The demographic developement in Europe and the impact on workforce

Impact and countermeasures

Seminar Paper, 2012

22 Pages, Grade: 1,3


Table of contents

1 Introduction

2 Definition of demography

3 Europe’s demographic development
3.1 Histrorical background
3.2 Social and structural trends
3.3 Ageing - changes in the labor force and the consequences

4 Countermeasures - How to face the challenge ?
4.1 Promotion of higher fertility
4.2 Immigration
4.3 Higher productivity
4.4 Higher labor-force participation rate
4.4.1 Higher participation in the group of young workers
4.4.2 Higher participation of females
4.4.3 Higher participation of older workers

5 Conclusion

6 Bibliography

1 Introduction

Demographic change, the "war for talent", global competition - key words that companies should seriously deal with. Whether in trade magazines, regional newspapers, Internet articles and television news - in all media the issues of demographic change and shortage of skilled labor are omnipresent. The population in Europe is growing older due to the high living standards, while the birth rate is alarming low1. The population of working age will be strongly influenced by the older workers and decline in the long- term period from 2015 on2. Due to quantitative and qualitative imbalances in the labor market in many industries qualified young professionals are missing, while the in-house workforce is getting older continuously.

Demographic change and the resulting consequences for companies are often underestimated or ignored. Companies should have taken precautions much earlier. Strong action is required now. But how can companies overcome the "demographic gap"?

The aim of this paper is to analyze demographic changes and their impacts on the labor markets. The paper will begin with brief r e view of Europe’s demographic development and its driving forces followed by an overview of different proposed countermeasures to prevent the consequences of demographic change.

2 Definition of demography

The word Demography comes from the greek and describes the scientific study of the condition of a population with it´s numerical change3. This scientific discipline deals with the statistic development of populations and their structures. Structures, geographical distribution as well as environmental and social factors, which are decisive for changes, are regarded in this connection4.

Demography primarily consists of the following four aspects:

- fertility (number of births)
- mortality (death rate)
- nuptiality (marriage rate in a given period)
- migration (immigration and emigration)5

The term demographic change describes the change in age structure in a society and can be used for positive and negative effects , i.e. both for shrinking population as well as population growth.

The age structure within a population is influenced by three main factors:

- The number of births
- Life expectancy
- Immigration and emigration

Following, the population number results from the birth and immigration rate, minus mortality and emigration6.

3 Europe’s demographic development

3.1 Histrorical background

The issue of demographic change is nothing new, only the effects are more relevant than ever.

Already a the beginning of the 20th Century, the german philosopher Oswald Spengler (1919), drew up a grim prognosis. His work „Der Untergang des Abendlandes“ was an attempt to predict history as well as the resulting consequences. It describes the causality between the development of a population and it´s society and the related depopulation7. The demographic change is a slow process. The main determinants of this developement are the declining fertility8, which leads to a decreasing population9 and the constantly increasing life expectancy, which results in a declining mortality rate10.

Crucial for the consideration of the declining birth rate are historical cuts, as well as changing societal views and norms. The most relevant historic cuts which must be considered are the three major wars in which Europe was involved. The so-called “Thirty Years War”, between 1618 and 164812, meant that about half of the former population died.

This development, however, is therefore of secondary importance because of the observation period which lies very far back in the past. Current and more noticeable are the two world wars. Since the end of the second world war a noticeable decline in births is recorded. Already in 1924 the birth rate fell to a level which was not sufficient for the reproduction of the german population. On the other hand, the life expectancy of people increased unceasingly13. The low birth rate resulting from this war had to face yet another challenge, the second world war. More than 12 million people in europe lost their lives and 12 to 14 million People were expelled from their homes11. These historical events led to a depopulation.

3.2 Social and structural trends

Not only historical events are the cause for a declining population but also structural trends can have a strong effect. The change in values, technical achievements, globalization, and emancipation are some further significant factors.

1. Funktional and structural change

Children in the family are no longer necessary for the retirement planning of old people, as in the past and even today in developing countries, which was once a reason for an increased number of children.

