Demographic Change in Germany: Between Longevity and Pflexit

Germany's population development up to 2040

Germany is facing one of the biggest social challenges of the 21st century: demographic change. Although the population will only grow slightly by 2040, the age structure will change dramatically. According to the Bertelsmann Foundation's “Guide to Municipalities,” around 0.6 percent more people will live in the Federal Republic in 16 years. However, the number of people over 67 years of age will increase significantly. The generations of baby boomers, who are increasingly reaching retirement age by the mid-2030s, are particularly affected. As a result, the proportion of seniors in the total population is significantly increasing, which has far-reaching consequences for care and social services.

In addition, this growth is distributed very differently from region to region. While urban and economically strong regions continue to grow, rural areas are shrinking, particularly in East Germany and Saarland. LAccording to the calculation, the population development in the 13 area countries is between plus 4.6 percent for Baden-Württemberg and minus 12.3 percent in Saxony-Anhalt. These regional differences present municipalities with specific challenges in planning infrastructure and social services, such as care.

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Care needs are increasing, nursing homes are closing

Because as the older population increases, so does the need for care. As early as 2020, around 4.1 million people in Germany were in need of care. According to forecasts, this figure will rise to over five million by 2040. In particular, the group of people over 85 years of age, who are considered to be very elderly, is growing strongly at around 15 percent.

However, the increase in people in need of care is offset by a decline in care places: Numerous care facilities have to close, while only a few new ones are being opened. Since the beginning of 2024 alone, more than 1,200 care facilities in Germany have gone bankrupt or have been closed. The reasons for this are manifold. These include, for example, rising care costs, inadequate remuneration and heavy workloads, which make it increasingly difficult to operate many institutions.

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Shortage of skilled workers and “care exit”: Alarming developments

A key problem is the shortage of skilled workers in the care sector. There is already a lack of nurses in Germany and the Institute of German Economics Expects a shortage of around 36,000 care professionals by 2027 alone. The IW sees around 60 percent of future demand in inpatient care, the remaining just under 40 percent for outpatient care.

Another phenomenon that aggravates the situation is the so-called “Pflexit” — the departure of nurses from their jobs. The main reasons for this are heavy workload, inadequate pay and psychological stress. At the age of 60 at the latest, many therefore change jobs or retire. Rural regions are particularly affected, where the emigration of young people and the closure of care facilities can lead to a dramatic supply gap.

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Structural and financial reforms needed

That is why it is only through the joint commitment of politics, society and business that we can overcome the challenges of demographic change and ensure high-quality care for all people in Germany. In particular, this includes making the nursing profession more attractive — through better pay, flexible working time models and extensive training opportunities. It is just as important to promote the training of young people in care in order to counteract the shortage of skilled workers. At the same time, care infrastructures must be adapted regionally to specific needs, as urban and rural areas have different requirements.

In addition to political measures and structural reforms, the question of financing will also become increasingly important in the coming years. Expanding care facilities, digitizing the industry and creating attractive working conditions require huge investments. In addition to government programs, private investors and private equity can also play a decisive role here. Innovative participation models, such as FINEXITY , also offer private investors the opportunity to invest in future-relevant sectors such as health and care. In this way, return opportunities can be exploited and at the same time an important contribution can be made to overcoming demographic challenges.