GERMANY – Deutsche Bank has called for German politicians to get more involved in pensions, saying “political action is required”.
“One thing seems clear: economic momentum in Germany will slow for demographic reasons,” said Deutsche Research senior economist Bernhard Gräf. “The extent of this slowdown will depend on the response to the demographic challenge from politicians and society as a whole.
He says in a new report that “individual measures alone will not be enough to maintain Germany’s growth potential”.
“Rather, a whole bundle of measures is called for. These will derive from choices to be made by society, for instance regarding the birth rate, migration, the retirement age and average annual working time.”
Last week Deutsche published a report from three researchers at the University of Mannheim which argued that demographic ageing was not necessarily a bad thing for German capital markets.
“The dangerous thing about demographic developments is their slowness, which tends to make people believe there is no reason for concern,” Gräf said.
“But time is pressing. We must act now in order to prepare the ground in good time, i.e. at a time when the effects of the demographic trends are not yet (fully) to be felt.”
He argues that if this is not done, Germany will lag its rivals. “The USA and, above all, the young emerging markets, will then be much more interesting locations for investment.”
“Political decision-makers are therefore called upon to create awareness of these problems among the population as well as willingness to adjust to the new environment.
“It must be clear that if the decisions already taken, for instance regarding early retirement and shorter working hours, are not revised, the German economy will lose considerable steam on a long-term horizon.”