Swiss population: “We will have to fight for immigrants”

– “We will soon have to fight to attract immigrants”

While politicians want to curb migration, Hendrik Budliger already sees the working population shrinking in certain regions, with dramatic consequences.

BotTalk

Mr Budliger, in 2000, the Confederation predicted that we would have 7.5 million inhabitants today. We are now at 9 million. How can we be so wrong?

Net immigration has been consistently underestimated. But I don’t blame my colleagues at the FSO: immigration varies greatly. Between 2018 and 2020, for example, we had an annual net immigration of around 40,000 people, less than half of what it was last year, when Ukrainian refugees were included in the statistics.

But even 40,000 is much more than the Confederation had announced before the vote on the free movement of people. At the time, it was a question of 10,000 per year.

In the 1990s, we had two years of negative balance, when the number of emigrants was higher than the number of immigrants. If we only take into account immigration and emigration from European countries, there were even four negative years. It is always difficult to predict the future.

You are embellishing the wrong forecasts: on the basis of these scenarios, (wrong) calculations are made for the financing of the AHV, railway, road and housing projects are being launched that cost billions. The consequences are enormous.

That’s true. But the FSO always establishes three scenarios, a low, a medium and a high. The calculations for the AHV and infrastructure projects are made with the medium, the reference scenario, as if it were a safe forecast. I have just attended a meeting with entrepreneurs. They too only plan with the reference scenario, without taking into account the fact that the age structure, and therefore the demand for housing, is changing completely. Added to this is the fact that the FSO only renews the scenarios every five years.

Why is this a problem?

For example, we are still calculating today with a scenario that starts from a birth rate of 1.5 children or more per woman, while we have arrived at 1.39 births. These scenarios are based on outdated assumptions.

You once said that the OFS used to constantly underestimate population growth, but now it is the opposite, that it is overestimated. Do you maintain your assertion that Switzerland will never reach the threshold of 10 million inhabitants?

Yes, but I would add today: “With a high probability.” I consider the low scenario to be more probable than the medium scenario, which, in my opinion, is based on too high net immigration.

What makes you say that? Switzerland is currently growing at a record rate.

Most of our immigration comes from Europe. However, the European population is already shrinking: the number of people of working age, i.e. between 20 and 64, has been falling for more than ten years. The shortage of labour is greater in many places than in Switzerland, and it is increasing dramatically. This means that European countries will do everything they can to retain their workforce or even attract it back. We will soon have to fight to attract immigrants. Incidentally, the UN also assumes that the Swiss population will stagnate from 2030 and that a Switzerland with 10 million inhabitants is less likely.

The UN’s predictions are nevertheless not very credible: in the worst-case scenario, Switzerland will almost disappear within 100 years.

This is an extreme theoretical scenario, if immigration were to disappear completely. The calculation is as follows: with the current birth rate in Switzerland, 1,390 children are born per 1,000 women, including 695 girls. These in turn give birth to 483 girls. Without immigration, the number of women of family age is therefore halved in just two generations. This does not mean a halving of the population, because people are living longer, but this development must be taken very seriously. We are already partially feeling the effects.

In what way?

Age groups are developing very differently. The number of people of working age, i.e. between 20 and 64, is crucial for the functioning of a society. In some regions, their numbers are already decreasing. This worrying reality is completely overlooked in the whole discussion on immigration. In Grisons, for example, the number of people of working age will decrease by 13% by 2040, according to the FSO’s reference scenario. This demographic change will be one of the greatest challenges of the future, with a sharp increase in the gaps between regions. Some will continue to grow, others to decline.

Even though skilled labour is scarce in Europe, due to its high wages and quality of life, Switzerland will always remain attractive to immigrants.

Switzerland is indeed one of the most attractive countries in the world. However, I think that the gap with many countries has narrowed in recent years. Salaries are high, but so is the cost of living. And home ownership has become unaffordable for most people. For many families with high childcare costs, it may even be financially attractive to emigrate. I can see the risk that we will lose immigrants again in the future. We must not feel too secure: in Romania, for example, minimum wages were recently increased in order to better retain local workers.

But asylum-related immigration is likely to continue. However, these people are often difficult to integrate into the labour market.

In our country, asylum-related immigration is not that important in percentage terms. What is decisive is labour immigration, for which there will be tougher competition in the future. We have no choice but to do much more for the integration of asylum-related migrants, for example by offering training. This is a profitable investment.

A shrinking population also has positive aspects: thanks to artificial intelligence, we may soon no longer need as many workers, and a few fewer people is good for the environment.

Until now, new technologies have always led to a redeployment in the world of work, but not to a reduction in jobs. Of course, it could be different this time. In any case, the consequences for society are serious: if the working population declines, consumption declines, which leads to a drop in corporate turnover and share prices, a drop in demand for real estate and a destruction of value. Tax revenues also decline, the state has less money when it would need it to finance the growing number of elderly people. Societies with a shrinking population always have a problem. But of course there are also advantages: density stress decreases, pressure on nature decreases.

So far, there is little evidence of any imminent shrinkage.

If we look at the figures, yes. My office colleague always says that there is a “feeling of a housing shortage” in Switzerland: throughout Switzerland, the number of vacant five- and six-room apartments is increasing because there are fewer large families. But even four-room apartments are increasing in 12 cantons. However, the differences between the cantons are significant. We already have one city that is shrinking: Lugano. It won’t be the last.

Hendrik Budliger is the founder and director of Demografik, a center of expertise in demography. On November 12, he is organizing a conference in Basel on the effects of demographic change on financial markets. www.financialdemography.com