In a world where overpopulation and high unemployment are serious problems for many nations, Germany faces an entirely different set of challenges. Germany currently has record low unemployment rates that are leading to a deficit of workers, especially those with high levels of education. To further magnify this issue, the current workforce is aging rapidly, and with the lowest birthrates in Europe, the size of the German workforce will decrease substantially in the coming decades. The most recent projections show that Germany’s working-age population will decrease by 6.3 million people by 2030, and that the entire population could decrease as much as 19%, to about 66 million people.

This decline in the population creates many new problems in the German economy. The most pressing of these issues is how to deal with funding the national pension system. Currently there are 2.3 workers for every retiree in the nation, but by 2060 this number is expected to drop to only 1.3 workers per retiree. In an effort to correct this discrepancy, Germany’s chancellor increased the retirement age from 63 to 67, but was met with political opposition that prevented these measures from applying to all workers.

Faced with this shortage of workers, German companies are being forced to adapt. The primary ways in which companies are adapting are by adjusting their working conditions in order to retain older workers, and by recruiting workers from abroad. Going forward, attracting talent from abroad will be the only sustainable solution to this problem.

Essentially the only way for Germany to avoid a downturn in its economy is by employing millions of foreign workers in the coming decades. Stephan Siever of the Berlin Institute for Population and Development was quoted as saying “Keeping the working-age population steady would need annual net immigration of at least 300,000 until 2050…It was 460,000 last year and could hit 500,000 this year.” Clearly Germany has a good start on mitigating this problem, and if current immigration rates continue, Germany might be able to avoid this problem altogether.

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