EUROPE'S FORGOTTEN YOUTH
August 11, 2005
Tomorrow, when the world celebrates International Youth Day, youngsters in Europe should receive special attention. Their continent will soon experience a demographic crisis not seen since the Black Death decimated a large chunk of the population in the Middle Ages, says Ann Mettler, executive director of the Lisbon Council, a Brussels-based think tank.
If current trends continue, a rapidly aging and rapidly declining population will put unprecedented stress on public finances and social security systems:
- In less than 25 years, one Italian worker will have to carry the burden of supporting one retiree.
- By 2050, Germany will have as many citizens over the age of 80 as youngsters under the age of 20.
- Already today, public coffers are squeaking under the burden of rising health care and pension costs.
According to Standard and Poor's, the credit ratings agency:
- Including the rising pension and health-care costs of aging populations, the ratio of debt to gross domestic product in France and Germany will soon exceed 200 percent and government bonds will be downgraded to junk status by 2030.
- Already today, the state bestows upon every German inhabitant more than 17,000 euros of government debt -- a total of 1,430 billion euros nationwide.
- Germany spends a fifth of tax revenues paying down that debt; it's only a matter of time until this fiscal burden will ignite a dangerous generational conflict.
With tax burdens already at astronomical levels, Europe's brain drain will accelerate as a highly mobile intellectual elite will simply escape the vicious cycle of sclerotic labor markets, low growth and an irreversible deficit trap, says Mettler.
Source: Ann Mettler, "Europe's Forgotten Youth," Wall Street Journal, August 11, 2005.
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