Thursday November 11, 2021
Millions of workers are missing
IW: Demographic change puts income at risk
Demographic change will also make itself felt in people’s incomes in the years to come. At least that is what the German Economic Institute predicts. Politicians have to act, the losses could be high. The IW names four central tasks.
Around 3,000 euros per person – according to a study, the average annual income in Germany in 2035 could be that much higher. But demographic change is endangering future prosperity, warned the Institut der Deutschen Wirtschaft (IW). In 15 years, there will be a shortage of more than five million workers on the labor market. The IW researchers called on politicians to act.
“The future federal government is called upon to react to the shrinking population; only then can companies do their homework”, explained IW Director Michael Hüther. “Going on like this costs us all prosperity and cannot be in the interests of politics.”
In their study, the IW researchers developed three different scenarios. If the current trends continue, the volume of work and thus also economic growth will be slowed down significantly from 2025 onwards. Under these conditions, average income will only increase by an average of one percent per year until 2035. For the year 2035, this results in an additional per capita income of a good 1,600 euros. If politics succeeds in combating the shortage of skilled workers on the labor market, mobilizing more capital and thus implementing stronger technical progress, real income per capita could, on the other hand, rise by up to 1.4 percent annually. In 2035, people in Germany would then have an average of 3000 euros more at their disposal.
More child care, longer learning
But the opposite development is also possible: a poor investment climate and anti-innovation course setting could lead to “noticeable loss of prosperity,” warned the IW. Compared to the base scenario, the per capita income in 2035 could then be 4,000 euros lower, calculated the researchers from the employer-related institute. In order to counter the demographic change, the IW called for an expansion of childcare and investments in the education system. Older employees should also be kept in the labor market longer through further training measures. The researchers also called for better conditions for private investment and investment in public infrastructure.
In a survey by the Bertelsmann Stiftung at the beginning of October, 66 percent of decision-makers in companies also reported a shortage of skilled workers. The shortage of staff turned out to be even worse than expected: at the end of 2020, only 54 percent of those surveyed had expected a shortage of skilled workers in 2021.