Germany’s working age population will shrink dramatically

The fall in the number of workers represents another challenge for Europe’s leading economy, which is already struggling with burdensome bureaucracy, high energy costs and fierce competition in its traditional industries.

– Germany is not on the edge of demographic changes – it is in the middle of them – said Holger Schaefer from the IW economic institute in Cologne, which published the report.

– In just a few years, the economy will lack the workers needed to create prosperity and maintain the welfare state in its current form – he said.

The study says the labor market will be particularly affected by the retirement of baby boomers, usually defined as those born in the two decades after the end of World War II.

Given that not enough people are entering the labor market to replace them, the working-age population will decrease by 4.3 million by 2036, to 51 million, a drop of about seven percent, it said.

The rate of decline is worse than previously predicted, as the population began to decline earlier than expected.

In the year 2025, the population of Germany has decreased by about 100,000 people for the first time in many years, and now stands at about 83.5 million. By 2040, it will drop to below 82 million, predicts the IW Institute.

In addition to the declining birth rate, the decline was caused by a sharp decrease in the number of people moving to Germany, it said.

Migration to the EU’s most populous country was set to remain muted due to “the clouded economic outlook and the federal government’s shift in migration policy,” the report said.

Conservative Chancellor Friedrich Merz’s coalition has prioritized a tougher immigration policy as it seeks to reduce the appeal of the far-right Alternative for Germany (AfD) party.

The IW Institute said the government could stop the decline in the working-age population by encouraging people to work more and making it easier to attract skilled workers from abroad.

(Vijesti.ba / FENA)