Ageing report: Europe needs to prepare for growing older

The age profile of the EU is expected to change dramatically in the coming decades, according to the EU's latest Ageing report that was published on 15 May.

The population of the EU will be slightly higher in 2060 (517 million, up from 502 million in 2010). At the same time it will be much older. While longer lives are a major achievement of European societies, the ageing of the population also poses significant challenges for their economies and welfare systems.

Share of older people rises

Notably, the share of those aged 15-64 is projected to decline from 67% to 56% by 2060. The share of those aged 65 and over is projected to rise from 17% to 30%. As a consequence, the EU would move from having four people of working-age to each person aged over 65 years to about two people of working-age.

Economic consequences

The total number of workers is projected to decline by 15.7 million over the forecast horizon to 195.6 million in 2060. The decline in the workforce will act as a drag on growth and per capita income, with a consequent trend decline in potential growth. The latter is estimated to converge to below 1,5% in real terms in the long-term in the EU.
Financial consequences
Moreover, the demographic changes are expected to have substantial consequences on public finances in the EU. On the basis of current policies, age-related public expenditures (pensions, health-care and long-term care) are projected to increase by 4.1 percentage points to around to around 29% of GDP between 2010 and 2060. Public pension expenditure alone is projected to rise by 1.5 percentage points to nearly 13% of GDP by 2060. However, the report shows a large diversity across EU Member States, depending notably on progress with pension reforms.

The challenge remains

All in all, further progress towards sustainable public finances remains a major challenge. The results of the Report prepared by the European Commission services (Directorate-General for Economic and Financial Affairs) and the Ageing Working Group (AWG) of the EU Economic Policy Committee reveal that in some countries, there is a need to take due account of future increases in government expenditure, including through modernisation of social expenditure systems. In other countries, policy actions have been taken, significantly limiting the future increase in government expenditure.

Life expectancy rises

In general, the extent and speed of ageing depend on future life expectancy, fertility and migration. Life expectancy at birth is projected to increase from 76.7 years in 2010 to 84.6 in 2060 for males and from 82.5 to 89.1 for females. The fertility rate in the EU is projected to climb modestly from 1.59 births per women in 2010 to 1.71 in 2060. Cumulated net migration to the EU is projected to be about 60 million until 2060.