2023-11-09 18:09:23
“Germany is not the sick man of Europe, it is the aging man of Europe. » The observation delivered by Monika Schnitzer, president of the council of experts on the German economy, or “council of wise men”, is not new. The subject might return to the heart of the political debate, as the demographic question becomes crucial for the evolution of the German economy.
The committee’s annual report, submitted by the five economists on Wednesday November 8 to the Chancellor, proposes an in-depth reform of the retirement system, suggesting in particular to correlate the retirement age with changes in life expectancy. . The proposal was rejected on Thursday, November 9, by the IG Metall union.
For the “wise”, the German demographic challenge is the main cause of the lethargy that the country should experience in the coming years, much more than the current economic weakness. This challenge of aging, economists point out to the government, has been “insufficiently prepared”. Due to the retirement of large generations born around the 1960s, the slowdown in productivity and business creation, the growth potential of Europe’s largest economy might be around 0.4% per year until ‘in 2028 if nothing is done, they anticipate. Or around a third of Germany’s performance during the 2010s.
This is a massive drop in wealth creation for Europe’s largest economy, which will have considerable consequences on the social system. In addition to the consequences of the lack of labor, the financial burden of the retirement system on the younger generations might become unbearable: according to the council’s calculations, the average contribution rate might increase from 18.6% of salary currently to 26 % by 2080, if the level of pensions remains unchanged.
Options are limited
The problem of pensions has taken a back seat to political priorities in recent years, due to high immigration figures. But the recent shift undertaken by Berlin to reduce the number of asylum seekers, following the rise of the far right, shows the limits of this approach. As for skilled workers arriving legally in the country, their number should not be enough to fill the shortage of future workers, as developed countries are also in international competition for the best talent.
The options are therefore limited for made in Germany. Some of those presented by the council on Wednesday will potentially be difficult to gain acceptance from a population where the generation born around 1960 is almost twice as numerous as that of those under 20. In addition to extending working hours, the “wise men” mentioned the idea of adapting the level of pensions downwards, for example by introducing more solidarity between retirees, thanks to adjustments in the value of the point. . Another proposed route is to create a complementary capitalized old age pension system, into which workers might contribute. They also recommend better training younger generations in investments in financial markets, by giving them start-up capital.
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