By Rumyana Vakarelska
This week a new study on EU’s immigration has confirmed that EU’s population as a percentage of the world’s population has fallen to 7 pc in comparison to 14, 5 after the World War II as a share of the world’s population. The research has indicated that in 2050 EU will hold 58 million people less living in Europe compared to 2010, so EU will continue to need immigrants. Prof. Dr Rainer Munz, Head of Research and Development at the Este Group and a Senior Fellow at the Hamburg Institute of International Economics, has formulated a valuable demographic perspective that may eventually resolve today’s immigration challenges across the EU. Considering the trend that EU is getting a bigger number of people, but a smaller number of workers by going beyond short-term political thinking that many political parties across the EU have demonstrated around the European elections earlier this year could not be more timely. Closer to home, the short-term EU immigration rhetoric may come back ahead of UK’s general elections in 2015, while the real issues include attracting the right immigrants and their better integration. This on its part can potentially guarantee their employment and potentially their sustainable employment. ‘We are undergoing two unique global processes that will never happen again and governments should look more closely at what is coming and how to get ready for it’, said Munz. These processes include the unprecedented population growth between the 1950s (known as the baby-boomers’ generation) and 2050s, when the global population is expected to reach 9 billion, coupled with the highest increase of life expectancy across the developed world and Europe, including a dramatic decline in the number of children in the latter. This means that in a few decades we will experience the highest number of older people since the beginning of human kind, which will dramatically rise between 2030 and 2050 at different rates across the world. In Europe, a few EU states and all European CIS states are already facing population stagnation, according to Erste Group’s Research. According to data published by Dr Munz and Albert Reiterer in their book ‘Overcrowded world’, global population and international migration, the age group of 65+ represents 1/6 of all people in rich countries, a quarter of them are above 80. In Europe, the average age will grow from the current 38 years old to 48 years old by 2050. By then, according to the above research, more than half of all EU citizens will be over 50 years old when taking into account the lower average age of foreign immigrants. In US, the average age will only rise from the current 35,8 years to 40, 3 years, which means that Europe is facing the biggest adaptation to meeting the demands of an older population, compared to other parts of the developed world. ‘This will dramatically affect the EU’s taxation and social security payments, using pay-as you go systems that may fit into the lifestyle of the economically active generation’, said Munz. However, understandably, today most EU governments worry about how to create more jobs, as currently EU countries experience a surplus of labour force and higher rates of unemployment. At the moment, Europe’s youth unemployment is roughly 20pc, while in countries like Spain it has reached 40pc. Due to many factors though, these people are luckily not starving, but the key concern that they lack labour skills remains, according to Munz. ‘Nobody can predict our respective countries’ GDP in the next quarter, but in demography we can predict the slow and inevitable processes that will drive most economic decisions tomorrow’, Dr Munz said. The new EU Treaty on Europe’s financial services and the Euro’s survival though should not distract decision-makers from the longer-term demographics, as they represent the main economic tasks facing Europe. As a former member of EU’s reflection group on the Future of Europe and advisor to the OECD, the EC and the World Bank, Munz considers the current reforms aimed at increasing the participation of women, the elderly and people from ethnic minorities in EU labour markets insufficient to balance the global trends of population decline and infertility. ‘It is only since the 1960s that Europe’s political and economic focus shifted from emigration to immigration’, Munz said. ‘Over the last 400 years, more people have left than came into countries like the UK, for example, whereby this tendency is almost universal across Europe. No wonder that countries like Greece, Italy and Spain are now learning how to shrink’, Munz said. As Europe’s baby boomers retire at a slowly increasing age across countries (UK from 65 to 68, France from 60 to62, Spain from 65-67, Greece from 58-63), by 2050 we will have 22 million people less in the labour force than we actually need’, according to Munz. While currently the UK, Denmark and Germany have a high participation in their labour markets, this tendency will need to increase elsewhere in Europe, in CEE in particular, where elderly and women currently work less years, in addition to the well recorded brain-drain from these countries since the fall of the Berlin Wall. Another challenge for the EU governments is that most skilled workers from outside the EU still prefer to go to US, while Europe is getting at large the low-skilled migrants. ‘However, the most advanced countries also carry most of the world’s sovereign debt, while developing countries’ debt will drop from 40pc in 2010 to 35 pc in 2014. This on its part may further shape international migration trends’, said Munz. According to the US credit rating agency Standard&Poors, as quoted by Dr Munz, bank interest rates in the long run will go down together with the demographic decline, which on its part raises new questions about sustainable wealth creation. He thinks that in the short run, introducing where appropriate a tax system like the one in Sweden can deal with some of the economic issues that arise from population decline. The question however remains how does one find solutions that work for a Continent that has so many country-specific economic structures, despite the existence of the Eurozone, as well as different cultures and value systems. ‘Another significant way to improve our future is to enable more adults and elderly people to continue in education, implying that employers and the political establishment need to allow older workers continue training, bringing a significant change towards work across the board’, said Munz. Currently, the present global population grows by 200,000 per day, but that growth is not distributed equally, negatively effecting Europe and Japan. In any case, Japan, which experienced the ageing population phenomenon first in the developed world, did not show us how to replace young people, who according to Dr Munz bring the most exciting ideas to societies. In addition, more than 50 per cent of the world’s population of 7 billion people today lives in cities and there is a tendency to stay, as migrants tend to go settle in cities, not in rural areas. One could argue that with a well-educated population in a better general health than ever before, good ideas in Europe may come from everyone. However, saving for a continuous education and retirement is something that businesses and politicians, as well as individuals need to address with a bigger urgency. Dr Munz has pointed out that in the last 30 years more people have left rather than joined education. Although not the ultimate solution to Europe’s demographic challenges, this trend needs to change before it is too late, as unlike other areas of social and economic forecasting, demography is destiny, he said.
Copyright Rumyana Vakarelska
‘Budilnik’ s newspaper new English Language Page contains original journalistic content in print and online on key developments in Bulgaria and Britain and on UK’s ex-pat life, aiming to build a higher and well-informed mutual awareness of the two countries and the viable prospects ahead of both. Interested sponsors for the English language page, please contact Rumyana Vakarelska, Team New Europe, an editorial and public affairs consultancy in London by email: rumy.vakarelska@gmail.com
