you can find work even in adverse conditions.

When I said to Detlef that something should have been done to anticipate the German situation thirty years ago, one of the issues I was thinking about was the whole guest worker thing. This was grossly mishandled, and I imagine that one day it will be down to the historians to apportion blame.

I think it is a very good idea to offer migrants only short term residence visas and work permits (and I would offer the two of these to anyone who can produce a work contract) renewable over a given period of time, say up to 5 years. Then I think people should be offered permanent citizenship rights (this is currently Prodi's reform suggestion in Italy, where again it is a case of too little, too late but still). People need to be able to become stakeholders.

But the Turks weren't given this opportunity in Germany and there you are. So back home it is. My guess is that the Turkish migrant pattern is more like the earlier South European migration to Latin America (ie a very significant return rate) than it is to the late 19th/early twentieth century migration to the US. (I suppose I have made this point before, but my dad was actually a 'returnee').

S.M. Stirling said...

The US also had a very significant return rate among immigrants in the great 1896-1914 surge; up to 25-35% among Italians, for example.

This was probably largely due to the fall in the time and money required for a transatlantic passage, which effectively unified the North American and European labor markets in some respects.

S.M. Stirling said...

Even a substantial increase in TFR would take a generation to get Germany out of the hole it's in, and the longer they wait the harder it will be.

The German government should be getting very, very pronatalist, and doing it _now_. And also encouraging East European immigration.

For historical reasons this is probably going to be difficult for them, especially the former.

Edward Hugh said...

"and the longer they wait the harder it will be."

Unfortunately Sterling, I have the horrid feeling that Germany is now very much a done deal. I mean Detlef may be defensive, but he is concerned. Out beyond him you find simply loads of people who are not convinced that either this problem is a serious one, or that there is any need to do anything. I mean, this is refelected in the current coalition, who hardly seem in a big rush about anything. Of course they are going to raise taxes next year, but beyond that they hope that the problem will fix itself.

Pro-natalism: in the German case the time for that was thirty years ago unfortunately. Of course, as you say, one of these generations there will be a change and a response, otherwise they would face extinction, but all of this is still a very long way off, and as I say people are in no hurry. Especially since so many influential people keep telling them the problem isn't as big as it is made out to be.

I think people simply aren't aware of the negative economic feedback processes involved. Unfortunately I don't think it will be too long before they will be (by this I mean a decade or so).

"And also encouraging East European immigration."

Again they seem to have missed the boat again here. The Poles went to the UK (nearly half a million migrants in 2 years) or Ireland. The Bulgarians and Romanians tend to head South - Italy, Spain, Greece, and anyway as Georgi says about Bulgaria in another thread, there may not be too many more to come out. Obviously Russia and Ukraine still have large 'feedstocks', but with the high levels of unemployment they have in Germany it is hard to convince people that they *need* immigration. This is what I mean by negative feedback in the economic area.

And of course, as we have been saying, major migration from Turkey is now over. This is another example of just how out of touch with reality the normal political discourse is, since as you probably know Turkey isn't slated to join the EU before 2014 at the earliest, and yet one of the major 'worries' people have about Turkish membership is that they might be 'flooded' with migrants.

On another front I just got a mail from Thomas (he posts as CapTvK). He works in the Netherlands statistical office, and he tells me, as the FT article in the link indicates, that the German authorities have finally decided to have a census in 2010-11. Germany has no electronic data system, and there are high levels of uncertainty about what the current population actually is. Feelings among the statistical community are that it could be round a million less than the official numbers, but noone really knows.