How the millions of baby boomers retiring threaten prosperity

How the millions of baby boomers retiring threaten prosperity Article by RP ONLINE • 5 hours • 3 minutes reading time Berlin. A new population forecast clearly shows the dramatic loss of workers in the coming years: 19.5 million baby boomers will retire by 2036, but only 12.5 million younger people will follow. This is one of the reasons why experts are criticizing the traffic light coalition's pension package. The German labor market will lose 19.5 million older workers from the baby boomer generation in the next twelve years. In contrast, according to a new population forecast, only 12.5 million younger workers will follow by 2036. This is the result of an as yet unpublished study by the employer-friendly German Economic Institute (IW), which is available to our editorial team. Despite the expected population growth of around 2.3 percent to 85 million people by 2040, the aging of society remains the central socio-political challenge, according to the economists. If it is not possible to increase the workforce potential through immigration and overtime work by domestic workers, there will be a loss of prosperity. "This threatens to intensify distribution conflicts - not least because the proportion of the non-working population is increasing significantly." The IW bases its forecast on the 2022 population census, data from the Federal Statistical Office and its own calculations. Baby boomers are people from the strong birth years 1954 to 1969. Only then did the contraceptive pill lead to a decline in births. By the end of 2022, around 3.1 million baby boomers would have already reached retirement age, according to the IW. Retirement will accelerate in the second half of the 2020s in particular. "By 2036, all of the remaining 16.5 million or so baby boomers will have reached the statutory retirement age," the study says. "The 19.5 million baby boomers from 2022 who will have reached retirement age or died by 2036 are offset by around 12.5 million young people gaining access to the workforce potential in the same period." This is putting increasing cost pressure on the social systems. This is also illustrated by the youth and old-age dependency ratios. These show how many young (under 15 years) and older (at least 67 years) people there are for every 100 people of working age. "Although the youth dependency ratio will remain almost constant between 2022 (21.3) and 2040 (21.8), the old-age dependency ratio will increase from 29.5 to 41.1 people," writes the institute. The government has introduced the Skilled Immigration Act, but it has not yet had the desired effects. "Problems exist, for example, with excessively long waiting times for issuing visas, with the rapid recognition of foreign professional qualifications or with the overloading of immigration authorities," says the IW. The question of who is responsible for recruiting skilled workers from abroad is largely unresolved. "Small and medium-sized companies in particular are overwhelmed by this." In Eastern Europe, the willingness to move to Germany is also decreasing because there is a shortage of skilled workers there too. "Refugee migration in the context of crises and wars cannot be a mainstay of an immigration strategy," especially since integration is more difficult here, warns the institute. In addition, all potential must be exploited domestically. "An international comparison shows that in Germany there is potential above all in extending working hours," says the IW. However, the institute doubts that it would be possible to extend working hours in Germany. "Firstly, employees predominantly want shorter working hours and, in light of increasing labor shortages, they also have the negotiating power to push through this interest." Secondly, the change requires time, which is no longer available. However, the SPD and the Greens want to implement the second pension package unchanged, regardless of the sharp increase in social costs due to demographic changes. By fixing the pension level limit at 48 percent until 2039, the package promises higher benefits to the more than 21 million pensioners. In their statements for an expert hearing in the Bundestag this Monday, economists, employers and the Federal Audit Office criticize above all the fact that the pension package places too much strain on younger generations. Part of the FDP parliamentary group shares this criticism and wants to push through changes. There is speculation as to whether the traffic light coalition will collapse on this issue.