Who Will Keep The German, And Thus Europe's, Economy Running?

Tyler Durden's picture

After a significant slowdown in the years before the crisis, Goldman Sachs notes that the number of immigrants coming to Germany is rising strongly again. While it is not clear at this point how sustainable this development is, it will nonetheless help to ease the strains in the German labour market. But, given the underlying demographics, we suspect, like Goldman, that an increase in immigration by itself is unlikely to prevent a meaningful decline in the labour force after 2020. Only a continuous rise in the participation rate can offset these demographic trends.

Via Goldman Sachs: German demographics and crisis-related immigration

 A strong rise in immigration


As the economic situation in peripheral countries deteriorates, an increasing number of people are migrating to Germany. While the number of immigrants from Greece, Italy, Spain and Portugal stood at around 41,000 in 2007, this number more than doubled in 2011. Numbers for the first half of 2012 point to a further acceleration of this trend in 2012 (see Exhibit 1).



But people are not only moving from the Euro area periphery to Germany. Total net immigration rose from just 11,000 people in 2008 to around 279,000 in 2011. If we extrapolate the figures for the first half of 2012, total net immigration could even rise to more than 360,000 this year (see Exhibit 2). To put this into perspective, net immigration into the UK for the 12 months up to March 2012 (the latest data available) stood at 183,000.



One immediate effect of this increase in immigration is an easing of some of the strains in the German labour market. These strains have become more visible over the last two years and the current cyclical weakness – which we expect to be temporary – has not changed the fundamental picture in any meaningful way.


The unemployment rate, for example, was 6.9% in October, only marginally above its record low of 6.8%. Note that the national definition of the unemployment rate is rather strict. Using the ILO definition, the German unemployment rate was only 5.4%; the respective figures for the UK and the US are 7.8% and 7.7%. Moreover, the national figures blur some significant regional differences, with unemployment rates in Southern Germany (Bavaria and Baden Württemberg) well below 4%. Finally, the number of vacancies stood at a level of 459,000 in October, compared with an average figure of 364,000 since 2000.


Long-term decline in population and workforce


These strains in the German labour market are set to become even more significant in the coming years due to weak demographics, which if current trends continue would lead to an overall decline in the population.


Exhibit 3 shows two different population scenarios based on the latest population projection from the German statistical office. Under its base scenario, which assumes a broadly unchanged fertility rate of 1.4 and a net immigration of 100,000 per year, the population would decline from around 82mn currently to 80mn by 2020 and 70mn by 2050. Under a ‘high fertility and high immigration scenario’, assuming a fertility rate of 1.6 and annual net immigration of 200,000, the decline in the population would slow, although the population would still be expected to decline to below 80mn by 2030 (see Exhibit 3).



Even more significant than the overall decline in the population would be the shrinkage of the working age population. According to the statistical office’s base case, the working age population – we assume here that this would be everyone aged 20-67 – would decline from around 51mn currently to 50mn by 2020 and 42mn by 2050 (Exhibit 4). Again the 'high fertility, high immigration scenario' looks more benign, although it still implies a big decline in the labour force after 2020.



Population size and labour force: No perfect correlation


Such long-term simulations are necessarily fraught with uncertainty. This is particular true for the estimation of the labour force, which is not only determined by the overall size of the population, but also by other social-demographic factors such as the retirement age and the participation rate (the share of people in the working age population that are working). Because of this, population and labour force can diverge, and indeed such a divergence has been observed in Germany over the last ten years. While there was a decline in the overall population, the labour force reached a record high (Exhibit 5) as the share of the labour force in the total population rose from below 52% in 2000 to 53.5% now.



What matters ultimately, however, is not the labour force but the total number of hours worked, which is the number of people in the work force times the average annual working hours. An increase in the number of hours worked provides a further buffer to a decline in the population or the labour force.



