Identifier
Created
Classification
Origin
06FRANKFURT4327
2006-06-23 14:51:00
UNCLASSIFIED
Consulate Frankfurt
Cable title:  

Two German States Tackle Demographic Challenges

Tags:  SOCI ECON ELAB PGOV GM 
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UNCLAS SECTION 01 OF 02 FRANKFURT 004327 

SIPDIS

SIPDIS
DEPT OF LABOR FOR ILAB - BILL BRUMFIELD

E.O. 12958: N/A
TAGS: SOCI ECON ELAB PGOV GM
SUBJECT: Two German States Tackle Demographic Challenges


UNCLAS SECTION 01 OF 02 FRANKFURT 004327

SIPDIS

SIPDIS
DEPT OF LABOR FOR ILAB - BILL BRUMFIELD

E.O. 12958: N/A
TAGS: SOCI ECON ELAB PGOV GM
SUBJECT: Two German States Tackle Demographic Challenges



1. SUMMARY: The states of Hesse and Saarland, like much of Germany,
face tectonic shifts as their populations stagnate and age. Whereas
Saarland is home to Western Germany's most rapidly shrinking
population, Hesse's uneven growth is causing public policy
challenges. Their differing approaches to this issue show there is
no "one size fits all" solution to a process which will profoundly
shape the region's economy, society, and environment in coming
decades. END SUMMARY.

A Tale of Two States
--------------


2. This report contrasts the approach of Saarland and Hesse in
managing demographic change. While Saarland has western Germany's
most rapidly shrinking population, Hesse faces serious disparities
between the service-based Rhine-Main region around Frankfurt (which
continues to grow) and stagnant rural/industrial areas. Both states
have started to counter the problems of a shrinking and aging
population. In Saarland, the state has pioneered more efficient use
of urban space and the revitalization of aging towns in rural areas.
The Hesse state government, in contrast, is searching for a more
comprehensive approach led by an all-party commission of the state
parliament (established in 2003, the commission released its first
findings in 2005 and will make recommendations later this year).


3. NOTE: According to the Federal Statistical Office, Germany's
birth rate fell last year to its lowest level since 1991.
Approximately 676,000 babies were born, a decline of 4.2 percent
from 2004. At fewer than 8.5 births per 1,000 inhabitants, Germany
now has the lowest birth rate in Europe. By comparison, births per
1,000 inhabitants stand at 11.9 in the Netherlands, 12.0 in the UK,
12.7 in France, and 15.2 in Ireland. Immigrant women have a
substantially higher fertility rate (1.8 versus 1.3 for Germany as a
whole),but still below the 2.1 needed to stabilize population. END
NOTE.

Saarland: Fighting Rear-Guard Battles
--------------


4. In Saarland, a state of slightly more than one million
inhabitants, only 7660 babies were born in 2004, while 12015 people

died; the state's remaining population mix is aging rapidly.
According to State Environment Ministry spokesman Martin Hohnhorst,
the state also continues to lose record numbers of residents to
other parts of Germany (a development clearly impacting Saarland's
population, but that also has other economic, social, and
non-demographic implications beyond the scope of this report).
Interestingly, the only region in Saarland experiencing a rise in
population is along the French border. Roman Glauben of the
Saarbruecken State Chancellery (who is working on demographic change
issues) opined to us that "France's successful population policy is
shedding a few rays of light on our border state." Border-region
growth may also stem from Saarland's lower property prices (versus
France) and the strong job market in nearby Luxembourg.


5. In response to de-population in rust-belt and rural areas,
Saarland has created the MELANIE program to revitalize towns, "right
size" shrinking areas, and streamline public services to accommodate
a smaller and more elderly populace. It is the first program of its
kind in Germany to set mandatory caps on new property development in
towns whose populations are expected to decrease. As Hohnhorst
explains it, the state government is giving priority to developing
existing infrastructure (particularly in town centers) over using
new land for development. This means a de facto growth ban for some
areas, sparking local resistance. Other measures, such as the
closure and merger of elementary schools, have also met broad local
protest. Saarland's CDU/Christian Democratic government does not
have all-party support for its policies; Saarland parliamentarian
Peter Gillo (SPD/Social Democrats) told us that closing schools and
child care facilities has the opposite effect on the problem. Like
many, he argues that low birthrates reflect the burden on women who
must choose between career and children, advocating more subsidized
daycare facilities so that working mothers can return to the
workforce.

Hesse: Thinking Long-Term
--------------


6. In Hesse, policy-makers are pursuing a more comprehensive (and
slower) approach to demographic change. A Hesse parliament report
(one of the first of its kind) points out that the state will have
"fewer, older, and more ethnically diverse" residents as Hessians
live longer (and due to immigration). The parliament's report warns
that demographic change will also seriously impact state finances.
One example is the need to rethink utilities and other services in
areas with a shrinking population. Another are increased pension
payments and less income tax revenue from retired civil servants
(states employ the bulk of public workers in Germany). In May,
Hesse Minister-President Roland Koch (CDU) said publicly that he
expects the retirement age to rise to 70 in the coming years in
reaction to this trend. Koch has also frequently spoken of the need

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to work longer hours in view of the shrinking working-age
population.


7. Stark regional disparities make a comprehensive political
strategy difficult in the state. While Frankfurt is among Germany's
fastest growing cities, areas in northeast Hesse could lose a fifth
of their population by 2020 (projections indicate Hesse as a whole
will lose 8.9% of its inhabitants by 2050). Frankfurt officials are
optimistic that Frankfurt will remain one of Germany's few cities
with stable or even slightly growing populations; a study by the
University of Cologne suggests that Frankfurt's population might
increase by 10% through 2040. Hesse's minister in charge of the
state chancellery, Stefan Gruettner (CDU),told us that the Hesse
state government has selected three counties and state capital
Wiesbaden as target regions to increase the birthrate from 1.3 to
"at least 1.8." With a paltry budget of 40,000 Euros, though, the
political opposition calls the program "a bad joke."


8. Consulate representatives attended a recent discussion entitled,
"Demographic Development -- A Challenge for the Economy in the 21st
Century," hosted by the Frankfurt Chamber of Commerce and Industry
(IHK) and including Hesse Minister-President Roland Koch. Frankfurt
IHK President Joachim von Harbou called it unacceptable that so many
highly-educated women in Germany choose not to have children,
arguing that unfavorable policies and social mores compel women who
want to advance in their careers to forego starting families. In
his remarks, Minister-President Koch said that solutions most look
beyond Germany's low birth rate and address underlying social issues
and the economic impact of an aging population.

COMMENT
--------------


9. Demographic change has arrived as a social and political reality.
While all four state governments in our district have commissions
working on demographic problems, their approaches differ
significantly in practice. In Saarland, the Environment Ministry
has the lead and frames the issue in terms of managing the impact of
aging and depopulation. Saarland's demographic problems are visible
and dramatic, with the prospect of undermining the state's financial
and political future (over the years, some outside the state have
proposed merging Saarland into Rheinland-Pfalz). In Hesse, the
state parliament is driving a more comprehensive but slower approach
-- with Frankfurt and the Rhine-Main region growing, the demographic
and structural problems of North Hesse appear less pressing.
Throughout the region, demographic problems are vexing because they
encompass so many issues -- childcare, education, retirement age,
land use, gender equality, the job market, and immigration -- so
that concerted action will take not just recognizing the problem,
but huge injections of political capital. END COMMENT.


10. This cable was coordinated with Embassy Berlin.

AKER