2009 Ageing Report

The European Union (EU) is faced with a demographic transition the consequences of which may have a high cost. Structural reform must be undertaken in order strengthen its growth potential and human capital. These reforms should lead to improvements in citizens’ health, education and quality of life.

ACT

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 29 April 2009 – Dealing with the impact of an ageing population in the EU (2009 Ageing Report) [COM(2009) 180 final - Not published in the Official Journal].

SUMMARY

The Commission uses the projections presented by Eurostat in 2008 as a basis to report on the long-term effects of demographic ageing.

The economic impact of ageing

According to these projections, the employment rate will increase from 65.5 % in 2007 to 70 % in 2060. The employment of women and older workers is also likely to rise, as will net immigration levels. However, these developments will only slow down the overall fall in employment, due to the shrinking working age population. While there are now four workers for every retired person, this will move to two workers for each elderly person in 2060.

The ageing population will also have consequences on the annual growth of the Gross Domestic Product (GDP) and labour productivity will become the main source of economic growth.

The impact of ageing on public finances

Member States will be faced with new budgetary constraints. The reform of pension schemes should ensure that services are matched to the needs of the elderly whilst tightening the eligibility requirements for receiving a public pension and developing funded schemes.

The increase in demand for care is likely to lead to an increase of 1.5% in European GDP by 2060. Furthermore, the duration of care will increase and public cover for the elderly will be developed. On the other hand, medical research should be a significant growth factor, as should services for senior citizens.

Lastly, despite a fall in the birth rate, spending on education and lifelong training will prove to be essential in fostering productivity and human capital.

The impact of the international financial crisis

The programme of structural reforms aimed at allowing the EU to meet the demographic challenge involves the adoption of a series of measures aimed at achieving balanced budgets, reducing the public debt, increasing employment and productivity, and guaranteeing the viability of social protection and healthcare systems.

However, in 2009 Member States should give priority to the European Economic Recovery Plan. In this context, the Commission presents amended objectives to prepare for the ageing population. National measures should promote:

• birth rates, by creating favourable conditions for families;
• labour market participation , aiming particularly at young people and older workers. The participation of older workers involves adapted working conditions and healthcare;
• economic productivity and progression towards a knowledge-based economy. In this regard, investments should be made in education, new technologies and services for the elderly;
• conditions for receiving migrants. The international financial crisis has consequences on the situation of developing countries and migratory flows. However, migrants may also face more difficulties finding a job in Europe;
• the viability of public finances and continuing reforms related to the demographic decline.

The measures taken at Community level are framed by the Stability and Growth Pact which forms the basis for the Broad Economic Policy Guidelines (2008-2010), and the Renewed Lisbon Strategy. The Commission encourages:

• strengthening of budgetary supervision and the coordination of national policies;
• reform of national pension schemes;
• protection of financial markets, particularly concerning their impact on pension schemes;
• regular evaluation of progress and needs in the areas of education, training, research and development.

Last updated: 25.09.2009