Cause and Effect in European Politics and Law

The problems of Europe are ours as well

Adelina Marini, March 18, 2005

Next week the European council is expected to put new energy the Lisbon strategy and maybe to agree on whether there would be any changes in the Stability and Growth Pact. Meanwhile a new report was published saying that the EU is on the edge of a serious demographic crisis. At the moment in no member state there is sufficient birth rate to refresh the population. According to a research of the European commission, published yesterday, the problems with aging will have dire consequences for European economies.

The issue is really very serious taking into account that the import of migrants will not solve the problem unless those migrants have the necessary qualification. Beside the inflow of well educated young people in Europe, it is also necessary the birth rate to increase as well. Of course for quite a lot of people the problem is somebody else’s because the principle “everyone on his own” is not only typically Bulgarian one but is shared by most Europeans. Only a day before the European Council on the 22nd of March, the Centre for European Policies organised a conference with the participation of the European Investment Bank, at which the issue would be thoroughly discussed. One of the researchers at the Centre is Daniel Gross whom I asked is there really a demographic problem.

Daniel Gross: Of course. The drop of birth-rate in Europe and therefore the lack of fresh labour force working out the pensions of the elderly is the main problem for all member states. This demographic problem is also behind the most of the financial challenges in Germany and France. That is why these countries have serious financial problems and the Commission tells them directly “Look, this is because your populations are getting old”.

Q: Yes, but in the same time member states are afraid of migrants and have even restricted access to their labour markets for people from the new member states.

Daniel Gross: That is in a way schizophrenic but as we know when hard times come; governments have to make irrational decisions. From generally European perspective if all countries have demographic problems, including the newcomers, then migration from East to West does not solve them. Such migration could help France or Germany but would sharpen it in Poland and Bulgaria.

Q: What’s the solution then?

Daniel Gross: Actually there’s no solution because even if we are open for migration from the rest of the world in a moment those migrants would also get old and would wait for pensions. Another issue is that most part of the people who come into Europe is not sufficiently qualified and most of them have low salaries. Therefore they will not be able to pay for the high pensions of the elderly people. The only possible solution could be increase of birth-rate. But to be successful this solution needs birth-rate increase of almost 50 %. By 2050, if people could afford more children per family, we would be able to say that we might have overcome the demographic crisis.

Q: There’s this strange paradox - the demographic crises arise in predominantly rich countries while in the Third World countries, which are the most poor, there is positive birth-rate. Why is this anomaly?

Daniel Gross: In a way this is natural development. We could see this throughout the world - when the countries get richer the demographic rate decreases. Take for example Turkey where 30-40 years ago the birth-rate was very high and now is declining rapidly. The same trend we could see in North Africa and some other countries which are getting richer. Actually this is the same process that happened to Europe 30-40 years ago.

Q: Yes, but what is the reason for it? What makes people not make babies although Europe has one of the best social systems in the world?

Daniel Gross: This is mystery because it also happens in poor countries like Bulgaria and in rich countries like Germany for example. There are also exceptions - France where birth-rate is almost near to the magical number for replacement of population. So, it is not only about rich or poor countries neither it is dependent on the social system which really is good. This is simply a mystery for which we still have no answer. We just don’t know what makes people want more children.

Q: What will happen when a poor country like Bulgaria with almost negative birth-rate joins the EU?

Daniel Gross: Initially the demographic situation will not have impact because the first 5-10 years Bulgaria will have to reach specific level of progress by introducing European technologies and improves its own productivity. In the long term though Bulgaria will face the same problem with pensions with which Germany and France are fighting now.

Q: Does the Lisbon strategy offer a solution?

Daniel Gross: No. The Lisbon strategy has totally neglected this issue. This plan actually states that there is no such a problem and that Europe can develop quickly with no aging people, which is actually one of the problems of the Lisbon strategy.

Q: And does and organisation like the one you represent have the capacity to change things?

Daniel Gross: We can research the problem and we do it in depth. We could also suggest a solution to policy-makers but it is the governments that have to undertake concrete measures. The populations in many member states if getting older and we have the following situation: we want higher pensions but in the same time we don’t want to spend more for our children.