Demographic change threatens to shrink Germany's workforce by 5.1 million by 2050. However, investments in education and better integration of people with health problems into the labor market can increase employment and partially compensate for the impending labor shortage. These are the results of a study carried out by the Austrian Institute of Economic Research (WIFO) on our behalf.
If the current expansion of education, which is determined by the level of education of parents, continues, simulations show that the decline in the workforce in 2050 can be cushioned by around 745,000, or about 15 percent. If further investment were to lead to a broader expansion of education, Germany could gain an additional 60,000 workers in 2050 and a total of about 800,000 more workers. The prerequisite for this educational expansion is that an additional 25 percent of each educational level succeed in advancing to the next higher level.
The only slight increase in the labor force by 2050 can be explained by the fact that young people remain in education for longer and are not available to the labor market during this time. Only when today's young people approach retirement will the education expansion take full effect. The demographically induced decline by 2080 (5.9 million compared with 5.1 million in 2050) would then be around 1.3 million less.
"Demographic change requires more investment in education. People with a higher level of education are less likely to be unemployed. They have better chances of finding attractive employment, receive higher salaries and also work more hours. Investments in education also pay off economically," says Jörg Dräger, member of our Executive Board.