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Contents 
PART I - SITUATION AND TRENDS
4 Factors determining real convergence
4.2 Demography and migration
Population in the EU is set to decline…
At the beginning of 2000, the population in the EU stood at 376 million,
substantially less than in China (1.2 billion) or India (1 billion), but
significantly more than in the US (272 million) or Japan (126 million).
Assuming trends in birth and death rates and in migration continue, EU
population is projected to grow very slowly between 2000 and 2005 (by
only 0.2% a year) and then hardly at all (by under 0.1% a year) from then
until 2022, when it is expected to start declining. In 2010, therefore,
population is forecast to reach 385 million and in 2025 to be only slightly
higher (388 million). From 2008, population is set show a natural decline
but this will be offset for a few years by net inward migration.
Trends in population, however, vary markedly between different parts
of the Union. While population is still growing in most regions even if
slowly, in some, predominantly in Spain, Italy, Germany and the Nordic
countries, it is already declining (See Map A.11
on crude rate of total population change, average 1995-97). Between
2000 and 2010, more regions in Germany and Italy are projected to show
a decline, in addition to some in France, the UK and Austria. On the other
hand, population is expected to continue increasing at a relatively high
rate in a number of regions in southern Spain, the south of France and
Greece as well as in parts of Germany, the Netherlands and the UK.
By 2025, almost 90 of the 200 or so regions, defined at the NUTS 2 level,
accounting for half of all the people living in the EU, are projected
to be experiencing population decline, including all those in Italy but
also a number in virtually all Member States.
…as it is in the candidate countries
Demographic trends are even more adverse in the candidate countries.
While in most of the 12 countries, population grew at a relatively high
rate in the 1970s and 1980s, due to high fertility rates and increasing
life expectancy, in the 1990s, fertility rates fell dramatically and life
expectancy declined. In addition, there was significant outward migration,
with only the Czech Republic, Malta and Cyprus experiencing a net inward
movement over the period 1990 to 1999 (See Map
A.12 on crude rate of net migration).
As a result, population growth has already begun to fall in most of the
countries. In 8 of the 12, population declined over the 1990s. Between
1995 and 1997, it fell in 32 out of the 52 regions, defined at the NUTS
2 level and there was net outward migration in 31 of them. In the wider
European area, therefore, and including these countries with the existing
EU Member States, population decline is likely to occur several years
earlier than indicated above. (The projections for the 12 countries are
based on UN forecasts.) 1
Regions with declining population
Demographic trends are affected by social and economic developments.
Migration flows, in particular, are related to regional differences in
labour market conditions, people moving from areas of low job growth to
ones with more employment opportunities, and, over the longer-term, such
differences can also affect birth and death rates.
Declining regions in the EU are, therefore, characterised by low income
levels, high unemployment and a large proportion of the work force employed
in agriculture and industry(See Graph A.9 on
regions with population decline, in annex). In addition, they tend
to have a relatively small number of young people, reflecting their migration
to other areas as well as low fertility rates, and a low density of population,
reflecting the rural nature of many of them. There are, however, notable
exceptions to the latter, since a number of densely-populated regions
(eg Brussels and Attiki, where Athens is located) have also experienced
a reduction in population in recent years. Indeed, a tendency to 'suburbanisation',
the movement out of city centres to the suburbs and neighbouring regions,
which is often described as 'urban sprawl', is evident in many major conurbations
across Europe.
Population ageing in the EU will accelerate…
Population in the EU is ageing rapidly. With low birth rates, the proportion
of young people under 15 has declined for a number of years and is projected
to continue to do so in the future, falling from 17% in 1998 to 14.5%
in 2025. By contrast, the proportion of those aged 65 and over is rising
significantly and is set to increase even faster after 2010 as the baby-boom
generation begins to reach this age. Accordingly, the proportion is projected
to increase from around 16% of total population in 1998 to 22% by 2025.