How difficult would it be to keep the total number of working hours constant until 2020? The short answer is: not that difficult. Exhibit 6 shows two different scenarios for the number of total hours worked in the German economy. The base scenario assumes a gradual decline in the population in line with the base case projection of the statistical office and no change in either the participation rate or the average working hours. The other scenario assumes an annual increase in the participation rate of 0.1% to 54.4% by 2020 and an increase in the average annual working hours by 0.1%. Furthermore, it is assumed that net immigration rises to 200,000 per year from 100k in the base case. Under this scenario, the total number of hours worked increases by around 1% from 2011 until 2020. What this shows is that the weak demographics would not necessarily also lead to a decline in labour input, and thus the potential growth rate of the German economy. Which scenario will play out in the end, however, also depends on the flexibility of the German labour market to accommodate an increase in the participation rate.


Source: Goldman Sachs

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ACP's picture

There goes the neighborhood!

iDealMeat's picture
  Who Will Keep The German, And Thus Europe's, Economy Running?

A:  The FED*


Who Will Keep The FED RUNNING?


A:  The FED*


* see circle jerk


DoChenRollingBearing's picture

Who will keep the Peruvian economy rolling?

We (Ameru) will!  Say "hi" to the ladies, fellas!


GetZeeGold's picture



I still blame it all on Hitler really.


We offered Bush the empty slot....and he said oh hell no.....that's a deadend job there.

zorba THE GREEK's picture

Where is Adolf when you need him?

magpie's picture

Studying today's Greek resistance to Umvolkung ?

TruthInSunshine's picture

Anyone with a modicum of intelligence knows that Spain, Italy, Greece, Portugal & Ireland are in dire straits, suffering economic contraction of significant percentages if measured in real terms.

What is not frequently spoken or written about is that France is probably doing nearly as badly as Italy. Many do not know that-- and this is fact, not speculation-- government spending in France accounts for just about 50% of France's GDP! How long is that sustainable for before France is forced to crawl to the ECB for a massive bailout, openly (rather than quietly), and how will Germans react to that, given France's massive debt, deficit spending and cratering economy?

And then, as this article focuses on, there's the problem of Germany getting dragged into the swamp by its neighbors and the fractional fiat alchemy of the ECB (much like most U.S. states are getting monkeyhammered by a Fed that prints fiat in order to prop up Manhattan "banking" institutions, an outrageously sized government workforce (unionized, too, with 1 in 7 employed Americans working for federal, state or local units of government).

Some people call it doom & gloom; I prefer to call it reality:  The shit hasn't even begun to hit the fan yet, but it will, and it will make 2008 look mild in comparison. There's no way Bernanke's, Draghi's, the BOJ's, BOE's and PBOC's fiat printing keeps the bond & equity markets propped up for much longer given the scale of the real, core, fundamental economic deterioration we face.

SafelyGraze's picture

how come ain't nobody talking bout who's keeping the us economy running. 


that's right. it's gw (courtesy rushmore) and lady liberty (courtesy morgan dollar)

too opaque?

DoChenRollingBearing's picture

GW and Lady Liberty have been obsoleted...

Stoploss's picture

Do they sell high powered rifles??

Schlomo Bergstein's picture

Germany's economy will be stronger than ever once we replace the native population with immigrants from Africa and the middle east. Diversity is our strength, fellow goyim.

Tijuana Donkey Show's picture

From that chart, I'm long gyro's and kale soup. 

Insideher Trading's picture

We need more of the bright and innovative minds from Kenya and the Congo to right this ship.

Europe and America literally need ship after ship of those sharp Congonian minds to bring diversity and knowledge to our countries shores in order to pull us out of this.

We really need to mine the talent and brilliance that comes from the African region.

Anusocracy's picture

Idiocracy can be imported.

It's faster than devolving into it.

magpie's picture

Who says the economy will stay running

chump666's picture

Who will keep the ECB running?  The NY Fed.  Audit the f*ckers!

Spitzer's picture

Euro is on its way to 1.50

The dollar is not "the best crackshack on the street". It is the worst crackshack on the street.

Bogdog's picture

I see potential to 1.40 and then it's into the basement by next spring.

EARLPEARL's picture


Anusocracy's picture

Our psychopathic killers vs. their psychopathic killers.

magpie's picture

Like Mexican wrestling, it is Masked Man 1 vs Masked Man 2

toomanyfakeconservatives's picture

Oh, I think he can. Whether it's one man against another or a mob against the city, the mathematics remain the same. You never enjoyed the enlightenment of poverty, did you, Governor? If you had, you'd know you can always hire half the poor to kill the other half. 

