Constantin Weiss is the German Parliament Correspondent of The German Diplomat. He studied International Relations at Tufts University, before moving to Berlin. For two and a half years, he’s been working as a staffer in the German Parliament.
Berlin, Germany | May 30, 2020 | Opinion Article
Public administrations tend to act irrationally. For example, the European Parliament commutes between Brussels and Strasbourg once every month. South Korean parliamentarians have a fistfight every time a budget gets passed. But there are more subtle irrationalities. One such irrationality could bring Germany to the brink of disaster if administrators don’t act soon.
Over the last few years, Germany has refused to tackle an existential issue it faces. We are an old country, the second oldest society across the globe behind Japan. And we are facing a wave of newly retired people by the 2030s. As the baby boomer generation stops working and starts retiring, robust German public budgets will start to crumble under the weights of consumptive spending.
In 1950, 70% of the country’s population were employable – the remaining 30% were stuck in kindergarten, school or retirement. By 2050, this ratio will have inversed, meaning that 70% of Germany’s population will be either too young or too old to participate in the labour market. Even though birth rates have been steadily increasing, the time lag is too big to defuse the situation. The implosion of the German labour market is visible on the horizon.
Our social system is pay as you go
But there’s another twist – Germany’s social system is pay-as-you-go. The current working generation pays directly into the pension fund that distributes money to pensioners. Set up by Ludwig Erhardt in the late 1950s, this system worked nicely when 6 working people paid for the pension of 1 retired citizen. Over the years, however, the balance of working people to pensioners has skewed dramatically toward the latter. Soon enough, additional subsidies out of the federal budget were necessary to guarantee liquidity for the pension system.
Today, that subsidy is the biggest earmark in the federal budget, accounting for more than €100 billion, or roughly a third of our budget in 2020. This is neither sustainable nor fair toward future generations. Given the implications of the COVID-19 crisis, Germany will have to manage two resuscitations in the coming decade: reviving the economy as well as its labour force.
The solution is immigration
However, solving the demographic crisis may not be as difficult as it seems. In fact, the solution is pretty obvious. It’s immigration, stupid!
The German government had the perfect opportunity to start tackling this issue in 2015, when an unprecedented number of mostly young asylum seekers sought refuge in Germany. Despite a public administration that was ill prepared for the influx of people, an impressive 60% of migrants arriving in 2015 managed to find employment within the first 2 years.
Fast forward to 2018, and soon enough, people were yanked out of their newly begun lives by exactly the same laws that granted them residency in the first place. Why? Residency statuses such as the refugee status need to be renewed regularly, in this particular case at least every three years – often, factors as small as mistakes in paper application forms completed upon arrival in 2015 result in the deportation of a refugee. The fact that he or she has just spent the last three years making a living, paying taxes and social security (not to mention learning the language) plays no role.
We refuse to tackle immigration
At this point, the idiocy of the German legal code needs no additional pointing out; the short-sightedness of its leaders, however, does. The persistent refusal to handle legal immigration as a necessity has not only given rise to right-wing extremist voices across Germany, it has also needlessly elevated the danger that demographics will play on Europe’s biggest economy.
Instead, German leaders have continuously sought to drag the discussion into emotional paradigms, arguing that Islam does not belong to Germany (neither does Christianity, according to our constitution), or that German workers should have access to the labour market first (they do, and we’re at natural unemployment).
The German Dream
Though alternative pension systems have been talked about over the last few years, they have not resulted in action. Alarmingly, the threat is not tangible enough for this issue to warrant political urgency. Instead, this threat is a slow, creeping one; the type of threat an administration only notices once it’s too late.
Germany does not need to start from scratch to correct its path. All we need is an update of the American Dream, a German Dream so to speak: the promise that everybody wanting to live in Germany gets the chance to do so, granted he or she contributes to the greater good. That way, both immigrants and the elderly assure a bright future.
Photocredit: Isabelle Knispel
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