In the coming decades, EU countries will experience steep increases in the share of elderly persons in the population and a significant decline in the share of those of working age. 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. The demographic transition is considered to be one of the most important challenges the EU is facing.
The demographic trends reveal that Europe will be ‘turning increasingly grey’. The Commission, as well as the European Council, have recognized the need to tackle resolutely the impact of ageing populations on the European Social Models.
Having reliable and comparable information on future demographic changes in Europe is essential. This sheds light on the economic, budgetary and societal challenges that policy makers will have to face in the future. They show where, when, and to what extent, ageing pressures will accelerate as the baby-boom generation retires and the average life-span continues to increase.
The age-related changes will affect pensions, long-term health care, education and unemployment transfers, and feed into a variety of policy debates at EU level.
Projections are used in the annual assessment of the sustainability of public finances carried out as part of the Stability and Growth Pact; in the context of the Open-Method of Co-ordination on pensions, health care and social inclusion; and the analysis on the impact of ageing populations on the labour market and potential growth.
DG ECFIN carries out economic analysis on these elements to assess potential impacts of demographic change. It also provides policy advice to Member States.