Symbolically, the Chamber of Commerce’s back-to-school economic forum devoted to the consequences of inaction in the face of energy, technological and demographic transitions began with the latter subject--that is, demographics. Maxime Sbaihi, an economist specialising in ageing populations, “is one of the few economists to warn of the consequences of an ageing population and a falling birth rate, and is doing so at a time when Europe seems genuinely aware of the problem,” said the head of the chamber, 
Europe declines
For Sbaihi, demography is just as powerful a trend as geopolitics or climate, but it is often ignored or scorned. This is a mistake. “We need to look at demographics through the whites of our eyes and put it on the same level as the other megatrends.” The megatrend? “The world’s population will decline over the course of this century, which is an unprecedented phenomenon. This decline is due to a voluntary reduction in fertility rates, which is an absolute revolution. And it will affect every continent.”
Top of the list is Europe, “the most ageing continent, with a median age of around 45. Maternity wards are emptying and retirement homes are filling up. The balance of births has been negative since 2012, and since then the under-20s have been in the minority compared with the over-60s. An unprecedented fact.” The east and south of the continent are at the epicentre of demographic decline. “Certain countries such as Italy, Poland, Romania, Bulgaria and Ukraine could lose 40% or even half their population. This risks fragmenting Europe.”
The Luxembourg paradox
“In the European context, Luxembourg, with a low fertility rate of 1.4--in line with the low European average--stands out for its double positive balance: natural and migratory,” Sbaihi pointed out. “It is one of the few EU countries in this situation. Its median age is younger (39-40) than the European average (45), which means that it is ageing more slowly than its neighbours. However, Luxembourg faces the highest demographic bill of all European countries (11 GDP points) due to ageing. This burden is linked to an effective retirement age that is among the earliest in Europe.”
"Luxembourg will have to finance this cost of ageing at a time when public debt levels are already high, and remilitarisation and the climate transition also need to be financed,” he continued. Luxembourg also needs to prepare for increased competition in Europe to attract skilled immigrants. “Countries like Luxembourg, which are dependent on immigration, will have to play hardball against countries like France and Germany, which are stepping up their own migration strategies.” How should we respond?
Low fertility and gerontonomy
Faced with this situation, Sbaihi sees three possible remedies: the reproductive route, i.e. boosting births; the immigration route, “a pragmatic patch” that does not solve the fertility issue in the long term, as immigrant fertility rates tend to align with those of local populations; and the robotisation route, “which, while offering economic potential, raises societal questions about replacing overly human needs in care services, for example.”
These three remedies, in the economist’s view, need to be blended according to local circumstances. In his view, it is urgent to avoid a double trap. The first is low fertility. In other words, “fewer and fewer children produce fewer and fewer future parents, who in turn produce fewer and fewer children, resulting in a younger and younger population. What’s more, fewer children engender a new social norm where behaviour adjusts by mimicry.”
Then gerontonomy. In other words, a system in which “political decisions favour an ageing population because of its electoral weight, to the detriment of young people who are faced with an increasingly heavy burden of intergenerational solidarity, with the added bonus of living standards that will increase much less. In the 1970s, you could double your standard of living by working for 15 years, and so you had children without asking too many questions because you knew that the economy was booming. Today, it takes 80 years of work and active life to double your standard of living.”
For Sbaihi, “it is urgent to reinvest in young people.” Is this an audible message in a context where the issue polarising political life is pension funding?
This article was originally published in French.
