Christa Schweng, EESC Member, Rapporteur for the EESC opinion on The impact of demography on Social Europe, argues that demography has the power to determine Europe’s future
Demography has the power to determine Europe’s future. To illustrate this statement, let me tell a little story:
Once upon a time, there were two settlements, A and E, each with four couples. The couples in A each had 5 children, the couples in E each had 1 child. In the second generation, there were 20 people living in A and 4 in E. In the third generation, there were already 50 people in A and only 2 in E. In the fourth generation, there were 125 people in A and only one left in E.
This example shows the power of demography. In simplified terms, settlement E stands for Europe. Since 1975, there have not been an average of two children to replace two parents. From 2016 to 2022, the fertility rate fell once again from 1.57 to 1.46 children.
The population of the EU-27
The population of the EU-27 has stagnated since 2010 and will shrink from 447 million to 419 million by 2100. There are two positive factors that prevent Europe from suffering the fate of settlement E: life expectancy is rising steadily, and immigration and the higher fertility rates among migrants are curbing the decline but cannot compensate for it.
As a result, the EU-27’s share of the global population has fallen from 11.7% in 1960 to 5.6% today and is expected to fall to 4% by 2100. In contrast, Africa’s share (the continent represented by settlement A) rose from 8.5% in 1960 to 18.5% now and is expected to rise to 40.4% by 2100.
As a result, age groups are shifting throughout Europe: the proportion of people aged 65+ increased from 16% to 21% between 2002 and 2022. There are currently 3 people of working age for every person of retirement age (65+); by 2040 there will only be 2.2, and by 2100, 1.7.
There is a downwards trend everywhere, but it is not uniform: the fertility rate is far higher in France (1.84) than in Spain, Italy and Austria (1.29-1.32). Emigration is exacerbating the situation in east-central and southern Europe, while immigration is alleviating it in Germany, Austria and western and northern Europe.
The far-reaching consequences of demographics
The consequences of demographics are far-reaching: the EU’s weight in the world is steadily declining. The economy and its growth depend on the number of people in the labour force and their working hours and productivity. A labour shortage is already the biggest factor stalling growth across Europe and is not compensated for by the other two factors. This is because working hours are also declining, and productivity – despite digitalisation and AI – has barely increased recently. On the other hand, public debt is rising, which will have to be borne and paid for by fewer people in future.
Immigration reduces the labour shortage and can be enriching, but heterogeneity can also be challenging for cohesion and solidarity.
Pension, healthcare and long-term care systems are coming under two-fold pressure: the decline in the labour force is weakening the financial foundation, while pensions and long-term care needs are increasing. Moreover, with fewer and fewer people having children, grandchildren, siblings, cousins, aunts, etc., there is a lack of family networks, meaning that the state is now even expected to combat loneliness.
European Union demography policy
The EU institutions have recognised the problem late but have eventually done so and recommend comprehensive measures in recently published documents, even though the EU has less responsibility in this area than the Member States. These measures include supporting families more – financially and through better childcare – and making more use of untapped potential on the labour market, especially by mobilising groups with disadvantages: people with health problems, long-term unemployed people, mothers, certain migrants, etc.
Improved working conditions help but, in and of themselves, do not increase the labour force. Work, especially full-time work, should be rewarded and tax relief should be provided.
Pension systems under pressure
Pension systems are coming under pressure: lower pensions and (even) higher contributions are not an option. A gain in healthy life years has led some Member States to link retirement age to life expectancy, while others are taking measures to bring the actual average retirement age closer to the statutory one.
Linking the retirement age to changes in life expectancy could support longer and more productive employment, while at the same time helping to stabilise pension systems and thus contributing to intergenerational justice.
However, any rise in the retirement age needs to be introduced gradually, over the long term, without undermining trust in social protection systems and would not be feasible in work that is physically and psychologically taxing. So far, only nine countries have introduced pension reforms; another six will follow by 2050.
Competition for talent
Competition for talent is underway worldwide. In view of the EU-wide labour shortage, the EU and its Member States need to become more active and work together. The EU talent pool was set up for this purpose. Integration of migrants needs to be understood as a two-way street and needs to be improved.
Demography will determine Europe’s future
The current demographic trend is jeopardising sustainability in the EU. A European Commissioner with a proper portfolio and an EU agency for demography would be a good idea to ensure that demography is mainstreamed and considered in all policy areas. After all, demography will determine the future of Europe
