Europe is repeating Japan's mistakes? This is not alarmist, but the whole of Europe is experiencing a similar population loss. Some people say that this is the inevitability of economic development, but if you look at the road Japan has taken, you will know that things are not that simple.
The fertility rate in Europe has been so low that it is alarming, with an EU average of only 1.46 children per woman in her lifetime, which should be at least 2.1 in order to keep the population stable.
On the other hand, Spain and Italy have an average of only 1.2 children per woman, while Germany has a little better than 1.5 and France has a good welfare policy of 1.7 but it is not enough.
This set of numbers reminds people of Japan in the 1980s, the Japanese fertility rate fell to 1.57, when nobody thought it was a big problem, everyone was immersed in economic prosperity, Tokyo house prices tripled for three years, young people were busy in the big cities.
No one thought that this was the beginning of a population collapse, with the total population of Japan now at 1.2 billion, which, according to the government’s forecast, could be only 75 million by 2100, a decrease of 40 percent over a hundred years.
The trouble faced by young Europeans and Japan at the time was too similar, with housing prices in Berlin rising by 70 per cent in the decade, London and Lisbon being more exaggerated, and the latter even surged by more than 120 per cent.
The young people in the big cities to get more than 40% of the income to rent, want to buy a house is more heavenly, independent apartment turned into a rental house, bedroom separated into a small compartment, under such a state of life, having children became a luxury.
A survey by the European Parenthood Agency found that from birth to college, a child costs parents more than 200,000 euros, and in Germany, one-third of women aged 35 to 44 who do not have children, said it was for economic reasons.
Even more extreme is the situation in Italy, where 70% of young people still live with their parents, not wanting to be independent, but are really unable to afford rent and daily expenses.
Changes in ideas are also fueling the flames. Nowadays, young people in Europe are becoming more and more indifferent to marriage, and feel that there is no need to rely on marriage to prove their feelings. Polls show that nearly 40% of young people are worried about climate change and think it is irresponsible to have children now.
The decrease in long-term partnerships affects more than simply not having children, directly cutting off the possibility of fertility.
The ageing chain reaction.
Japan has already tasted the bitter fruits of the aging population, and in the 1980s, there were seven working-age population supports behind each retired elderly.
Now this number has become two, which means that fewer people have to bear the burden of paying taxes, providing for the elderly and maintaining the operation of society. Europe is rapidly approaching this critical point.
Pension spending in Germany and France has surpassed the government’s budget by 20 percent, hospitals and nursing homes have a shortage of people, and vacancies in France and Germany have increased by more than 50 percent since 2010.
On the one hand, the number of elderly people in need of care is increasing, and on the other hand, the number of young people willing to do care work is increasing, and this contradiction will only become sharper.
The decline of rural areas is the most intuitive. Nearly one-third of the houses in rural Italy are empty, and the maternity wards in Portugal are closed one by one. It's not that there is no money to operate, but that there are not so many pregnant women.
Some villages in Eastern Europe are even worse. All the young people have gone, leaving only the old people to guard the empty villages. Nature is slowly devouring houses and roads.
Cities look good, but in fact they are changing quietly, with 80% of Europe’s GDP coming from cities, jobs and opportunities concentrated here, young people crushing their heads into big cities, and the countryside further emptying.
This imbalance is worse than in Japan at the time, with Japan completing urban and rural infrastructure at least at the peak of the economy, and many parts of Europe still do not have access.
Tax pressure has become an invisible killer, and to pay pensions, each EU citizen pays 5,000 euros a year to retirees.
Young people are faced with high taxes, it is harder to save money to buy a house and have children, which forms a vicious cycle: economic pressure is not going to dare to have children, children have less future labor, tax pressure is greater, and young people are not going to dare to live.
Japan has used 30 years to prove how stubborn this cycle is, and from the “lost decade” to the present day, no matter how stimulating the economy, encouraging fertility, the decline in the population has not reversed.
In 2024, Japan's new adult population will be only 1.06 million, a record low and 60,000 less than last year. This figure may also be faced by Europe in ten years.
Limitations of the policy toolbox
The European countries did not fail to take measures, Hungary to give money to families with children, the more subsidies, the more fertility rate will be 1.5, the big use of 1 euro for the sale of houses to attract the population, the little effect.
Nearly all European countries have put the boost on immigration, and 2.5 million net immigrants in the EU in 2022 appear to be few, but experts say it should at least double the population to stabilize.
Immigrants can temporarily fill the labor gap, and the German nursing industry and French agriculture cannot be separated from the immigrant labor force.
But this has brought many new problems at all. Italy's far-right political parties came to power with anti-immigration slogans, Sweden's immigration problem caused street riots, and there was also dissatisfaction with the open border behind Brexit.
Adjustment of the pension system is even more difficult, France wants to move the retirement age from 62 to 64 years, resulting in a nationwide strike, gas stations shut down, and schools closed.
It's not that everyone doesn't know that the pension pool is almost empty, but no one wants to sacrifice their own interests. Japan also experienced this deadlock in those days, and in the end, it can only fill the gap by constantly increasing the consumption tax.
The effects of policies that encourage fertility are limited, the childcare coverage rate in France is high, there are monthly childcare subsidies, and the fertility rate is high in Europe, but also dropped from the previous 2.0 to 1.7.
The young people's claim is very real: not a little money can solve the problem, no house, work is unstable, can not support, these real problems are not solved, nobody dares to have more children.
The European Central Bank has warned that a decline in population could bring economic growth to less than 1 percent in the middle of this century, and that Europe’s economy is too dependent on labor, and that labour accounts for half of the total economic output.
Robots are more advanced, and cannot completely replace nurses and teachers in these professions, let alone drive the economy to consume like young people do.
Unfinished transformation challenges
The decline in population is not necessarily a bad thing, the housing crisis in Europe, the urban congestion problem, will theoretically ease with the decline in population, Tokyo's current house prices are lower than thirty years ago, and the pressure on young people to buy houses is much less.
But this “benefit” was exchanged for economic stagnation, with the growth rate of GDP long-term sliding around 1 percent in Japan’s lost thirty years.
The European welfare system is unable to withstand the impact of the decline in population, and the current pension system relies on the retirement of employees.
If the working-age population is halved, or pensions are drastically reduced, or tax rates are reduced to a level that is unbearable, both options will trigger social turmoil.
Innovation vitality will also be affected, young people are not only the workforce, but also the main force of innovation, Japan's breakthroughs in the field of science and technology in these years are less and less, and are directly related to the aging of the population.
If Europe repeats the same mistakes, those proud technology companies and luxury brands may lose their competitiveness.
Japan's lessons deserve attention. They have proved for 30 years that there is no quick-acting medicine for the population crisis, and the policy of encouraging childbirth can only be effective for a generation. The immigration policy needs social consensus, and the economic transformation is even more difficult.
The choices Europe now faces are not all easy, but delays will only make the problem worse.
Whether Europe will be the next Japan is not yet determined, but it is clear that the impact of the demographic crisis is far deeper than any economic crisis, it is not the numbers in the newspapers, but the reality that is happening and will change everyone’s lives.