The baby boomers are coming


In Germany, there have been two major states of emergency for some time now. One is Europe and why Germany needs the euro, the other revolves around the consequences of demography for society and the welfare state. The latter is what we are talking about here. The consequences of the demographic development can be mitigated by more immigration and a sensible immigration law, higher investments and increasing productivity. This will require a noticeably higher equity ratio in private portfolios and housing subsidies tailored to demand.

Even if the new population projection by the Federal Statistical Office is somewhat more optimistic. The basic problem of an ageing society with too few children remains. In around ten years‘ time, when baby boomers will gradually retire, the change in age structure will accelerate dramatically. The baby boomers, who today still contribute as skilled workers to the production of goods and services, pay into the social systems and live with their children in the same household, then switch from gainful employment to retirement. Because the generations after the pill-break are significantly smaller and people live longer, the heavyweight in the age pyramid of our society is shifting upwards. The result is enormous challenges for the labour markets, social security systems and housing markets.

Meaningful reform steps such as the introduction of long-term care insurance, the Riester pension, increases in the statutory retirement age or support for families with children have already been taken. The law on the immigration of skilled workers recently passed by the Bundestag is also likely to make a contribution to overcoming the challenges in the future. However, this study shows that the measures are far from sufficient to solve the problems. The greatest dangers are an increasing shortage of skilled workers, gaps in the old-age provision of many citizens and a permanent shortage of housing in cities and for senior citizens.
The economic and socio-political debates show that there is a clear awareness of the problem of demographic change. However, discussions often focus on proposals that merely redistribute the burden of age structure change instead of actually solving the problems. This applies to concepts such as the maternal pension or the unconditional basic pension, which merely create a right to pension benefits. They do not respond to demographic change. On the contrary, it makes it more and more difficult to finance pensions and the young people bear the brunt, regardless of whether they are financed from the pension fund or from taxes. The same applies to measures such as the rent brake or the Berlin rent cap. Only those who have an apartment benefit. This does not tackle the problem of housing shortages. Instead, investors are deterred, new construction and refurbishment activities weaken and urban housing remains scarce, expensive and often in need of refurbishment. This means that the housing stock cannot be adapted to the changing needs of demographic change. The result is a growing backlog of investment and renovation projects, the elimination of which is being postponed ever further into the future.

What is needed are substantial reforms that really tackle the problems. This means that the measures must be judged by whether they actually improve the supply of skilled workers, secure the financing of pensions or the development of a funded old-age provision and create housing that meets demand. Sustainable solutions to the enormous demographic challenges of our time are a question of intergenerational justice. What is needed are economically viable concepts that are not at the expense of future generations. But the citizens themselves can also make a contribution by starting as early as possible with a funded old-age provision and paying attention to a balanced portfolio structure of the saved investment funds.

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