Study dampens expectations
Retiring baby boomers do not mean fewer unemployed people
March 15, 2024, 11:49 a.m
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Demographic change hovers over the German economy like the sword of Damocles. Millions of working people will soon be retiring. But it won’t be paradise for those who remain. A study calculates that neither the number of unemployed will automatically fall nor salaries will rise.
According to a new study by the Institute for Employment Research (IAB), a shrinking workforce will not automatically lead to higher pay and fewer unemployed people. “You would expect the unemployment rate to fall and wages to rise when there are fewer workers – but that is not the case,” said labor market researcher Enzo Weber from the IAB. To achieve this, productivity would have to be increased. This requires more support for technology and qualification.
Scientists assume that the number of employees in Germany would fall by seven million people by 2035 due to the retirement of the baby boomers if there are no compensatory measures. However, the studies show that the participation in working life of people who previously did not participate is also increasing. This applies, for example, to women and older people.
Fewer workers will reduce the gross domestic product – but not from a per capita perspective. “Production is made with higher capital expenditure per employee. Accordingly, GDP per capita even increases somewhat,” said Weber.
The Federal Statistical Office announced at the beginning of the year that almost 46 million people were employed in Germany in 2023 – more than ever before. The reason was mainly the work of foreign workers who had immigrated. However, the balance sheet emphasized that the decline in the working-age population will be felt in the medium term.