Non Passaran's picture

This is truly enlightening... And of course, since it's a BIG war, it - what the heck, the entire comment - must be written in UPPERCASE...

The situation in Europe is bad, but your comment has absolutely nothing to do with this particular article.  The article actually shows that the single labor market is providing a way for the unemployed from the more messed up countries to work in the less messed up countries, which is positive as they remit money back and offload some pressure on their country of origin. So this is kind of good.

Is Europe messed up? Yes. But your comment is garbage.

Ghordius's picture

+1 Non Passaran, the comment is garbage and US gov spending is already at war levels - just see here TD's graphs


you need resources for a big war, and they are already committed for several small ones

the term for that is imperial overstretch

disabledvet's picture

But resource prices are falling not as was the case during the 70's "going through the roof." not only that but the interest rates are at RECORD low yields...with commensurately very high value of said debt. "it's like a stock buyback plan for Government." you could argue...can't say I'm ready to go there yet tho...that say "a health insurance program run by the Federal Government that covers 100% of all Amercans could add materially to economic growth. Both now and going forward...for as long as can be sustained." you would know this Ghordius but my understanding is that Germany has had such a program since Otto Von Bismark in the 1870's. Is this true? "and the fact that it is paid for goes a long way towards explaining the net migration numbers"? Yes? No? You tell me.

q99x2's picture

Banksters, Politicians, Panetta and their drones against 7 billion decent human beings.

three chord sloth's picture

How to lie with stats: Lesson 1

Say something like, "While the number of immigrants from Greece, Italy, Spain and Portugal stood at around 41,000 in 2007, this number more than doubled in 2011. Numbers for the first half of 2012 point to a further acceleration of this trend in 2012". People reading this will naturally assume these immigrants are Greeks, Italians, Spaniards, etc. Some may be, but many (most?) are likely to be Turks and North Africans who merely spent a while living in southern Europe, and now count as "internal migrants."

Pairadimes's picture

Who cares? We have the Bad Idea T-shirt girl in the column ads.

Lord Of Finance's picture

Who is migrating into Germany?


    Uh, the Greeks, the Irish, the Spanish, the Lithuanians/Latvians/Estolithulatvians . . . among others.   A little latter on; the Italians. The French. The British ARE coming. Then it will be the Australians. Then the Japanese. History has shown the you do have to always look out for those damn Mongolians. Then it will be the Brazilians and some African and so called "emerging market" countries,(after the "maestros" and 'helicopter Bens'  inflationary money bomb bubble facial "bruising" appears and  is realized to have been the only thing that made their economies seem like they were actually growing), start to see all that investor funny money stampeding out of their "markets", will we finally have the Americans/barbarians at the gate.

Azannoth's picture

I think you got the order exactly backwards, the Government is importing almost forcibly all the Africans it can get it hands on(immigration a modern form of slavery?)

Lord Of Finance's picture

I met a lot of German immigrants/exchange students in college 10 years ago and they all informed me that they were losing their sovereingty back then. They told me they had illegal/legal immigrants flooding their country from Ireland, Spain, Greece, Bulgaria, Poland and where my wife is from- 'Estolithulatvia'- She has a little of all three of the Baltics, with the other 25% being Finnish.  Many of these euro's stick together when they come to America. In going to parties when I was dating my Lithuanian wife, I met all Euro's from nearly every country who had immigrated here-except from England and France and Italy. They all admitted that Germany was Europes shining beacon on the hill and if they were not in America, they would be in Germany. The Germans I met, and there were quite a few, said that the Africans were a problem in their country but that they were a small percentage of the populace compared to the immigrants flooding in from eastern, western and northern Europe.

