Population drop

Since Germany's first Chancellor Otto von Bismarck introduced Germany's first state pension in the late 1880s, the retirement age has since become one of the cornerstones of the social welfare state.

Today, more than 150 years after the industrial revolution, 20 percent of Germany's 82 million inhabitants are aged 65 or over. But in 50 years, every third person in Germany will be at least 65 years old and one out of every seven will be 80 or more years old. Based on two different population projections, Germany's population is expected to shrink to between 65 and 70 million people, with first signs of demographic change noticeable in two decades.

The population will decline because the number of births will continuously decrease by 2060 and the number of deaths will increase until the beginning of the 2050s. The annual deficit of births, that is the excess of deaths over births, will more than triple by 2060, according to Roderich Egeler, President of Germany's Federal Statistical Office (Destatis).

"We are witnessing demographic change. Since 2003 the population has been sharply declining and at the same time people are growing older. This development will shape the population in the coming decades," Egeler said at a news conference in Wiesbaden.

Old age ratio

Political analysts are already forecasting that the new generation soon may not be in a position to pay the retirement pensions of their parents. According to Eurostat statistics, in 50 years' time the number of pensioners compared to people of working age will have doubled from 25 percent to 53 percent.

"The demographic change will be one of the most important political and societal challenges of the next decades," said Engeler.

Today, the population of working age Germans aged between 20 and 64 consists of some 50 million persons. In 2060, their number will be down by 27 to 34 percent, depending on the assumed extent of immigration, says Destatis. However, the number of persons aged 65 and over will increase drastically after 2020 when the strong age cohorts will reach that age. Hence the old-age ratio, that is the number of persons of retirement age per 100 persons of working age, will also increase considerably.

The EU's population now stands at 495 million and is projected to rise to 530 million by 2035, before falling to 505 million in 2060.

In Germany, the total fertility rate stands at 1.4 children per woman, compared to 1.9 in Britain, which is now at its highest level in a generation. Compared to the six biggest EU countries, the UK has the greatest birth rates. By 2060 it would have increased by 25 percent, according to Eurostat statistics.

Life expectancy at birth in Germany will increase by about eight years to 85 for males and by about seven years to 89.2 for females by 2060.

By 2050, the UK's population will hover around the 74 million mark. By 2058, France will have pushed Europe's largest economy into third place.

There will be grave consequences for "Old Europe." If people live longer, there will be an increase in healthcare and welfare costs, with a reduced number of the population working. Inevitably, that means that more old people will have to work, or work longer. Retirement, as defined by Bismark, may no longer be an option.

Author: Nigel Tandy

Editor: Trinity Hartman