ANALYSIS / EUROPE : New blood needed as population rapidly ages and shrinks

ANALYSIS / EUROPE : New blood needed as population rapidly ages and shrinks.

By BRIAN LOVE

Paris : As debate rages over the merits of Europe ''importing'' immigrant labour, one thing looks inevitable _ the homegrown population is becoming too small and too old to maintain the living standards of the last 50 years. Attempts to rejuvenate Europe's workforce took a fresh twist this week with news the European Commission would propose a pan-European system of US-style green cards to lure youthful migrants with good education, skills and economic potential.

The idea itself is controversial, but it also illustrates a point some find hard to swallow. The glory days of the baby boom that followed World War Two are over, and most probably Europe's economic prowess of those post-war decades, too.

''We have enjoyed this period of historically unprecedented economic growth,'' says David Coleman, professor of demography at Britain's Oxford University. ''We're now quite rich. We're going to continue to get richer, but not at the same rate as before.''

He reckons the economic growth rate, both absolute and per person, could possibly halve in some countries worst hit by population shrinkage, notably Germany, Spain and Italy as well as others in the south and many to the east, such as Russia.

The United Nations predicts the world population will rise to nine billion from six billion by 2050 before stabilising, with most growth in Asia, where India will expand by nearly 500 million to pass China as the most populous country, nearing 1.6 billion.

So Europe will have to live more frugally as its population shrivels and the centre of gravity shifts towards Asia.

Living frugally means paying more or accepting less in state welfare provision, be it health care, pensions or other benefits, and working longer or accepting less on retirement, economists argue. Politicians worry that this is a vote loser.

A report commissioned by the French government and published this week says pension reform including measures to make people work longer for a full pension are not going to be enough. Those reforms caused widespread street protests.

For Germany alone, the population is officially forecast to remain more or less stable for another five years or so, but then drop by nearly 10% by 2050.

That puts a dampener on all the recent excitement over Germany's resurgence as Europe's economic powerhouse.

Worse still, the 10% population drop is based on Germany taking in 200,000 immigrants a year, twice as many as in recent times, says Marc Schattenberg, a researcher at Halle University.

''From a demographic point of view, immigration is not a solution but an alleviation,'' Mr Schattenberg added.

He is currently examining whether reform of German pensions should include incentives to raise fertility rates.

Europe's population, which has hovered within reach of 20% of the world total for a large part of the last 2,000 years, will slide to about 7% by the next century, says Oxford's Mr Coleman.

In a double-whammy, baby boomers are starting to flood into retirement, with few to replace them as taxpayers after decades of dwindling birth rates.

Germany's labour force could shrink by 40% by 2050, or by 18 million, if there is no inflow of immigrants, according to Deutsche Bank simulations in a report published last May. The findings are breathtaking if strictly theoretical for now.

They include a slump in economic growth, a dip in return on capital and a rise in public welfare costs for governments that would make nonsense of the targets for deficit and debt control in the 13 European countries that use the euro currency.

Real income per capita in Germany would slow to a growth rate of less than 1% a year by 2050, a mere third of the increase in prosperity Germans enjoyed over the past 50 years.

Mr Coleman notes France, like Ireland, is making babies at a rate that ensures some stability for now at least, and the French population could overtake that of Germany in the next 50 years, restoring the situation at the time of Napoleon.

The United States, through both higher birth rates and high immigration, comes off better than the other two powers that dominated the world economy until recently. Its population will rise as Europe's and Japan's dwindle.

Can a European green card help Europe ease the pain of age?

The idea of selective admission of high-skilled immigrants is a lesser evil economically than no selection at all, but it still raises questions about the morality of draining poor countries of their would-be elites, Mr Coleman says.

Jakob von Weizsaecker, author of a research note by an EU think-tank called Bruegel, says Europe needs to encourage highly skilled immigrants with a single passport-permit for the region.

He regards Europe's demographic fate as something that can be influenced by policy, in tandem with the usually unpopular economic reforms that make politicians nervous.

The challenge on welfare reform is most dramatic in places such as Germany, Spain, Italy and indeed much of southern and eastern Europe, says Mr Coleman.

There are other things that could be done to make Germany more attractive, to retain homegrown brains and to entice more from elsewhere, according to Mr Schattenberg at Halle University.

His brother spent time in the United States, came back with his wife and two US-born children to Germany, but could not find a kindergarten school for his children so that he and his wife could both continue their research careers.

''He left. They're back in Pennsylvania,'' said Mr Schattenberg.REUTERS

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Monday January 15, 2007