     I still keep in touch with one of them who moved back to Germany and they said that the African onslaught has far surpassed the other Euro countries by far over the last 6 years. Although she admits since it is the Africans commiting all the violent crime in Germany, maybe then it just seems like they are everywhere. The Germans are not digging the multicultralism. That is why I have so much respect for the Eastern Asains. They are not racist or biggots, they just want to keep their ethnicity pure. That is the way it should be and they are smart enough to know it and strong enough intellectually to not allow others to name call then and label them as being racist for not encouraging innerbreeding. Us Euro decendants are different though. It is hard to tell exactly which clans settled exactly into which parts of europe. We all know the celts settled into the U.K. but we also know there were other nomadic tribes that did as well. The same goes for the Germans or the germanic tribes that often intermingled with the celts an the nords who settled eventually into Scandanavia as well as the Baltic states and into far western russia and poland. That is why some Russians and eastern euro women are so damn hot.  They are decendants of the nordic tribes, but the nords intermingled with the celts and the germanics and the spaniards and the romans so most europeans are a mix of all the tribes. So A german can marry and irishman who can marry a russian who can marry a pole who can marry a norweigian and they are all the same and it is all good. Todays centrally planned and liberal dipshit induced multiculturalism bullshit is a disaster of epic proportions.


    Oh well, a wiser man than me once said that 'those with the best of intentions often achieve the worst of results.'   Sigh 




Azannoth's picture

Couldn't have said it better my self.

Sandmann's picture

This is fatuous. There are major problems as German slaughterhouse workers are replaced by Romanians and Poles who are "self-employed" to save social costs and reduce contract terms.....the German meat sector is cutting costs by employing marginal labour. The trend to part-time working and contracts is following the same path as in UK and Spain. There were lots of Poles and others working in Germany even before the restrictions on movement ended this year. German unemployment figures are fake, massaged heavily as in the UK and other states. German unemployment is massively understated following revisions to the numbers by Merkel's governments.

Germany has a theoretical labour shortage. This is reminiscent of the Great Youth Shortage in Britain  when Norwich Union claimed there were not enough school leavers in Norwich for its recruitment - this later became once the Media had finished a National Problem. Instead the country ended up with Youth Unemployment as Blair etc pushed UK Youth into Universities and imported Youth from Poland so now Britain has huge youth unemployment and debt-laden students competing for jobs


Elikal's picture

The Plan is NOT to keep Germany or the EU running. The Plan is, to create crisis after crisis, until people give away all their rights and liberties willingly, just to give power the group of "Saviors". THAT is the Plan!


 ´ `

/ o \


JR's picture

Germany is in a life and death struggle with international financiers, in particular Goldman Sachs investment bankers, who have taken control of her country.  Dilution of sovereignty is a banker goal, not that of the German people. Therefore, I  suggest it is the bankers who are pushing for more immigration into Germany to “ease the strains in the German labour market."

One in five people living in Germany now comes from an immigrant background, according to figures released in September 2012.

There are now 16 million people with an immigrant background living in Germany – 19.5% of the country's population, according to The Guardian.  This, in one of the most densely populated countries on earth, in a country about half the size of Texas with a current estimated population of around 81,000,000 people.

Of all the 27 European Union states, Germany has the highest percentage of immigrants in its population.

The Jewish Daily Forward reported in January of 2011: “In Berlin, 22% of the population is Muslim; in Frankfurt, more than 30%.”

Forward further notes findings from a 2009 report by the Berlin Institute for Population and Development “that Turkish immigrants — who make up almost two-thirds of the country’s Muslims — are the least integrated ethnic group in the country, despite being the second most numerous immigrant group.”

BBC News reported in October 2010 that a recent survey suggested more than 30% of the German people believed the country was "overrun by foreigners."

“The study - by the Friedrich Ebert Foundation think-tank - also showed that roughly the same number thought that some 16 million of Germany's immigrants or people with foreign origins had come to the country for its social benefits.”

The BBC also cited in 2010 an “opinion poll that showed 55% of Germans thought that Muslims were a burden on the economy.”

In addition, Chancellor Angela Merkel said the so-called "multikulti" concept - where people would "live side-by-side" happily - did not work, and immigrants needed to do more to integrate - including learning German.

Said the BBC, “The comments come amid rising anti-immigration feeling in Germany.”

