The difference in demography between France and Germany is a crucial factor in explaining what is at stake in the crisis of the euro.
The German demography, as those in much of Europe, is catastrophic: if the birth rate stays as it is (around 1.4 children per woman), the Germans, who are still about 82 million, will be just 73 million at best and at worst 66 in 2050 (according to immigration rate) and the over-60s will represent 40% of the population that is two out of every five inhabitants.
The French demography, just like the demography of Ireland, is exceptional: assuming recent demographic trends persist, France (which now has 65 million inhabitants) will have over 74 million inhabitants in 2050; the over-60s will constitute 33% of the population that is one out of every three inhabitants. Thus the population of France will be much younger and will exceed, in any case, that of Germany.
This explains much of what we live today: Germany has absolutely nothing to gain from inflation, which will impact savings, therefore the elderly, to the benefit of borrowers, who are the youngest. And of course, without young people with a job, the German pensions will not be fundable. Germany must therefore keep most of its resources to try to fund at least part of its pensions, while France has less to fear from inflation and should have an interest in maintaining important social spending (in terms of family, childcare facility, female employment, housing, taxation) that accompanies in a very substantial way its demographic structure.
These differences in demographic trends in the same currency zone will eventually be as unbearable as differences in public debt and competitiveness. For, if we continue like this, the Germans will have to borrow money from the French to pay for their own pensions.
Demographic convergence is therefore necessary. To achieve this, we can imagine at least four solutions:
1. Mobility of labor, which would attract young people where there is more work: it is absolutely necessary, but we cannot imagine that the French will voluntarily go to work en masse one day in Germany. Today, they willingly go anywhere, except in Germany.
2. The alignment of the French family policy on that of Germany: this is what is implicitly behind the German demands of French public spending cuts. But if the fiscal convergence becomes a strategy to age France at the same rate as its neighbors, it is obviously unacceptable.
3. The alignment of the German family policy on French policy would probably be a better solution, this means that Germany agrees to increase its social spending, and stops asking France to reduce its own. This will take time to be effective, as family habits are slow to change.
4. The acceptance, on all sides, of more foreigners, from other continents (not just from Eastern Europe, faced with the same problem as Germany) is certainly an element of the solution, subject to the condition that, among Europeans, we acquire a genuine policy of integration of foreigners.
It is therefore urgent to introduce the demographic parameter in the financial discussions: a little forward planning will not hurt.