Brrrrr! Morning in gerontocratic Germany
Back in September, I said that the German government's general election campaign was a low, dishonest affair and time has certainly proven me right. You may remember that the great theme of the campaign was Iraq, although what that had to do with the central challenges facing German society — sclerotic labour market, redundant pension system, malignant bureaucracy, punitive taxes — was never made clear. It was, of course, a re-election ruse. On a wave of populist anti-American sentiment, the SPD-Green coalition just managed to scrape back into power and the end was seen as justifying the means. Now, however, it's morning in Germany. And, brrrrrrr, it's cold.
With the world preparing for a post-Saddam scenario in which Germany will play little or no role, the coalition has been forced to face up to the need for some domestic "regime change" of its own, but it's running scared. If the reaction to the pensions crisis is anything to go by, those who can vote with their feet should. Otherwise they'll be bled dry paying for a pension system that lost touch with reality a long time ago. Although, enormously complicated in its administration, the German pension system can be reduced to the following: workers hand over money to the government, which then hands it on to pensioners. Simple. Everything is rosy in this garden as long as there are sufficient workers earning enough for 45 years in a full-time job and the birth rate is balancing the death rate. But when high unemployment arrives and at a time, too, when jobs-for-life have disappeared and more people are working part-time, or moving between the worlds of employed and self-employed, it's a different story. Add, then, a declining birth rate to the reality of increasing longevity and you get, yes, that's right, a horrid mess.
Hard demographic facts: In 1960, the over-60s comprised 17 percent of the German population. Today it's 24 percent. In 2040 it will be 40 percent. The future vista, then, is of a dwindling number of younger workers supporting a growing number of retirees expecting pensions that represent 70 percent of their salaries. It's a recipe for generational warfare.
Solution? Radical reform in the shape of private pensions, delayed retirement, more immigration, new thinking... Expectation? Higher taxes and more bureaucracy. Oh, and there's always Iraq.
