The demographic change has a brutal impact and endangers German prosperity. Economists like IW boss Michael Hüther call for massive reforms, even if they are unpopular. However, they are met with rejection from trade unions and social organizations.

It is a proposal that contains explosives: “We should work 100 hours more a year.” That is what the head of the German Economic Institute (IW), Michael Hüther, recommends in an interview with the “Wirtschaftswoche”. He wants to use this to cushion demographic change and the associated shortage of skilled workers.

The employment rate is now very high – it is around 80 percent for 20 to 64 year olds. But there is still potential when it comes to the volume of work, the IW boss justifies his suggestion. “In mathematical terms, the Germans work two hours less per week than the Swiss. If we worked 100 more hours a year, around 4.2 billion hours of work could be replaced by 2030 that are lost due to aging.”

In the past, Hüther had already called for consideration to be given to extending the regular weekly working hours and brought the 42-hour week into play. There was support for this from industry, but also from former Foreign Minister and SPD Chairman Sigmar Gabriel.

However, the initiative was not well received by trade unions and social organizations. Anja Piel, board member of the German Trade Union Confederation (DGB), even spoke of a cheap sham solution “without a social compass”.

But the fact is that the fact that our society is aging is increasingly threatening our prosperity. That cannot be ignored. The proportion of people in the total German population who are 65 and older has increased steadily since the 1960s. In 1960, around every tenth German citizen fell into this age group – by 2020 this was already the case for around every fifth. According to calculations by the Federal Institute for Population Research, by 2060 almost every third person could be more than 65 years old.

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This poses a major challenge for our country, as there are fewer and fewer young workers. Germany is already facing an enormous shortage of workers and skilled workers. Anyone who drives through the country these days sees them everywhere: the notices with which companies are desperately looking for staff – be it in gastronomy, in trade or in industry.

According to analysts at the Federal Statistical Office, the number of people in work (aged 20 to 66) in Germany could in the worst case fall by almost four million by 2030 (compared to 2019). Another 30 years later, there are only 31.5 million workers in this scenario, almost ten million fewer than in 2019. Even if the experts are more optimistic, there will still be an overall decline in employment.

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At the same time, demographic change is also increasing the burden on the pension system and social security systems. Experts are increasingly warning of a collapse in funding.

The number of contributors to the statutory pension has risen by around 20 percent over the past three decades. In the same period, however, the number of old-age pensioners increased by 55 percent. Added to this is the constantly increasing life expectancy of pensioners, which is also one of the main stress factors for the pension system.

According to forecasts by the German Economic Institute (IW), in 2030 there will be 1.5 contributors for every pensioner. In 2050 there could even be only 1.3 contributors.

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Therefore, Hüther also made it clear in the conversation with the “Wirtschaftswoche” that, in view of these challenging circumstances, politicians cannot avoid a fundamental structural reform of the entire social security system. “Unfortunately, the dramatic consequences of demographics on the social security systems are largely ignored by the federal government,” complained the IW boss. Pumping more and more tax money into social security cannot be an alternative to reforms.

In addition to extending the legally prescribed weekly working hours, Hüther also proposes working longer at the end of one’s working life and wants a “dynamization of the retirement age”. Employer President Rainer Dulger recently defended this position in relation to “Bild am Sonntag”.

The DGB trade union, on the other hand, sees the solution to demographic change somewhere else: Board member Anja Piel said in an interview only recently that there should be a nationwide wage agreement and compulsory social security from the first euro earned. No exceptions should be made here for mini-jobs, seasonal work, self-employment and the remuneration of elected officials. The higher the sum of the wages from which contributions flow into social security, the more solid their financing, she argues further.

The DGB wants to solve the shortage of skilled workers with more training and further education, good working conditions, collective wages and better compatibility of life, family and work. For years, the DGB has also been calling for a modern, unbureaucratic immigration law.

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