Demographic Worries: German Birthrate Rising -- But for How Long?

By David Gordon Smith in Berlin

Recent changes to family policy have led to more babies in Germany, with the birth rate rising for two consecutive years. But the current economic crisis could spell an end to the trend.

Call her Saint Ursula. That, after all, is how new parents see the German family minister, Ursula von der Leyen. In recent years, the photogenic mother of seven has pushed through a number of measures making child-bearing less of a financial burden, such as generous income support for both men and women taking parental leave.

The policies appear to be working. Germany's birth rate, which had been in decline for years, rose slightly in both 2007 and, as recently released statistics suggest, 2008. German officials, though, have so far kept the champagne firmly corked. Despite the positive trend, worries are growing that the current economic crisis -- the worst in Germany's post-war history -- could threaten the fragile turnaround.

Will the financial crisis threaten the tentative upswing in Germany's birth rate?
DPA

Will the financial crisis threaten the tentative upswing in Germany's birth rate?

Presenting a report on the state of the German family in Berlin on Monday, von der Leyen warned against cutting back on programs to support parents and said that the country's family strategy will affect how Germany comes out of the current downturn.

"A sustainable family policy strengthens the economic growth of our country," she writes in the foreword to the report. "More, not fewer, measures to support families are required."

Making it easier for women to combine children and career could benefit the government to the tune of €70 billion ($88 billion) a year through savings in social benefits and higher tax revenues, the report claims. Measures to support the family could also create between 117,000 and 417,000 new jobs, due to increased demand for household services, such as cleaning.

More Births

The increases seen in the last two years have been modest. According to the report, the number of children born in the first nine months of 2008 rose by 3,400 compared to 2007 to around 518,000. The Federal Statistical Office estimates that the total number of births in 2008 was 690,000, compared to 684,862 in 2007 -- an increase which seems especially significant given that the number of women in the child-bearing age range of 15 to 45 declined to have children in 2008. The results are "not a reason for euphoria," von der Leyen said Monday, but they are a "reason for confidence."

Von der Leyen pointed to the increase in the fertility rate in Germany, which rose to 1.37 children per woman in 2007 from 1.33 in 2004. However that is still a long way from the so-called "replacement rate" of 2.1 children per woman that demographers say is necessary to maintain population levels. Even if one factors in a high level of immigration -- itself a political hot potato in Germany -- a birth rate of around 1.7 children per women is needed to stop the population in an industrialized country from shrinking.

Von der Leyen sees the birth-rate up-tick as confirmation that the family policies she has pursued since 2005 are having the desired effect. One of the cornerstones of her program is benefit payments for parents known as Elterngeld (literally "parents money"). Under the new benefit, introduced in January 2007, the state pays the parent who stays home with the child 67 percent of that parent's current net income, up to a maximum of €1,800 ($2,810) a month for up to 12 months. If both parents elect to take time off, the total number of months the benefit is paid, split between both parents, goes up to 14 -- a measure intended to encourage fathers to take time off work. And it seems to be working -- the latest figures suggest that some 15 percent of fathers are taking at least two months off work under the scheme.

The reason for the generous measures is clear: The low birth rate will have serious consequences for Germany if it is not corrected. In its most recent projections, published in 2006, the Federal Statistical Office warned that Germany's population could drop from around 82 million today to as low as 69 million by 2050 "if the demographic situation continues to develop along current lines."

Steffen Kröhnert, a demographer at the Berlin Institute for Population and Development, warned against over-interpreting the new figures. "The rise in the number of births is only a few thousand and could just be a fluctuation," he told SPIEGEL ONLINE, adding that it was important to wait until final figures for the so-called total fertility rate -- which takes the age structure of the population into account -- were produced for 2008. However he said that "one can assume" the rise in the birth rate in 2007 was related to the government's new family policies.

Fear of Unemployment

However some observers are warning that the financial crisis will reverse the current modest upswing in the birth rate, arguing that people will wait to have children until the recession is over. Kröhnert explains that economic downturns in Germany tend to trigger two opposing effects: Lower-income groups generally have more children during recessions in order to achieve financial security by benefiting from state support, while the middle classes tend to put off having kids out of fear of losing their jobs or downward mobility.

"For Germany as a whole, the effect is likely to be a decline in the birth rate in the short term," Kröhnert says. "People are reading horror stories about the economic crisis in the newspapers and are in a state of shock. Many will decide to wait to have children."

However the influence of the downturn in the medium term is likely to be small, he says. "The fertility rate has stayed relatively constant in Germany over the last 30 years even though unemployment has gone up over that period," Kröhnert points out.

In the Middle

In European terms, Germany is in the middle when it comes to birth rates. Most of the European Union's "new" member states in Eastern Europe have even lower birth rates, while several Western European countries, such as France, the UK, the Benelux countries and Scandinavian states, have relatively high birth rates (although all of them are below the replacement rate of 2.1 children per women). While the low birth rates in Eastern Europe are a temporary phenomenon caused by what Kröhnert calls the "shock" of the rapid transformation of their economic systems after the collapse of communism, the western European birth rates are a long-term phenomenon thatis at least partly due to good family strategies.

France leads the rest of Europe with a birth rate of around 1.9 children per woman. "The French system allows women to combine children with a career through good child care and generous tax breaks that offset the cost of having children," Kröhnert explains, saying that Germany could benefit by adopting more elements of the French model, such as comprehensive child care provisions. "At the moment Germany only guarantees state child care for children from the age of three, and then it is often only half-day care. But child care needs to be available for children as young as one, so that women can go back to work full time."

The amount of money a country spends on family benefits -- in the form of direct cash transfers to families, public spending on services such as child care and tax breaks -- also seems to play a role. The Family Ministry report reveals that Germany is also in the middle of the European range when it comes to expenditure on family support. It spends around 3 percent of GDP on family benefits, compared to France which spends around 3.8 percent of GDP, according to 2005 figures from the OECD quoted in the report. The UK, Denmark, Sweden and Belgium also spend a higher proportion of GDP on family benefits than Germany -- and all have higher birth rates. However some countries manage to do more with less: The Netherlands has a birth rate of 1.66 despite only spending 2.3 percent of GDP on child-friendly measures.

Will Germany ever reach the magical replacement rate of 2.1 children per woman? "Probably not," says Kröhnert, explaining that when a country has had a low birth rate for as long as Germany has, it "changes the meaning of children" for that society. "If we manage to achieve a rate of 1.7 or 1.8, then that will already be a big success. But that needs at least another 15 years."

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