Studies of Economic Change

Introduction (Demography)

The population forecast is - according to the change of the relation between the different age groups - an important aspect to predict the economic performance and growth in Germany. Because of the decline of the birth rates the share of the retired people is likely to increase substantially within the next decades. The public opinion reported by the media is characterised by the belief that the retirement pays are in danger and that the retirement age has to be increased.

At present the unemployment rate is still incredible high. The assumed decline of the unemployment rate is caused by the increase of marginal employment and wage dumping as well as by the increasing dependence on the export surplus and self-employed without substantial orders. So we have to be aware that not only children and the elderly people need welfare allowance but also unemployed, welfare recipients, and marginal employed people.

Consequently the share of the retired people in relation to the population is not of major interest. Of major interest is instead the share of the working people - resp. all people who are able to work - in relation to the population. This share is measured by the labour force participation. These studies about the demographic development show that this share can remain nearly at the same level despite the aging society. In addition to that it is expected that the average amount of the heritages per capita increases substantially. Another contribution to save the retirement pays is the increase of the inheritance taxes. Therefore the retirement pays are secure.

The analysis consists of three parts:

1. Presenting the employment rate for different age groups according to the Labour Force Survey of the European Union for selected countries as Germany, Denmark, and Italy. By estimating the maximum labour force participation for each age group it is possible to calculate the additional potential of workforce.
2. Transferring the Labour Force Survey to the demographic development of Germany until the year 2050.
3. Deducing two scenarios of the labour force participation based firstly on the choice of political passivity and secondly on adapting the maximum labour force participation.

CONCLUSION: The labour force participation can remain at the same level. The retirement pays are secure.