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DE RUEHFT #4327/01 1741451
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R 231451Z JUN 06
FM AMCONSUL FRANKFURT
TO RUEHC/SECSTATE WASHDC 5280
INFO RUCNFRG/FRG COLLECTIVE
RUEHC/DEPT OF LABOR WASHDC

UNCLAS SECTION 01 OF 02 FRANKFURT 004327 
 
SIPDIS 
 
SIPDIS 
DEPT OF LABOR FOR ILAB - BILL BRUMFIELD 
 
E.O. 12958: N/A 
TAGS: SOCI ECON ELAB PGOV GM
SUBJECT: Two German States Tackle Demographic Challenges 
 
 
¶1. SUMMARY: The states of Hesse and Saarland, like much of Germany, 
face tectonic shifts as their populations stagnate and age.  Whereas 
Saarland is home to Western Germany's most rapidly shrinking 
population, Hesse's uneven growth is causing public policy 
challenges.  Their differing approaches to this issue show there is 
no "one size fits all" solution to a process which will profoundly 
shape the region's economy, society, and environment in coming 
decades.  END SUMMARY. 
 
A Tale of Two States 
-------------------- 
 
¶2. This report contrasts the approach of Saarland and Hesse in 
managing demographic change.  While Saarland has western Germany's 
most rapidly shrinking population, Hesse faces serious disparities 
between the service-based Rhine-Main region around Frankfurt (which 
continues to grow) and stagnant rural/industrial areas.  Both states 
have started to counter the problems of a shrinking and aging 
population.  In Saarland, the state has pioneered more efficient use 
of urban space and the revitalization of aging towns in rural areas. 
 The Hesse state government, in contrast, is searching for a more 
comprehensive approach led by an all-party commission of the state 
parliament (established in 2003, the commission released its first 
findings in 2005 and will make recommendations later this year). 
 
¶3. NOTE: According to the Federal Statistical Office, Germany's 
birth rate fell last year to its lowest level since 1991. 
Approximately 676,000 babies were born, a decline of 4.2 percent 
from 2004.  At fewer than 8.5 births per 1,000 inhabitants, Germany 
now has the lowest birth rate in Europe.  By comparison, births per 
1,000 inhabitants stand at 11.9 in the Netherlands, 12.0 in the UK, 
12.7 in France, and 15.2 in Ireland.  Immigrant women have a 
substantially higher fertility rate (1.8 versus 1.3 for Germany as a 
whole), but still below the 2.1 needed to stabilize population.  END 
NOTE. 
 
Saarland: Fighting Rear-Guard Battles 
------------------------------------- 
 
¶4. In Saarland, a state of slightly more than one million 
inhabitants, only 7660 babies were born in 2004, while 12015 people 
died; the state's remaining population mix is aging rapidly. 
According to State Environment Ministry spokesman Martin Hohnhorst, 
the state also continues to lose record numbers of residents to 
other parts of Germany (a development clearly impacting Saarland's 
population, but that also has other economic, social, and 
non-demographic implications beyond the scope of this report). 
Interestingly, the only region in Saarland experiencing a rise in 
population is along the French border.  Roman Glauben of the 
Saarbruecken State Chancellery (who is working on demographic change 
issues) opined to us that "France's successful population policy is 
shedding a few rays of light on our border state."  Border-region 
growth may also stem from Saarland's lower property prices (versus 
France) and the strong job market in nearby Luxembourg. 
 
¶5. In response to de-population in rust-belt and rural areas, 
Saarland has created the MELANIE program to revitalize towns, "right 
size" shrinking areas, and streamline public services to accommodate 
a smaller and more elderly populace.  It is the first program of its 
kind in Germany to set mandatory caps on new property development in 
towns whose populations are expected to decrease.  As Hohnhorst 
explains it, the state government is giving priority to developing 
existing infrastructure (particularly in town centers) over using 
new land for development.  This means a de facto growth ban for some 
areas, sparking local resistance.  Other measures, such as the 
closure and merger of elementary schools, have also met broad local 
protest.  Saarland's CDU/Christian Democratic government does not 
have all-party support for its policies; Saarland parliamentarian 
Peter Gillo (SPD/Social Democrats) told us that closing schools and 
child care facilities has the opposite effect on the problem.  Like 
many, he argues that low birthrates reflect the burden on women who 
must choose between career and children, advocating more subsidized 
daycare facilities so that working mothers can return to the 
workforce. 
 
