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Slow German economy finds bright spot in elder care

The Christian Science Monitor

  July 29, 2003

Ralf Heinrich first realized his tour company was in trouble in the summer of 2002. Americans, who represented close to half his turnover, were staying home after Sept. 11, 2001, and his company's English-language historical tours of central Munich were sparsely attended.

So the German entrepreneur started thinking what services he could offer that would be more in demand. Since last month, instead of whisking camera-toting travelers to the Alps, he has provided home-care workers for Munich's increasing ranks of seniors.

"Before I started this," says Mr. Heinrich, "I had no idea about caring for the elderly, but I am good at managing a small business. I jumped in because it is very attractive from the perspective of growth potential.... There are seniors everywhere in ever- increasing numbers. One doesn't have to travel too far to find customers."

In catering to the elderly, Heinrich has joined a wave of new companies in a sector that is among the few growing in Germany's struggling economy. The numbers of retirement homes, home-care services, and hospitals serving the elderly in Germany have risen 20 percent since 1996, according to the country's national statistics office. During that same period, capacity in the country's senior-care facilities, including private as well as government, church, and charity operations, has grown by more than 46 percent.

Germany's combination of rising life expectancy and low birth rate means that by 2050, more than 1 in 10 Germans will be octogenarians or older, compared with 4 percent today, according to the central office. While the birth rate - currently at 1.38 children per woman - is higher than that of Italy and Spain, two other countries on a continent with aging populations, the demographic trend of a growing group of elderly has been developing in Germany since World War II.

"The trend in aging is to be seen elsewhere in Europe," says Holger Jenrich, editor in chief of Altenpflege, a trade journal devoted to senior care, but in Germany it's "especially dramatic." He adds, "The effects are already becoming apparent. We are in a situation where we need to build even more retirement homes and we need even more companies caring for the elderly."

But staffing could be an issue. Otherwise thin want-ad sections here are full of offers for retirement-home nurses, in-house care assistants, and even students to help elders with shopping.

Efforts to train workers for the industry are being stepped up. But more than 80 percent of those trained soon quit because of the strenuous work and the poor pay, says Mr. Jenrich. That leads to a steady turnover in positions, many of which are staffed by Eastern European immigrants, especially from Croatia and Poland.

In an effort to lure more workers, many cities have started advertising campaigns to make the job more attractive. In Hamburg, for example, hundreds of billboards have appeared featuring celebrities appealing for new employees.

The rising number of seniors in Europe has made them a consumer group with increasing clout. Andreas Hollinek, the operator of an Austrian Web portal devoted to marketing for seniors, says advertisers across Europe are already focusing more on seniors by using older models in advertisements and emphasizing the comfort and user-friendly aspects of products rather than their speed or glitz.

Mr. Hollinek also points out that the group currently entering retirement in Europe is wealthier than any of its predecessors with more than € 90 billion ($112 billion) in discretionary cash per year to spend. He cites the financial health of businesses catering to them: Austrian spas are full, the real estate business in Spain and Italy is doing well as rich retirees from northern Europe move south, and cruises remain immensely popular.

"There isn't anybody who can afford to ignore this group anymore," says Hollinek. "In the future, senior citizens will control demand in our economies."

But German retirement may not continue to have such a rosy hue. As in France, Austria, and other parts of Europe, the country's state-funded pension plan is increasingly strapped. In France, parliament late last week approved a pension reform plan that will bring public-sector workers into line with the private sector, requiring them to work 2-1/2 years longer to qualify for a full pension.

Currently, there are 44 retirees in Germany for every 100 people employed. In 25 years, that number is expected to grow to 71 per 100. Chancellor Gerhard Schröder's government introduced a plan last year to try to move workers toward privately financed pension plans, but so far response has been limited.

"There have been discussions to continue to move toward a system imitating that used in the United States," such as allowing individual retirement accounts or employer-funded pensions, says Ralf Ulrich, a professor of demographics at Humboldt University in Berlin. "Nevertheless, the financing of the pension system remains the single biggest challenge facing Germany and Europe."  

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