2. Emancipation of women

Due to the development of society and the end of oppression in terms of the social status of women a lot has changed. With the breakthrough of the birth control pill by 1951 it became possible to control the family planning. This lead to a great change in the typical “role” of women. Because of this "revolution" the thematization of discrimination against women in the last 40 years gained special importance14. As a result of this trend the wish to be employed grows more and more into the focus of women.

3. Welfare of the state

Young families are, according to the affected people, not adequately supported by the state, e.g. in the form of social services such as kindergartens, childcare places or nursery facilities.

4. Consumerism and demanding lifestyle

Children do not only mean the change of the output distribution of family budgets, but also an enormous amount of time for education. This fact prohibits a costly and higher living standard for the majority of families which therefore makes children appear unattractive15. The average birth rate in europe is currently only 1.516.

Another trend is the wish to live longer, which is allowed by drugs and technical advances. The life expectancy today in comparison to 1900 has increased by an average of more than 23.5 years17. These developments and trends are decisive and responsible for the "demographic change".

3.3 Ageing - changes in the labor force and the consequences

From an economical point of view, a key aspect of ageing will soon be the impact on the size of the working age population, which is expected to decrease by nearly 50 million people up until 2060.18 It is expected that the total potential workforce will increase up until 2015 before beginning to decline. Within this workforce, people on average will also be older than nowadays. Consequently, an increase of the older workforce group (55 - 64) is predicted, which can be seen in graph 1. The young people and young adult populations are already in decline. Shortly after 2012, the older middle- aged (40 - 54) workers will join them. Older and senior worker cohorts will continue to grow. This means that in the near future, companies will have to increasingly rely on the labor of older workers.19

illustration not visible in this excerpt

Graph 1: Trends in the size of working age population and its subgroups in the EU25, 2005 - 2030, Source: European Commission, 2007 b, P. 55

It is important to consider the difference between the total potential workforce and the actual available workforce. The former represents the entirety of persons currently at working age, whereas the latter comprises the employed and the unemployed currently searching for a job. The actual labor force in 2008 was 214 million people. If current activity rates remain stable, the labor force will decline by about 36 million people by 2050.20

What would be the consequences from this decline? Firstly, economic growth rates would be bound to decrease along with the ageing population.


1 Euröpäisches Statistikamt (eurostat) online: Fewer, older and multicultural? Projections of the EU populations by foreign/national background (2012), P. 5

2 eurostat online: National reports on the demographic developments in 2010 (2012 edition)





7 Personalpolitik in schrumpfenden Kommunen Ostdeutschtland, Westdeutschland und Polen im Vergleich, Wiesbaden 2011 Walter Bartl

8 fertility = birth rate

9 Den demographischen Wandel im Unternehmen erfolgreich gestalten. Eine Zwischenbilanz aus arbeitswissenschaftlicher Sicht. Berlin Heidelberg 2009, Thomas Langhoff, S. 1

10 mortality rate = death rate

11 Wirtschaft und Sozialgeschichte kompakt, München 2009, Hartmut Kiehling


13 Training_und-Fitness.pdf

14 Herausforderung Bevölkerung zur Entwicklung des modernen Denkens über die Bevölkerung vor und nach dem “Dritten Reich” Wiesbaden 2007, Monika Müllhausen, S. 71

15 Herausforderung demographische Wandel, Wiesbaden 2004, Bernhard Frevel, S.60

16 eurostat online:


18 Cf. European Commission, 2008, P. 54

19 Cf. European Commission, 2007 b, P. 55

20 Cf. Nimwegen N. van, 2006, P. 10

Excerpt out of 22 pages


The demographic developement in Europe and the impact on workforce
Impact and countermeasures
University of Cologne
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The demographic development in Europe., Impact and countermeasures, Definition of demography^, Europe’s demographic development, Ageing – changes in the labor force and the consequences, Promotion of higher fertility, Higher labor-force participation rate, Immigration
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Mathias Tillmann (Author), 2012, The demographic developement in Europe and the impact on workforce, Munich, GRIN Verlag,


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