Midnight in Munich
All European Union Countries Face Declining and Aging Populations
Recent snapshots of fertility indicators across Europe look less depressing than they did a decade ago: The fertility rate for the European Union (EU) as a whole has stabilized, and it has increased in a number of member states. Still, the rate remains below the replacement rate of 2.1 children per woman in all 27 EU countries, with 12 having a rate below 1.5 (see the figure below). A rate of 1.5 or lower means, all else equal, that a country’s population will be reduced by half in fewer than seven decades.
Despite Recent Upticks, Fertility Rates Remain Below Replacement Level in All European Union Countries
SOURCE: Eurostat.
NOTE: The earliest available data point for Latvia is 2002, which has been used for 2000.
Eastern, Southern, and German-speaking European countries tend to have the lowest fertility rates. In Germany, the rate has been below 1.4 children per woman since 1990 and is still one of the lowest rates in Europe. Higher rates are found in Western and Northern European countries.
The alarmingly low fertility rates in several EU countries will lead to significantly fewer young people in the labor force a generation from now and will reduce the future population of potential mothers. Over the next four decades, the ratio of the population over age 65 to that of working age is expected to double across the EU. This has serious consequences not only because of the increased pressure on pension and health provisions, with more older people and fewer taxpayers, but also because the larger group of older people will wield greater political power.
The main driver behind the looming increase in dependency ratios is not fertility but the pending retirement of the baby boom generation. Even if fertility rates continue to rebound, it would take decades of levels that are substantially above replacement rate (which is very unlikely) to reverse the aging of Europe’s population.
As the current financial crisis across the Eurozone suggests, European governments will have to introduce pension, health, and labor market reforms to reduce public debt and to ensure the future affordability of their welfare states. To do this, the governments will have to take all three components of population change into account: fertility, mortality, and migration. 
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