Can a graying Europe still support itself?

Jesusa Segade, the superintendent of a smart Paris apartment block, was born 53 years ago in Codeso, a village in northwestern Spain, one of 14 brothers and sisters.

Like seven of her siblings and hundreds of thousands of other Spaniards, Mrs. Segade sought a more prosperous life abroad. She and her husband limited themselves to three children, "because we wanted to give them an education," she says. Even three kids seem an extravagance; none of her husband's relatives have more than two, and "in Codeso, all the young women today stop at one."

Segade's family story is a tale of success. But its pattern of fewer and fewer children, one that recurs all over Europe, carries within it the seeds of an alarming crisis, and possibly of a dreadful failure for the Continent, demographers warn.

Europe's population is about to start shrinking, and aging, dramatically. Unless the trend toward small families is reversed or immigration increases sharply, its citizens face the prospect of not only waiting longer to retire, but receiving smaller pensions when they do. Even so, as fewer workers support ever more retirees, government budgets will be threatened, industrial output will fall, and the very nature of European society will be at stake.

"When you have a lot of old people rather than a lot of young people, society's psychology changes," says Joseph Grinblat, a demographer with the United Nations Population Division. "This type of change is gradual, but in the long run it is going to be tremendous."

Mr. Grinblat is one of the authors of a United Nations study, to be published in March, drawing attention to the effects of the striking fall in European birth rates. By the middle of the 21st century, the study predicts, Italy's population will have dropped from today's 57 million to 41 million. Its labor force will have been halved, while the number of pensioners will have nearly doubled. Other European nations will be in roughly similar situations: Today there are about five people of working age for every retiree - by 2050 there will be only two. The only way to maintain the current ratio, says the UN report, would be to let 159 million immigrants into Europe - 40 percent of the current population over the next 25 years.

"That is clearly not possible" for political and social reasons, Grinblat points out. "There are only three things you can do: increase the retirement age, increase social security contributions, or reduce pensions. Those are all painful, so it is very hard for politicians to act unless there is an urgent need." Some demographers propose a fourth option - boosting the birth rate with government policies designed to encourage larger families. "We should revalue parents, see them as creators of wealth and give them financial recognition," argues Jean-Didier Lecaillon, an economist at the Sorbonne university in Paris.

Government spending in France, complains Jean-Claude Chesnais, director of research at the French National Institute for Demographic Studies, "is upside down." While $166 billion are spent on pensions each year, only a tenth of that goes to family-oriented programs, he says. But it is far from clear that government spending can really reverse a falling birth rate. Sweden tried offering generous benefits to encourage childbearing, but its success seems to have been short-lived.

As women in developed countries enjoy new prosperity and freedom to work, they appear to be wreaking profound changes on society. Politicians, however, are showing few signs of facing up to the implications of smaller, older populations.

Nowhere in Europe does a government encourage immigration. Most, on the contrary, strictly limit foreigners, fearing the social tensions - and political extremism - that poorly integrated immigrant communities can generate.

But without immigrants, a shrinking labor force will be paying fewer taxes and social security contributions. Every field of government expenditure, from health care to housing, from defense to education, will suffer. Markets will undergo radical transformations too, as a lopsided consumer base develops different tastes. There will be "a smaller market for toys," while "sales of cosmetics, skin care, hair coloring, and other youth-inducing products will thrive," predicts a report by New York-based PriceWaterhouseCoopers, the world's largest accounting, auditing, and consulting firm.

Since the retirement age will have to increase, economists say, (it is already up to 67 in Iceland and Denmark), businesses will have to find ways to employ older people. And since there will be fewer young people graduating from universities, "one main problem would be where industry would go," worries Rainer Munz, a demographer at Humboldt University in Berlin. "We are not yet prepared for a situation where 30- to 50-year-olds need to get fresh knowledge, we lack the institutions to meet this need."

Some observers see deeper significance in the statistics that tell the story of Europe's declining population. "The numbers are like a thermometer," suggests Professor Lecaillon. "You have to wonder what it means, this rejection of life in our modern civilization."

For Professor Chesnais, the ebb "is inevitable: Europe went through a phase of arrogant expansion around the world, now we are in a phase of decline. I think we can limit the extent of the fall, but we cannot stop it."

(c) Copyright 2000. The Christian Science Publishing Society