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June 27, 2011

GERMANY: Aging population poses a huge economic threat

FRANKFURT, Germany / Wall Street Journal / Business / June 27, 2011

Anybody Home? 
Germany's rapidly aging population poses a huge economic threat. 
The nation's rural towns offer a glimpse of the future.

By Laura Stevens

ERFURT-KÜHNHAUSEN, Germany—Like thousands of small hamlets scattered across Germany, this village in the rolling countryside of Thuringia is a picture of rural tranquility. Yet a couple of generations from now, the quaint stone and brick facades that line its winding streets may be all that remain.

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Some say this town and others like it in Germany are in danger of disappearing, victims of the nation's sinking birth rate and aging population. Already, a quarter of the 1,200 residents in Kühnhausen, which sits on the outskirts of the eastern German city of Erfurt, are senior citizens, many of them living alone.

"Unless more children are born in Germany, the problem can't be solved," says Kühnhausen Mayor Renate Lindner, 61, sitting on a porch overlooking her garden and greenhouse on a recent Saturday. 

Economists have said that Germany's rapidly aging population is one of the biggest long-term threats to the nation's status as Europe's economic heavyweight. The working-age population is shrinking by more than 100,000 people a year, raising fears that eventually there will be too many retirees and not enough working people to support them. Rural areas are feeling the effects already as Germany's labor shortage draws younger residents to bigger cities, where companies are fighting to attract skilled workers.

Germany's birth rate—at about 1.36 children per woman on average in 2009, according to government statistics—remains among the lowest in the European Union. Efforts to encourage women to have more babies, including a government program that pays part of parents' salaries while they take a year of maternity leave, have had a negligible effect. A lack of day-care and a stigma against working mothers are part of the problem, some say.

A Woman's Choice

The attitude is that "the woman must always choose between her family and her career—there's no both," says Barbara Riedmüller, a political science professor at Freie Universität in Berlin.

Unless something changes, Germany's population is forecast to shrink 20% to 64.7 million people by 2060 from about 82 million now, the government estimates. The size of the working-age population will drop 27% to about 36 million. So far, tough immigration laws have helped prevent Germany from importing enough skilled labor to compensate.

Although Germany's greatest population challenges are still ahead, the pain is starting to be felt already in small villages and towns such as Kühnhausen. Some of the most rural communities have stopped building, or even maintaining, infrastructure such as public transportation and schools as older residents die out.

Eastern Areas Age Faster

In some places, "the wolf is coming back, nature is taking over, so to speak, and it's really literally only old people" left, says Harald Wilkoszewski, a political scientist with Population Europe, a collaborative network of European demographic research centers. "In general, the eastern regions are aging faster than western Germany," says Mr. Wilkoszewski.

Indeed, the population in the state of Thuringia, which was part of former East Germany, is forecast to plunge more than 40% to 1.3 million residents by 2060, according to government statistics.

The medieval city of Erfurt, the capital of Thuringia, and Kühnhausen, essentially a suburb of Erfurt, are starting to show their age. While the center of Erfurt is still picturesque and remains a big draw for tourists, some big block buildings on the city's outskirts that used to be residential apartments now sit empty, many of them boarded up. In Kühnhausen, there are fewer multi-generational families living in its big farmhouses—now, it's more common to find older people living by themselves.

Ms. Lindner, Kühnhausen's mayor, runs a small hotel in town with her husband. Of their three adult children, only a son lives nearby and has children. One of the couple's two daughters is working in the northern city of Hamburg, while the other is attending a university in the city of Weimar.

"When they're done with their studies, especially the girls, they want to work for a while, they want to earn money, they want to educate themselves further," she says. "In this day and age, having a family and career is not so easy."

Ms. Stevens is a staff reporter for The Wall Street Journal in Frankfurt. She can be reached at

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