The Foreign Service Journal, April 2017

THE FOREIGN SERVICE JOURNAL | APRIL 2017 31 of Europe. Relations with Brussels and the E.U.’s policymaking machinery, in particular, are increasingly combative—perhaps a legacy of their resistance to the Soviet yoke, or a symptom of the E.U.’s much-criticized “democratic deficit.” Also troubling for the E.U. is the North-South divide separating its Western Euro- pean members. The fiscal austerity forced on southern debtor countries by Germany and other northern Euro- zone states has accentuated economic disparities between them. Youth unemployment and backward industries with little high-tech innovation have become hallmarks of the so-called “Club Med” Medi- terranean economies. Developments in France will be crucial to the continent’s future. Although geographically a “Club Med” country, France has been one of the E.U.’s economic powerhouses. In recent years, though, the wasting of its industrial sinews has become cause for concern. The populist siren calls, notably anti-immi- grant rhetoric and demands for trade barriers to protect French jobs, have produced a steady rise in support for the far-right National Front Party. Elsewhere, extremists on both the left and right, offering simplistic solutions to complex problems, have become prominent figures in national politics, and pose very real threats to Europe’s continued integration. The Demographic Dilemma The deceptively straightforward nostrums offered by these populist politicians fly in the face of a single, overwhelming reality: Europe is aging at an alarming speed, and its workforce is shrinking while social security costs are soaring. As a rough average, there are at present four working-age people to support each pensioner. But by mid-century, that ratio will have shrunk to just 2:1. That’s clearly unsustainable, yet this grim demographic out- look is scarcely discussed in national debates. Nor is there much focus on the more immediate consequences of labor shortages on the overall European economy. The reality of a dwindling working-age population is being eclipsed in the public mind by the headline figures of joblessness among young people. There’s no question that school-leavers and even university graduates in many parts of Europe have a tougher time finding work than did earlier generations. The years since 2008 have seen unemployment in the E.U. rise by 10 million people to 26 million, contrasting sharply with the previous decade during which 25 million new jobs were created. This roller- coaster is, though, of much less importance than the size of the labor force. It is generally accepted by economic analysts that a grow- ing labor force is key to growth in a country’s overall economy. Even if tighter immigration controls lead to a slowdown in America’s forecast demo- graphic growth from 320 million to around 400 million by mid-century, the U.S. economy is on a steady upward trend. That of Europe is not. The present population of the European Union, including the United Kingdom, is 510 million—and looks likely to fall to around 450 million by 2050. Raw numbers like these are less significant, though, than the ratio between workers and depen- dents. How far and how fast Europe’s workforce will shrink is going to be determined by the flow of immigrants. By mid-century, the E.U.’s workforce of around 240 million people today will be down to about 207 million, assuming that immigration into Europe continues at its present rate. That is worrying enough, but there’s a growing risk that immigration will be stifled. The surge in 2015 and 2016 that saw some 1.5 mil- lion refugees and economic migrants from conflict zones like Syria and across Africa undertaking perilous journeys to reach Europe provoked much sympathy, but also a strong anti-immi- gration backlash. Voters are increasingly anti-immigrant. It’s a mood that did much to determine the outcome of the Brexit referendum in the United Kingdom, and it is shaping election outcomes across the continent. Yet the economic effects of halting or severely cur- tailing immigration are potentially catastrophic. Without new blood from beyond Europe’s borders, the present workforce could number only 169 million in 2050, taking a huge chunk out of the European economy and limiting its maximum attainable growth rate in gross domestic product to barely 1 percent a year. No one is more worried about this trend than Germany’s hugely successful export industries. Daimler, the Stuttgart- Since 2000 the United States has been steaming ahead with productivity gains of more than 2 percent a year, while Europe is floundering at barely half that rate.