Studies of Economic Change

Employment

It is the purpose to show that the share of the labour force in relation to the population can be kept at the same level despite the demographic development. Therefore the employment rates for different age groups are analysed for selected European countries according to the Labour Force Survey of the European Union dated to the year 1993. As a result we can see that there are tremendous differences within the age groups. The next subchapter transfers this comparison for a specific point of time to a comparison over the time.

[As shown in the last subchapter the main conclusions are still true despite the fact that the figures are out of date.]

Italy has the lowest labour force participation with 41% related to the population resp. 66% related to the age group of the 15 to 64 year olds (transferred to Germany's population pyramid). As it is of special interest to increase the labour force participation this case is not considered any longer. The only conclusion is that there is a tolerance to the bottom for Germany as well.

Germany's labour force participation is 49% related to the population resp. 79% related to the age group of the 15 to 64 year olds which reflects the European average figures. But it is remarkable that only less than 20% of the age group of the 60 to 64 year olds are employed while it is discussed to increase the retirement age at the same time. Furthermore it is also remarkable that only 40% of the 55 to 59 year old women are employed. The argument of child rearing does not really fit for this age group. This fits better to the labour force participation of 70% of the age group of the 20 to 44 year olds.

Denmark's labour force participation is a good example with 56$ related to the population resp. 90% related to the age group of the 15 to 64 year olds (transferred to Germany's population pyramid). This is by the way a consequence of the extraordinary high labour force participation of the women which is about 14% above the level of Germany. Furthermore the labour force participation of the 60 to 64 year old in Denmark is twice as high as in Germany.

Even the figures for Denmark can be exceeded which is abvious for the age group of the 50 to 64 year olds. Therefore in addition the maximum possible labour force participation is defined. Because of the increasing life expectation and the better health conditions it should be possible that about 90% of the 50 to 54 year olds, 80% of the 55 to 59 year olds, and 60% of the 60 to 64 year olds are able to work. According to the importance of the education the labour force participation of the 15 to 24 year olds is reduced slightly as the share of university graduates has an important impact on the international competitiveness.

There is a huge potential of workforce in Germany which is actually not used but can be used to keep the labour force participation at the same level over the time. This potential is shown in the graphic by the green coloured area.

Does this additional potential of workforce suffices to finance the aging society?