At Denmark’s largest job fair, held in Copenhagen in mid-August, more than 1,500 job vacancies remained unfilled, prompting the Confederation of Danish Employers to protest that the problem has been overlooked for far too long. With the economy stretched to its limits, most qualified workers were employed.

Indeed, countries with aging populations, such as Germany, Japan, and Italy — all with median ages of 42-plus — face a demographic trap. Equally, nations such as China and India, with median ages in the 28-33 bracket, are bound to enjoy the demographic dividend. The former group of countries must wake up to the reality that, increasingly, people from the latter set will man both skilled and unskilled (more of the first) jobs.

Demographers are well aware of it but policy-makers perhaps do not want to see it yet. As Zachary Shore writes in Breeding Bin Ladens: America, Islam, and the Future of Europe, “the world’s median age is 24, but by 2050 it is projected to be 53-55 in Germany and Japan. Western Europe and Japan will grey the most... At the same time Europe’s mortality rate is falling, so too is its birth-rate. Ethnic Europeans are having fewer children and consequently their populations are shrinking. And with them shrinks the labour force.

“By 2050, Japan is expected to see its work-force — those aged between 16 and 64 — drop by an extraordinary 37 per cent. Italy’s workforce will fall an even greater 39 per cent and Germany’s by 18 per cent. France and Great Britain will experience declines of 11 and 12 per cent... In most industrialised countries, today the ratio of workers to pensioners is 4:1, but by 2050 that ratio may drop to just 2:1.

A halving of workers to retirees will put enormous strain on societies with aging populations... If Europeans hope to maintain their living standards in retirement, more young workers will have to be found. A logical place to look will be to regions currently experiencing baby boom...”

Indeed, an OECD survey of Denmark says that to stop the Danish economy from over-heating, Copenhagen must use foreign labour more intensively: removing barriers for skilled workers from abroad; speeding up the administrative procedures to issue residence and working permits for those from the new EU member-states; and helping firms connect to unemployed workers in these countries as well as in other parts of the EU where there are skilled but unemployed workers.

In 2006, the Danish Minister of Employment, Mr Claus Hjort Frederiksen, said labour shortages cost the Danish economy about 27 billion Danish Kroners, or $4.7 billion. Perceptions of Denmark as being a land of high taxes and high costs, among other factors, are making it difficult for employers, including subsidiaries of foreign companies, to fill crucial job positions.

According to a February 2007 survey of managing directors and HR managers, by the American Chamber of Commerce in Denmark (AmCham), most companies are experiencing difficulties in filling positions that are vital for conducting competitive business: sales and marketing, IT, research and development, accounting and finance, and senior management. The AmCham Executive Director, Mr Stephen Brugger, warned that the situation puts Denmark at risk of mediocre growth. It also begs the question, “How can Denmark attract the skilled labour it needs to compete?”

It is not just the question of finding people to man jobs but it is crucial for the economies that they have a mix in various age groups, especially in the 20s and 30s, for the economy to consume.

An aging population translates into low consumption, which means these countries will perforce have to export more, as Edward Hugh points out in demography.matters.blog. He cites the example of Japan and Germany that have been faced with consistently poor domestic consumption growth and are thus compelled to export.

Economies with aging populations face another double-whammy — of low tax receipts, both direct and indirect, what with a falling population in the wage-earning bracket and low consumption by an aging people. This is compounded by the high social security obligations to maintain a large group of senior citizens for long years, as life expectancy is usually very high in these countries.

With life expectancy only expected to rise, the immigrant population is the only variable on which these countries can act, and quickly too. While as of now the policy of most European nations is quite hostile to immigration, attitudes will have to change as reality begins to bite. Indeed, this seems to be happening in Denmark, with its Prime Minister, Mr Anders Fogh Rasmussen, promising to loosen immigration laws to attract more foreign workers.

While the Prime Minister is likely to relax the rules for white-collar workers, the nation may need more blue-collar workers. Perhaps, Denmark must quickly get all the Polish, Hungarian, Slovenian or Bulgarian plumbers and electricians it can before other nations with similar, if not greater, demands beat it.

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