Hesse: Thinking Long-Term 
------------------------- 
 
¶6. In Hesse, policy-makers are pursuing a more comprehensive (and 
slower) approach to demographic change.  A Hesse parliament report 
(one of the first of its kind) points out that the state will have 
"fewer, older, and more ethnically diverse" residents as Hessians 
live longer (and due to immigration).  The parliament's report warns 
that demographic change will also seriously impact state finances. 
One example is the need to rethink utilities and other services in 
areas with a shrinking population.  Another are increased pension 
payments and less income tax revenue from retired civil servants 
(states employ the bulk of public workers in Germany).  In May, 
Hesse Minister-President Roland Koch (CDU) said publicly that he 
expects the retirement age to rise to 70 in the coming years in 
reaction to this trend.  Koch has also frequently spoken of the need 
 
FRANKFURT 00004327  002 OF 002 
 
 
to work longer hours in view of the shrinking working-age 
population. 
 
¶7. Stark regional disparities make a comprehensive political 
strategy difficult in the state.  While Frankfurt is among Germany's 
fastest growing cities, areas in northeast Hesse could lose a fifth 
of their population by 2020 (projections indicate Hesse as a whole 
will lose 8.9% of its inhabitants by 2050).  Frankfurt officials are 
optimistic that Frankfurt will remain one of Germany's few cities 
with stable or even slightly growing populations; a study by the 
University of Cologne suggests that Frankfurt's population might 
increase by 10% through 2040.  Hesse's minister in charge of the 
state chancellery, Stefan Gruettner (CDU), told us that the Hesse 
state government has selected three counties and state capital 
Wiesbaden as target regions to increase the birthrate from 1.3 to 
"at least 1.8."  With a paltry budget of 40,000 Euros, though, the 
political opposition calls the program "a bad joke." 
 
¶8. Consulate representatives attended a recent discussion entitled, 
"Demographic Development -- A Challenge for the Economy in the 21st 
Century," hosted by the Frankfurt Chamber of Commerce and Industry 
(IHK) and including Hesse Minister-President Roland Koch.  Frankfurt 
IHK President Joachim von Harbou called it unacceptable that so many 
highly-educated women in Germany choose not to have children, 
arguing that unfavorable policies and social mores compel women who 
want to advance in their careers to forego starting families.  In 
his remarks, Minister-President Koch said that solutions most look 
beyond Germany's low birth rate and address underlying social issues 
and the economic impact of an aging population. 
 
COMMENT 
------- 
 
¶9. Demographic change has arrived as a social and political reality. 
 While all four state governments in our district have commissions 
working on demographic problems, their approaches differ 
significantly in practice.  In Saarland, the Environment Ministry 
has the lead and frames the issue in terms of managing the impact of 
aging and depopulation.  Saarland's demographic problems are visible 
and dramatic, with the prospect of undermining the state's financial 
and political future (over the years, some outside the state have 
proposed merging Saarland into Rheinland-Pfalz).  In Hesse, the 
state parliament is driving a more comprehensive but slower approach 
-- with Frankfurt and the Rhine-Main region growing, the demographic 
and structural problems of North Hesse appear less pressing. 
Throughout the region, demographic problems are vexing because they 
encompass so many issues -- childcare, education, retirement age, 
land use, gender equality, the job market, and immigration -- so 
that concerted action will take not just recognizing the problem, 
but huge injections of political capital.  END COMMENT. 
 
¶10. This cable was coordinated with Embassy Berlin. 
 
AKER