The disappearance of Europe

Ignacio de la Torre. Professor. IE Business School

1 November 2016

Rising life expectancies and plummeting birth rates have given a new meaning to the literary term for Europe, “the old continent.” 

Last year more children were born in Nigeria than in the whole of Europe put together, in spite of the fact that the population of Nigeria is 65% smaller than that of Europe.

Although I find this news somewhat disturbing, there is hardly any mention of it in the media.  Two years ago I learnt that in Japan there had been more adult incontinence products sold that year than children’s diapers, and that didn’t get much attention either. 2015 also marked a historic year for developed countries for another reason – for the first time in history the number of workers in active employment is actually smaller than the previous year.

Another piece of news that gives food for thought is that also, for the first time since Eurostat was created, there have been more deaths than births. In 2015 the European Union saw births reach 5.1 million (40,000 fewer babies than the previous year), while there were 5.2 million deaths. There are ten children born for every thousand residents, with the highest rates of births being registered in Ireland, France, UK and Sweden. The lowest rates were seen in Italy, Portugal and Greece. The European regions with the lowest birth rates are all Spanish: Asturias, Galicia and the Canary Islands. Also, 10.3 of every thousand European residents died, with the highest death rates occurring in Bulgaria, Latvia, Lithuania, Hungary y Romania, while the lowest death rates were in Ireland, Cyprus and Luxemburg.

In the field of economics we often consider the differences between flows and stocks.  Thus, Spain’s international debt stock is very high, but the flow is negative (little by little, Spain is repaying its debts).  In terms of demography the alarming thing is not the progressive increase of middle aged people in Europe (stock) but rather the increasingly worrying flow (births vs. deaths).  

Japan is a particularly salient example of this trend. Japan decided not to replace negative birth rates through immigration, given that the Japanese philosophy of life considers that social harmony (the way they understand it) carries more weight than economic growth. Thus, Japan is losing a million workers a year, which explains its mediocre level of economic growth (although in per capita terms its economic data is very positive). The US and Europe maintained a more open attitude to immigration. Hence, although Europe is losing 100,000 inhabitants in terms of native population, in real terms its population went up from 508 to 510 million inhabitants during 2015, due to net immigration.  All in all, the economic crisis and the eruption of new political movements appear to give increasing cause to question this open approach to immigration, as laid out in the heading of this article in the starkest possible terms.

Spain is second to none when it comes to contemplating a dismal future for demographic reasons. During 2015, and according to Spain’s Institute for Statistics, birth rates dropped by 2%, while deaths went up by 6.7%, which gives rise to very serious concerns.   Nine children were born for every 1,000 inhabitants of Spain, compared to 19 in 1976, which might have something to do with the fact that there are increasingly fewer women of childbearing age, and that the average for women to have their first child has risen to 32. Of the 419,000 births last year, almost 75,000 were to non-Spanish mothers (18% of the total), which shows the growing impact of immigration on Spanish birth rates (Spanish mothers give birth on average to 1.28 children in their lifetime, while for foreign residents that number is 1.65, partly because the Spanish women had their first child three years later on average than foreign nationals).  Meanwhile there were over 422,000 deaths in Spain, or 9.1 per 1,000 inhabitant, compared to 8.3 in 1975 (due to a higher average age among the general population).    

If the social consequences of data like these are shocking (can civilizations commit demographic suicide?), the economic consequences are also terrifying. Demographic crises have occurred throughout history (Rome before the barbarian invasions is a good example), but not in societies with high social spending, especially in terms of pensions and health. Europe developed social protection when it had the high economic growth that comes with productivity. Today we are hardly growing at all, and productivity levels are dwindling. Ageing places greater pressure on public spending, which impinges on spending on education and leads to higher levels of public debt, and so on until the weight becomes too much to bear. This in the medium term can generate social and economic crises that are far more acute than those we are seeing at the moment.

And having started with a little noticed and worrying piece of news about our continent, I am going to finish off with a similarly worrying observation about Spain. In 2015, for the first time since statistics first came into being, there were more deaths than births in Spain. And talking about the old continent (a very apt description in this case), in 1900 one out of every four human beings on the planet was a European, while in 2050, that number will be one out of every fourteen.  

Another alarming trend that nobody seems to notice, and which will remain unnoticed … until this most fascinating of continents finally disappears. 

 

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