A family affair: Europe debates demography

The second Berlin Demography Forum explored solutions to challenges and opportunities presented by population shifts of unprecedented scale and speed.
French Minister for Families Dr. Dominique Bertinotti and Ambassador Wolfgang Ischinger listen to .../ Credits: Berlin Demography Forum
The world population has tripled since 1950. It will grow by 2.5 billion in Africa alone by 2100, when one in three humans will live there. By then, low birth rates will have almost halved Germany’s population and reduced Europe’s share of global population to just 6.7 percent. Today, the fastest growing age group globally is the over-50s. And the popular explanation for President Obama’s election triumph? “It’s the demography, stupid!”

These were some of the seismic shifts that European government ministers, businesspeople, economists, academics and members of civil society discussed at the second Berlin Demography Forum in early January 2013 at the European School of Management and Technology (ESMT).

Under the theme ‘Generations - Learning - Prosperity’, they debated fundamental challenges at opposite ends of the life cycle: how to make having children and a career compatible; and how to create an inclusive, coherent, prosperous society that maintains solidarity between young and old.

As Allianz CEO Michael Diekmann stressed in his opening remarks, the world urgently needs practical solutions: “The issue of demography has to become part and parcel of international politics just like climate change. Like climate change, the issue becomes more painful the longer we wait.”

The needs of families

The pain will mostly be felt by advanced economies with low birth rates, shrinking workforces and aging populations like Germany, argued Dr. Gerhard K. Heilig, Section Chief of the UN Population Division, whose jaw-dropping statistics and blunt honesty held the audience rapt.

“We are losing about one third of each generation from one generation to the next. It is not plausible that this can be replaced by immigration,” he warned, predicting severe impacts on the socio-economic and even cultural fabric of the country.

Addressing that population decline is the job of Germany’s Minister for Family Affairs, Senior Citizens, Women and Youth, Dr. Kristina Schröder. To encourage people to start families she prescribed expanded child daycare, transferable parental leave rights from parents to grandparents, and a new corporate culture that makes sure “work meets the needs of families and not vice versa”.

Schröder’s counterpart in France, Minister of Families Dr. Dominique Bertinotti, agreed. She called for childcare centers within companies and more flexible working hours. She argued that France’s relatively healthy birth rate was helped by its strategy of “clearly linking family policies with our labor market policies” resulting in high levels of female employment and fertility.

The ‘Young Experts’ panel of under-30s also took up the theme, arguing that their generation would be encouraged to have children by measures like greater job security and a reduced income gap between the sexes. Among them, Masters student Katharina Klein was a lone dissenting voice. “We don’t need more children,” she said. “We need to care better for those that already exist. More has to be invested in the education and training of young people.”
Intergenerational solidarity

Dominique Bertinotti’s advocacy of inter-departmental policymaking emerged as a key theme, with enormous implications for intergenerational solidarity. Yves Leterme, Deputy Secretary-General of the OECD, singled out Australia for praise, describing how the Australian Treasury produces an “intergenerational report” every five years, setting out the current terms of the social contract between young and old on all issues, resulting in “guidance and tools for all policymakers”.

That contract was also of concern to U.S. Ambassador to Germany Philip D. Murphy who noted that America is simultaneously aging and diversifying yet its education system is failing some minorities. “There is no economic security for the grey without economic opportunity for the brown,” he declared.

When it comes to pensions, the social contract in Europe must be redrafted, said Professor Elsa Fornero, Italy’s Minister for Minister of Labor, Social Policies and Gender Equality. “We are talking about a shift from redistribution of resources to a combination of private and public insurance it will depend on the working population’s savings not public generosity,” she said. The Minister was describing how Italy has increased the retirement age, equalized it between men and women, and even introduced an automatic mechanism that adjusts retirement age to changing life expectancy.

Sabine Bätzing-Lichtenthäler, member of the German Social Democratic Party, preferred to put the onus back on employers and legislators to “make sure we pay people a proper salary so they are not poor in old age”. Dr. Jutta Allmendinger, President of the Social Science Research Center in Berlin forcefully criticized the lack of economic opportunities for women, concluding: “The marriage market is a better way for women’s old age provision than the labor market. This is a scandal.”

Windows of opportunity, inconvenient truths

Forum participants also emphasized the gains to be made from demographic change. “There are a lot of opportunities if we stop thinking just about the German or European context,” observed ESMT development economist Professor Rajshri Jayaraman, not least the demographic dividend that offers developing countries the chance of improved economic and social development.

Enrico Cucchiani, CEO of Intesa Sanpaolo, reminded the audience that all global population growth will be in urban areas in developing markets, which “represents huge market opportunities for developed world companies”.
Meanwhile, Professor Burkhardt Schwenker, Chairman of Roland Berger Strategy Consultants, emphasized the economic growth potential of cross-border migration, and recommended a “simplified record of degrees and certificates across Europe” to spur more dynamic movement.

Notwithstanding the numerous innovative policy solutions discussed, these may just be tinkering at the margins, Gerhard Heilig suggested. “A large fraction of what will happen in the future is already built into the age structure of the current population,” he pointed out, emphasizing the immense momentum of demographic change.

For instance, even if the Polish fertility rate leapt to replacement level tomorrow, the population would still decline up to 2060, Professor Janina Jó?wiak of the Warsaw School of Economics demonstrated. “This is what can happen if there is no reaction to profound changes,” she concluded. “Measures should be defined far in advance.”

To continue Michael Diekmann’s analogy, like greenhouse gases emitted decades ago that will warm the planet for decades hence, past population trends will dictate future demographic change regardless of what we do now.

The Berlin Demography Forum is a cross-party, international platform for debate on demographic change. The forum brings international politicians, scientists, economists and representatives of society together to debate potential solutions and to contribute to sustainable development. The idea is also to raise the general public's awareness of the significance of demographic change. The forum is held once a year; the first event took place in January 2012. It was initiated by the Federal Ministry for Family Affairs, Senior Citizens, Women and Youth (BMFSFJ) and Allianz.

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