Europe's Low Fertility Rates and the Welfare State
Updated: Jul 25, 2020
Europe is in a demographic winter. For many years, our political class willingly ignored this issue, as it knew it could import vast numbers of foreigners to fill in the gap. While that alone causes various issues, from the drop of the average salary to potential ruptures of the social fabric, topics which are worthy of their own articles, today I will be focusing on the current situation regarding COVID-19 and why I believe our societal model makes for a completely unsustainable scenario in the long run.
Let’s start with the numbers. If one was to take all of the countries that are part of the European Union and calculate the average fertility rate, the first obvious conclusion one can take is that since 1976, on average, EU countries have been below the necessary 2.1 births per woman necessary to replace their previous generations. The number of people living in Europe, has increased over the past 50 years, having a population of around 440 million people in 1970 and just over 510 million in 2019. With fertility rates beneath the replacement levels, it is only through mass immigration and an increase in life expectancy (that went from 70 years to 80 in the same time period) that this increase can be justified and put into perspective.
For the lack of a better term, for at the least the past 2 generations, Europeans have generally ignored this issue, claiming it to be a consequence of living in first world countries of modern societies, and have gone about their business as if this was not a source of worry. And while there is certainly a case to be made that the drop in fertility rates is a natural consequence of the existing societal system, there are still aspects of it which are not disassociated from the fertility rate problem; the most important that comes to mind would be the welfare state.
One key tenant of modern European states and their development is the existence of a welfare state, a system in which taxable income is re-distributed in order to ensure that the poorest and neediest in society are helped. While the implementation of this welfare system differs from country to country, due to the various economic asymmetries between European countries, most take pride in having built their social safety nets to make sure nobody falls off of civil society: the furthest any societies have ever gone to protect the least fortunate amongst their own.
The sustainability of these welfare states, however, is in peril. As the current pandemic has already forced some remarkable changes into societies around the world, and restrictions ranging from social distancing to travel have been put in place, our social safety nets took a huge impact trying to make sure both health services did not collapse and our economies did not enter a free fall; the state from which welfare states across Europe will emerge after this pandemic will probably be very negative.
As if that blow was not enough to put things into perspective, if one is to look towards the future and how to improve the welfare state’s sustainability, it does not look like it’ll be a bright one, to say the least. As any welfare state is dependent on tax revenues in order to pay for its social safety net, any economic crisis (especially of the sort we have coming for the next few years) is a detriment to the welfare state in any immediate future.
As far as a long term plan to improve the welfare state goes, we go back to the fertility rates. In theory, a population who manages to reach the required replacement levels and manages to sustain a healthy economic growth will most likely ensure not only the existence of its welfare state but in most cases expand the benefits it provides. With European fertility rates down for over 40 years, as we have seen, immigrants have stepped in to fill in the gap and the free trade and movement of people’s provided a solution in terms of taxable income and transactions that many thought neutralized the fertility rates as a real factor to have in mind as far the sustainability of the welfare state went.
COVID-19, however, might make this an impossibility. We have recently witnessed a breakdown not just in trade, but in travel, as lockdowns and restrictions all over the world have made the frenetic movement of people, goods and services that had become synonymous with our societies suddenly come to a grinding halt. With no vaccine in sight, the new consensus regarding the way we live our lives might very well include a world in which reduced travel gives us no option in terms of realistically being able to save our welfare states. The breakdown in trade and the economic crisis will harm it, the breakdown of movement will put it in jeopardy, and our low fertility rates might be its deathbed.
In summary, fertility rates and the welfare state are just another component of the various aspects of our lifestyle that Europeans, for the lack of a better term, had taken for granted. It is perhaps time to wake up and realize that cherishing a lifestyle must include investing on the aspects that make it work, rather than just reaping the benefits and willfully ignoring our duty to maintain it. If our fertility rates do not improve, we might not have a welfare state in 50 years.