Europe is facing the first natural population decline in roughly 700 years since the 14th-century Black Death. As the United Nations (UN) and Eurostat, the statistics office of the European Union (EU), released official projections that the EU population will peak next year and then continue to shrink, concerns are rising across Europe about a recession driven by the evaporation of the labor force and population disappearance.
On the 13th, the Washington Post (WP) said that "Europe is terrified of population decline," noting that European countries are desperately rolling out pronatalist measures, but their limits are clear. The EU total fertility rate stood at 1.38 last year, an all-time low. At the current pace, by 2100 the EU population will contract to about 419.5 million, down by roughly 27.3 million to as many as nearly 100 million from today.
European governments are already showering cash to spark a baby boom. Italy is paying bonuses to working mothers with two or more children. Poland, through its "800 Plus" policy, pays about $220 (about 320,000 won) per child each month and passed a bill granting large tax cuts to parents with two or more children.
But money did not directly translate into births. The Hungarian government led by Prime Minister Viktor Orban is pouring 5% of gross domestic product (GDP) into family policy. That is far higher than the United States' 3.6% spending on defense. At the national level, Hungary reduces the lending rate on mortgage loans when married couples plan to have a child. In particular, it lends parents $30,000 (about 43.8 million won), and if they have three children, the debt is fully forgiven. In effect, giving birth to a third child hands them a lump sum worth over 40 million won for free. Also starting next year, women under 40 with three children will be exempt from income tax for life. Mothers with two children are also tax-exempt.
The Hungarian government has rolled out this series of pro-birth policies over the past 15 years. As a result, the fertility rate rebounded from 1.25 in 2011 to 1.61 in 2021. That was the limit. According to 2023 statistics, Hungary's fertility rate fell back to 1.39. Despite massive budget投入 at the national level, it ultimately reverted to the EU average.
Experts said cash-centered support was less effective at making those who would not have children decide to have them, and instead led parents who were going to have children anyway to move up the timing to receive benefits. Once the cohort already considering childbirth exhausts the budget, the figures plunge again.
Anna Rotkirch, a researcher at the Finnish Population Research Institute, noted in a Finnish government report that "the social media favored by the generation that should be having children idealizes travel and an individualistic life, and dating apps create the illusion that partner choices are limitless, making it harder to settle down."
According to the report, "People without children now tend to perceive parenting as a greater sacrifice than it actually is," and "the uncertainty that becoming a mother makes one look old and that all pleasures will end is the biggest barrier to childbirth." The Population Research Institute analyzed that, given the reality that even the relatively well-off Nordic welfare states in Europe are experiencing declining fertility, financial support cannot be the answer to low birthrates.
Demographic change is a set future. Thirty years ago in Western Europe, four people of working age supported one older adult, but now it has adjusted to 3 to 1. By 2050, it is projected to fall below 2 to 1. According to a Eurostat simulation, by 2100 Western Europe will be locked into an inverted pyramid in which there are more people aged 85 and older than 5-year-olds.
McKinsey, a consulting corporations, recently warned that the deeper the shortage of young people in Europe becomes, the more it will weigh on economic growth and fuel intergenerational conflict. It analyzed that labor supply shortages will trigger wage increases and inflation, which in turn will lead to pension depletion and a national fiscal crisis in a vicious cycle.