Moreover, within this, the relative number of people of 80 and older is
rising faster still.
These trends will have important consequences for social welfare and
taxation systems across the EU. In particular, the prospect is for a growing
number of people above retirement age who will need to be supported by
those in employment. All Member States will experience an increase in
the old-age dependency rate (the number aged 65 and over relative to those
of working-age, taken here as 15 to 64), but the extent of this is likely
to vary significantly between them. The most marked increases are expected
to be in Italy, Sweden, Finland and Germany and the smallest in Ireland,
Portugal and Luxembourg.
The trend is likely to be similar, if less pronounced, for the overall
dependency rate, the total above and below working-age in relation to
those of working-age, despite the projected decline in the number of children2.
(See Map 10) At present, there are some 49
potential dependants in the EU for every 100 people of working age, in
2025, there are expected to be 58. The number is projected to be particularly
high in most regions in France, Sweden and Finland.
The retirement of 'baby-boomers' together with the declining number
of young people is set to reduce working-age population in the EU from
around 2010 onwards, which is projected to fall from around 251 million
now to some 243 million in 2025. At the same time, the average age of
those of 15 to 64 will increase.
…as it will in the candidate countries
The pace of population ageing in the enlarged EU, ie including the candidate
countries as well as the existing Member States, might be slower, but
only slightly. In most candidate countries, active policies of encouraging
population growth during the 1970s and 1980s were reversed in the 1990s.
While the average age of their populations is lower than in the EU at
present, it is likely to increase rapidly over the next 25 years, as falling
fertility rates reduce the relative number of young people under 15 in
all countries apart from Malta. By 2025, the proportion of young people
in total population is, therefore, projected to be even less than in the
present EU.
On the other hand, the proportion of people aged 65 and over in these
countries is, on average, less than in the EU at present (see
Map 10).
The relative number of elderly people will also increase substantially,
though only in the Czech Republic is the number expected to rise above
the EU average by 2020. Nevertheless, both the average old-age dependency
rate and the average overall dependency rate are expected to be only marginally
lower in an enlarged EU than indicated above.
The same is true of the prospective decline in working-age population,
which is projected to occur from about the same time in the candidate
countries as in the present EU. The number of people aged 15 to 64 is
expected to rise slightly from the present 72 million until 2009 and then
to fall to 66 million in 2025. Working-age population in an enlarged EU
is, therefore, likely to reach a peak of 328 million in 2010 and to decline
to 309 million by 2025. As in the EU, the average age of those of 15 to
64 will also increase, though at a slightly slower rate than in existing
Member States.
The labour force in the EU is set to decline and to age…
The trends in working-age population described above will inevitably
affect the growth and age structure of the labour force in the EU, though
this will be influenced as much by changes in participation as by demography.
These, in turn, will be determined by a range of economic and social factors,
most especially by the availability of jobs, but also by education developments,
social attitudes towards women working, the availability of child-care
support, the age of retirement, the details of pension schemes, the structure
of households and so on.
If current demographic and participation trends persist, the labour
force is projected to grow in the EU up to 2010, when it will reach 183
million.3 Thereafter, it will start to decline,
falling to some 175 million by 2025. The onset of decline, however, is
likely to differ significantly between regions (see
Map 11). Nevertheless, in almost all regions in the EU, the number
of economically active people is expected to be falling by 2025, though
at widely differing rates. The decline is projected to particularly marked
in Italy, Germany and Spain, the labour force falling by over 1 million
in each case.
Because of demographic trends and possible changes in participation,
the relative number of people of 50 and over in the labour force is expected
to increase in all Member States, from an average of around 20% of the
total now to 30% in the early 2020s. In the Nordic countries, where participation
is not expected to change much, the increase in this proportion is likely
to be relatively small, while in Italy and Spain, where birth rates are
low and participation rates of women could increase markedly, it might
be substantial.
