Europe is facing an existential crisis.
Birth rates below replacement levels
20-25% of population in retirement age in most European countries
Higher security and energy costs
Lagging in business and tech competitiveness
Fertility is not the only issue, but still a critical one.
You can clearly see the role it plays in the deep dives of social security and pension systems in Poland, Switzerland, and EU.
Why don’t people make kids anymore?
There’s many reasons, obviously.
But let me offer an economical angle, which IMO explains things a lot more than other social or cultural factors (economy is the physics of the social world):
Having kids is not worth it.
And that's why younger generations don't make them.
The pension you'll get != f(how many kids you've had)
If we make:
The pension you'll get ~= f(how many kids you've had)
People will start making more kids.
What we have right now is: AS A WHOLE, the more kids we make, the more pension we'll get.
But, since we're individualistic, people think "let other people's kids pay for my pension, while I keep doing 3 vacations per year and eat out all the time".
Back in the days it was different: kids were also a resource, that's why people made it.
Today, at the family level, they're more a liability than a resource.
And it’s not just about pensions, but welfare in general.
Throwing money at the problem doesn’t seem to help a lot.
Many countries in Europe have tried it: Hungary, Poland, Germany, certain regions in Italy, and I guess several more.
I am not sure what will help. Probably not one single thing.
Right now, the gap is filled by bringing in working-age migrants.
But more and more people are unhappy with uncontrolled migration and its effects.
To improve what we’re currently doing, maybe we could:
a) Raise the bar on migration quality
• Prioritise high-skill applicants
• Fast tracks for shortage roles
• Clear performance and integration rules
b) Reward families more directly
• Link a slice of future pension and benefits to the number of children raised to adulthood
• Lower the cost of childcare and housing for families
• Protect people who cannot or choose not to have kids with a base pension
A mix of both may work best.
Immigration is good
To the best of my knowledge, there is no doubt about this.
Despite what the current anti-migrant trends on social media might suggest.
The issue is more about how to get high-quality migrants.
Let’s look at Switzerland
Prediction: as immigration to Europe will rise, Switzerland will attract a lot of the top talent.
Attracts the best non-EU talent through ETH/EPFL
Also hires EU citizens, including 2nd/3rd-gen migrants
If an EU hire goes wrong, the fallback is the person’s EU country of citizenship
It's a migration “control system”:
The EU admits many kinds of migrants: skilled, less skilled, refugees, irregular
Over time, some get EU passports, usually those who integrate best
Switzerland then recruits from that pool, plus top non-EU grads and researchers
Talent and demographics can decide winners.
Countries that manage immigration well will fund pensions, keep services running, and stay competitive.
Switzerland seems well positioned to manage this effectively.
From my personal experience
Switzerland made a good deal with me.
Let me in as a high-skill, high-income migrant
High income -> Good taxes and social security contributions
Free press from some of my 40M+ LinkedIn impressions
Now takes a cut on the value I create out of thin air with my business
The EU should focus less on value signalling and more on creating an environment where high-skill value creators want to be.
I could have opened my business and moved anywhere in the world.
Yet, in the 5 years I've lived in Switzerland:
I always felt safe, connected and productive
Most professionals I interacted with were qualified
I never had a bad experience or surprise with the public admin
I learned about the effectiveness of its social security and tax system
Switzerland attracts and fosters:
Quality
Value-creation
Innovation and competitiveness
It might not be the most fun place in the world, but business is business.
You can always take a train to Paris or Milan or a short flight to Barcelona or Warsaw.
But to build? Switzerland is hard to beat.
Europe just got an opportunity served on a silver platter
The recent $100k fee introduced by Trump on H-1B visas is a real chance for Europe to attract serious Silicon Valley talent, while addressing demographic issues.
If you’re an engineer abroad, and are considering moving to Europe check out this guide I wrote some time ago, or this one about moving to Switzerland.
For Europeans in the US: time to consider the many ways to make 6-figures from Europe (honestly almost “easy” nowadays).
For Asians abroad: the chance to move to a place with great quality of life, opportunities and proximity to home.
For LATAM talent: in southern Europe you’ll feel as at home as you’ll ever feel outside of LATAM!
I guess there weren’t that many Africans and Oceanians on H-1B, but if so the above might apply to you too :)
What do you think?
Quiet insightful.