BRUSSELS – What will it mean to be European 25 years from now? Unlike the United States, whose history as a “melting pot has given Americans a truly multi-ethnic character, native Europeans are becoming an endangered species. Europe badly needs immigrants, yet is not culturally prepared to welcome them. The coming decades will therefore see substantially greater social change in Europe than elsewhere, although the nature of that change is far from clear.
At first glance, much of Europe’s current debate is about political and economic integration – about how far its nation states should go in pooling resources and sovereign powers in the European Union. But beneath the surface, the real tensions are about immigration and fears that national “cultures are threatened by the influx of non-natives, both white and non-white.
Immigration in Europe today is running at a higher rate than in the US, with almost two million people arriving officially every year, together with an unknown number of illegal immigrants. The most conservative estimate, by Eurostat, the EU’s statistical agency, puts the total number of newcomers to Europe between now and 2050 at 40 million. Inevitably, that sort of influx will ensure that Europe’s already vociferous right-wing extremist politicians win even greater support.
The specter of rising racial tensions is worrying enough. But it is just one aspect of Europe’s urgent need to import people from Africa and Asia.
Europeans will also see the dismantling of their welfare states and social security systems; the cherished “European model of pensions, healthcare, and unemployment benefits risks being replaced by the despised and widely feared “American model. This is not, needless to say, because Europeans crave the rigors of America’s less cosseted social conditions, but because it’s the only way that European governments will be able to stay afloat financially.
The root cause of all these developments is Europe’s population shrinkage.
The “demographic time bomb that economic analysts have been discussing for a decade or more is now exploding. The result is widespread labor shortages in many EU countries and an alarming reduction in the proportion of working-age people whose taxes pay the pensions and medical costs of those who have retired. Many countries have themselves aggravated the problem, either by encouraging early retirement or – as with France – through job-creation nostrums like the 35-hour working week.
About one-third of male workers in Europe quit their jobs by their early fifties. That, together with two generations in which birth rates across Europe have dropped well below the two-children-per-couple replacement rate, and what the European Commission describes as “spectacular increases in longevity, means that by 2050, instead of four workers supporting each retiree, there will be only two.
In short, European policymakers are in an impossible position. The political mindset in most EU countries remains firmly focused on unemployment as the chief ill to be cured, whereas the real threat is the worsening shortage of people to fill job vacancies. The European Commission has warned that this will put a lower ceiling on GDP growth rates. According to Klaus Regling, the Commission’s Director-General for Economic and Financial Affairs, Europe’s working population has so shrunk that from 2010 onward maximum annual economic growth in western Europe will drop to 1.8 percent, from an average of 2.3 percent in recent years, and to just 1.3 percent a year from 2030.
Economic stagnation on this scale has alarming implications, because it means less and less tax revenues to fund all the reform projects and infrastructural investments Europe badly needs to regain its productivity and high-tech competitive edge. And if things look bad for Western Europe, they’re worse for the EU’s formerly communist newcomers, whose demographic trends imply that average potential growth will nosedive from today’s healthy 4.3 percent per year to just 0.9 percent after 2030.
Much of Europe already suffers from under-performing labor markets in which job seekers and would-be employers either can’t or won’t find one another. Stubbornly high youth unemployment, along with Europe’s dwindling numbers of school-leavers, is already canceling out the positive effects of immigration. Here in Brussels, where the largely North African immigrant population comprises a quarter of the city’s inhabitants, hotels and restaurants recently resorted to an emergency on-line recruitment service to counter their worsening staff shortages. The manpower crisis is even more acute in sectors that demand greater skills and qualifications.
Like the US, Europe’s manpower-related difficulties are accentuated by the rise of India and China. How Europeans, and to a lesser extent Americans, will maintain their high standards of living is anyone’s guess. But Europe’s problem is greater, for its politicians are at a loss to cope with the high-voltage issues of race, religion, and ethnicity in societies that seem determined to remain anchored in the past.
Giles Merritt is Secretary-General of the Brussels-based think tank Friends of Europe and Editor of the policy journal Europe’s World. This article is published by Daily News Egypt in collaboration with Project Syndicate/Europe’s World, www.project-syndicate.org.