No population decline in Germany?

Key insights

• For years, we have been discussing demographic changes and the shrinking German population.
• Most recently, the German population grew by 300,000 people in 2023, reaching 84.7 million by the end of the year.
• The sudden population growth can be attributed to high net migration over the past two years.
• However, without further inbound migration in the future, the German population will struggle to avoid shrinking.

The number of deaths has surpassed the number of births for decades

The past decade has seen an ongoing debate regarding Germany’s shrinking population, the declining workforce, and aging society. In 2020, what was a scenario became a reality: The population did not grow for the first time since 2011, and in the following year, 2021, it increased by a mere 0.1% or 82,000 people.

This development is not unexpected. Germany has experienced a surplus of deaths for decades. In fact, since 1972, the number of deaths has consistently exceeded the number of births. This decline in births persisted in 2023. According to preliminary estimates by the Federal Statistical Office, 631,000 children were born from January to November 2023, marking a 7.5% decrease compared to the same period in 2022. Consequently, the resulting birth deficit for 2023 is projected to exceed that of the previous year.

Migration was significantly underestimated in the population growth forecasts

A look at the latest United Nations population development forecasts confirms that the German population has long been expected to shrink. In the 1994 World Population Prospects Revision theorized that the population was expected to shrink rapidly from 2005 onwards, with an expected total population of around 76.4 million people in 2025. However, these figures have been continually corrected upwards in recent years. For example, the 2019 revision predicted a population of 83.5 million and the 2022 revision revised this figure to an expected population of 83.2 million in 2025.

Nobody could have expected that the forecasts would still underestimate the unexpected population turnaround in 2023. The population in Germany grew by around 300,000 people in 2023 and ultimately reached around 84.7 million people at the end of the year, according to the Federal Statistical Office. More people than ever before.

In the 2022 revision, the United Nations projected an average annual net migration of 155,000 people between 2022 and 2025 for Germany in its population forecasts. However, in just the years 2022 to 2023, Germany recorded five times the average immigration compared to the 155,000 people assumed by the United Nations. Has the narrative of population decline in Germany been reversed?

Without significant net immigration, our population would have actually been declining for quite some time

The unexpected growth in the German population can be attributed to the substantial net immigration observed over the past two years. In 2022, net immigration to Germany reached 1.46 million, surpassing even the record year of 2015 when a total of 1.14 million people immigrated to Germany and settled. According to current estimates from the Federal Statistical Office, net immigration in 2023 amounted to around 700,000. Despite halving compared to 2022, net immigration remains at a high level over the long term.

Irregular immigration flows will not stop the population decline and the shortage of skilled workers

Similar to 2015, 2022 saw a significant influx of refugees, temporarily halting the population decline. However, as immigration flows came in spurts, a normalization of migration flows can be expected in the medium term. This trend is already reflected in the data: According to a preliminary evaluation by the Federal Statistical Office, only 121,000 people net immigrated from Ukraine to Germany in 2023. This is a stark contrast to 2022 when nearly 960,000 people moved from Ukraine to Germany and remained.

What does this mean for the labor market?

Has the shrinking of our population been reversed? It’s unlikely, instead, the trend has merely been postponed. As outlined above, Germany has been experiencing a death surplus and birth deficit for several decades, which is driving up the population's old-age dependency ratio. On paper, the shrinking of the population was recently halted by the large number of people who came to Germany from Ukraine to seek protection from the war. Even though, according to a survey by the IAB and the BiB, 44% of refugees from Ukraine intend to stay in Germany for the long term, the majority of people are still keen to return to their home country at some point. At the same time, the high immigration figures of the past two years are already normalizing.

Another challenge arises from the difficulty of accessing the labor market for individuals who have sought refuge in Germany. In contrast to the Netherlands, Poland, and Denmark, where more than half of Ukrainian refugees have secured employment, in Germany, this figure stands at just 17%. This disparity can be attributed to numerous entry barriers, including a shortage of childcare facilities and overloaded offices tasked with verifying professional qualifications.

We, therefore, cannot conclude that the population decline and the shortage of skilled workers have been resolved. Without a consistently high level of net immigration, demographic change in Germany is likely to continue, and the skills gap will continue to grow. Even if all the people who immigrated in 2022 remained in Germany and found work directly, the skills gap of 1.8 million jobs described by the DIHK could not be closed. To survive economically, Germany will therefore continue to rely on a considerable influx of skilled workers and must lower the access barriers to the labor market.