11
Finally, a combination of demographic trends that lead to population ageing is a final and
important challenge for welfare states. The combination of longer life expectancy and de-
creasing birth rates has led to a growing share of the population aged 65 and older.6
The corresponding figures for Germany envisage increases in the retired population (65
years and older) from 15 percent in 1990 to 26.1 percent in 2030 and 28.4 percent in 2050
(UN Population Division 1999, in: Schirrmacher 2004:44). The prevision of the German
Statistical Office is even more drastic: in its 2003 population prevision it concluded that the
proportion of those over 60 years is to increase from a current 23 percent to 37 percent dur-
ing the next fifty years; at the same time, the proportion of those under 20 years is to de-
crease from 21.3 percent to 16 percent. Through these changes, the German population,
given a certain level of net immigration, will shrink from 82 million to 75 million during the
same time period. As life expectancy still increases, the higher proportion of retired people
will drive up the average age of the population; at the same time, the share of the working
population will decrease by 15 to 30 percent until the year 2040 (Statistisches Bundesamt
2003, in: Sesselmeier 2006:25). These developments have immediate and far-reaching im-
plications for social policy programmes: on average older populations put more strain on
(statutory) pension and health care schemes, while the amount of contributions tends to
decline (because of a decrease in those paying contributions), necessitating a search for
complementary sources of funding if current benefits and service are to be maintained. Fis-
cal strain on these two schemes in particular is set to increase, the average increase in pen-
sion spending between 2000 and 2030 is set at 3.9 percent of GDP across the OECD coun-
tries, for health care provisions, it is set at 1.7 percent, totalling an average increase of ex-
penditures for these two programmes of 5.6 percent of GDP (OECD 1996 in Pierson 1998:
550-551). As far as Germany is concerned, the proportion of GDP spent on pensions and
health care has shown a continuous upward trend since reunification (1992: pensions 10.5;
health care 10.4 percent; 2000: pensions 10.9; health care 10.7 percent; 2003: pensions
12.4; health 10.9 percent).7 In a ten-year period, the ratios for pension expenditure/GDP had
thus risen by 1.9 percent and for health by 0.5 percent, combining to 2.4 percent. With the
onset of demographic effects after 2010, this trend is set to continue.
2.3 Consequences of Adjustment in Continental Welfare States:‘Wel-
fare Without Work’
With regard to the reaction of Continental welfare states to these pressures, their problems
with responding to the changing economic situation (and to economic crises), have received
the most attention in the literature. The gist of the arguments is that such crises, which usu-
6 While the percentage of the population in the OECD countries aged over 65 was still 9.4 percent in
1960, it was projected to rise to nearly 14 percent by the year 2000 and is anticipated to reach 23 percent
by the year 2035, with the major part of this transition to occur from 2010 onwards, when the large co-
hort of ‘baby boomers’ are retiring (OECD 1995, 1998 in Pierson 1998: 550).
7 Sozialbericht 2005, Berlin: Bundesministerium f. Gesundheit und Soziale Sicherung, p. 197