Europe's baby bust
WHEN IT UNVEILED a plan last month offering parents new financial incentives to have more children, the French government was seeking to redress a looming and deeply worrisome demographic crisis -- one that affects not just France but all of Europe.
The French have one of Europe's highest fertility rates -- about 1.9 children per woman -- compared with only 1.3 in Germany, Italy and Spain. But because a fertility rate of 2.07 is needed to keep France's population at a steady level, even the more amorous French are poised to watch their countrymen dwindle in the years ahead.
In Germany, Italy and Spain, the problem will be even more severe. The decline of Europe's population promises to starve its economy of badly needed workers and to bankrupt its pension systems. One recent study estimates that the aging of its populace could cut Europe's economic growth rate by as much as 50% by 2040.
Economic growth within the European Union already lags that of the U.S. for two main reasons: Europeans work roughly 15% fewer hours per year than Americans, and the U.S. population has been growing steadily while Europe's has been stagnant. Europeans may prefer -- and their economies may even be able to withstand -- more leisure time, but they cannot also afford a steady decline in their working-age population.
That, however, is exactly what lies ahead. In Italy, for example, the working-age population is poised to shrink by 20% by 2035, and another 15% by 2050. In France, every 10 workers support four retirees through the social security system. The International Monetary Fund estimates that by 2050, there will be as many French pensioners as workers. The same goes for Germany. So much for the solvency of pension systems.
The French incentive to bump up fertility rates -- under which parents will get about $900 a month if they take a year of unpaid leave after the birth of a third child -- is a step in the right direction. Financial incentives, more liberal leaves for parents with newborns and the greater availability of affordable day care have already helped put birthrates in France and Scandinavian countries well above the European average. This suggests that women will have more children when the state makes it easier for them to balance professional aspirations and family life.