As for how well things are working out for the German people in their banker-captured economy, 2105204 PY-129-20 gave a first hand account on Zero Hedge in January:

“This is not working. And we all know it. End the current EU, end this currency union. We Germans exported very well before the EURO experiment started. You think it is because of the Euro that we export so much? Nope. It's because of the cheap labour in my country. Unlike our European neighbours we do not have a minimum wage. There are people out there in Germany that work for 1 Euro per hour. Can you top that? I guess slavery is the next hip thing here. I am tired of this shit. More and more Germans are waking up every morning knowing that they will never be able to retire. Actually the whole system here is built around this… There will be a lot of anger when this thing explodes here in Germany. And this anger will be directed towards the German elite.”

And now the multinational corporatists intend to keep those wages low by bringing in more immigrants who will accept lower and lower benefits and wages in order to get the jobs.

needfiatforBBB's picture

you wanted growth and globalization, you got it. 

Officefarmer's picture

Too fucking right. I see these muslims walking around like they own the fucking place while I pay 40+% taxes just to fund these fuckers.

There are so many cases of violence and sexual harassment of my ethnic German friends. If this shit went down in their country multiculturalism would stop overnight. Over here another attack on an ethnic German means more funds for "integration".

Fuck Merkel and fuck all those green/liberal/socialist politicans who waste taxpayer money to "integrate" unemployable, non-German speaking, uneducated third-worlders.

Thank you Zerohedge for providing a retreat for the clear-minded. Fuck your political correctness.

falak pema's picture

I see these muslims walking around like they own the fucking place ...

That says it all. First of all they are human beings who work and produce and even make babies. Secondly, religion and race are now NOT criteria for defining nationality. I know its contrary to traditional eurocentric culture. But WW2 changed that; remember what triggered that?

So now Europe reaps what it sowed in colonial plays. And, the demographics of Germany make immigration necessary as the home grown women don't want to make babies.

Being politically correct is like movin with the times. Charlemagne taught that to the Saxons, back in 789. He opened up Germany. And in those days, Francs and Saxons were like Europeans and non EUropeans today!

Funny how perception of race n culture changes.

And...once a child is born it doesn't know the colour of its skin, so take hope and don't bake your rancid cake of old. 

Today, culture, education and open systems feed hope and adventure for the human race. Move and hip-hop and you'll feel betta. Those moslems will have their butts kicked by their own women like the christians of old.

The beat goes on.

You have ONE ZH member here who won't buy your cake. 

Five8Charlie's picture

"Move and hip-hop and you'll feel betta."


That is not a solution. Time to grow up.

Joe A's picture

Germany being the powerhouse that keeps Europe going, blows against the EU dreams of creating polycentricity on the continent. The latter can only be acheived when national sovereignty is losened and regions in Europe strengthened. Often in Europe, communities in regions in Europe have more in common with their neighbouring counterparts than with their central government.

proLiberty's picture

To the extent that these immigrants are Muslim, and have a much higher birth rate than native Germans, because Muslims don't want to assimilate but instead live in enclaves, Germany is committing cultural suicide, something that goes against the German character.  The German public reaction will be strong when they wake up to this situation.  It will not be pretty.

Acet's picture

This fixation with Nation-level GDP growth is ridiculous, deceitfull and a statist scam.

What matters is per-capita growth, not total growth.

Adding warm bodies to the work pool might increase total growth, but if they're less productive, involved in low value activities or displace other people that end-up in unemployment what you end up having is a per-capita reduction in wealth (more people but less productivity per-person), even if politicians and central bankers are harping praises to themselves for national growth all the while people are actually getting poorer.

This is why immigration policies that are pretty much open-door for uneducated, unsophisticated, unskilled workers from poor areas in poor countries (who often later bring their wifes over who are much less likelly to be employed than local women) are a big negative for a country and why quality of life in places like the UK and the US has in fact gone down, all the while the welfare roles balooned with all the local unskilled workers that got pushed out of the workforce.

Eastwood's picture

Arbeit macht spass. Die Deutschen wissen sie das. Was meinst du?

Meta Fundamentalist's picture

Bei der letzten Bundestagswahl waren über 50% der Wahlberechtigten über 60,

bei der nächsten Wahl sind über 50% über 64, wir Deutsche werden noch 10-20 Jahre von  dem Denken der 70ger Jahre des letzten Jahrhundert regiert.

Keine Hoffnung.

Translation: Germany and its people are f*.