…which could have profound economic consequences
As noted above, these trends could have far-reaching economic consequences,
especially for the sustainability of social protection and health care
systems, which will be put under increasing pressure by the growth in
the number of elderly people. Accordingly, attention needs to focus on
the possibility of increasing participation among older people as well
among women, the prime source of labour force growth in the future.
At the same time, such a possibility brings into focus the problem of
maintaining, updating and extending the skills of the people concerned,
which is already a concern given the ageing of the work force. In many
countries, the pursuit of early retirement policies up until recently
have enabled this problem to be ignored. Moreover, the perception that
returns to the training of older workers are relatively low, whatever
the reality, means that employers are often reluctant to undertake the
necessary investment. This reluctance tends to be compounded by the perceived
difficulties of the training process and of older workers learning new
skills. These difficulties, however, can be greatly reduced if the training
of such workers becomes part of a process of lifelong learning, which
in turn means that people acquire new skills throughout their working
lives and are accustomed to doing so. This kind of development, which
requires a change in attitudes as well as in working practices, is essential
if the potential of older workers is to be effectively tapped, which could
prove vital for EU producers to remain competitive on world markets.
It is equally important to ensure that women - or indeed men - returning
to work after a period of absence due to family reasons have access to
the training they need to update their skills and learn new methods of
working, so that they can both find suitable jobs and contribute effectively
to the development of the EU economy.
The prospective decline in the number of young people might have the
effect of diminishing youth unemployment, though this in the long-term
depends more on their skills and the rate of job growth than on numbers
per se. The decline in young people entering the labour market has been
accompanied by an increase in the number remaining in education and initial
vocational training longer. In a knowledge-based economy, it is essential
that this trend continues. At the same time, the growing recognition of
the importance of workplace training as well as formal tuition means that
in a number of countries the labour force participation of young people
is increasing as they combine paid employment with continued education.
Whatever measures are taken to increase participation, the extent to
which it increases for women and older workers as well as young people,
ultimately depends on the rate of job growth, which in turn is likely
to depend on the pace of economic development. (The process, it should
be emphasised, is not solely one-way, since more skilled and enterprising
people joining the labour market is itself likely to boost competitiveness
and economic growth.) This will determine whether unemployment declines
and job shortages emerge or whether, despite the falling number of people
of working age, unemployment in the Union increases again.
The labour force in many parts of northern Italy is, for example, projected
to decline significantly in future years on the basis of past trends and,
indeed, labour shortages are already beginning to emerge. In the longer-term,
however, if economic growth and net job creation can be sustained at high
levels, this might encourage more people - women in particular whose participation
is well below the EU average in most areas - to join the labour force
and ease shortages. (Participation of women in northern Italy has increased
markedly over the past 10-15 years, whereas in southern Italy, where job
growth has been depressed, it has hardly changed.)
Inward migration could increase it should not be overemphasised…
Recent studies conclude that large-scale migration flows from the candidate
countries are unlikely to occur and should not be overemphasised in the
enlargement agenda. Since, however, convergence of income per head in
the CECs to EU levels will be a long process, migration is almost certain
to increase once free movement is possible. Estimates are that net migration
to the EU could amount to some 335,000 a year immediately after entry
barriers are removed, but that this would fall to below 150,000 within
a decade4. At this time, the number of people
living in the EU from the CECs could reach 2.9 million and another 10
years later, 3.7 million, rising to a peak of 3.9 million 30 years after
the introduction of free movement of labour. This implies a growth in
CEC nationals resident in the existing EU Member States from 0.2% of total
population in 1998 to only just over 1% in 30 years time. On these estimates,
concern that migrants from the CECs will swamp EU labour markets are,
therefore, ill-founded.
People moving from the CECs are likely to go mainly to Germany and Austria,
where the numbers are already high. Estimates are that some 65% will go
to the former, 12% to the latter, and within these countries, primarily
to border regions and centres of economic activity - in Germany, to southern
regions bordering the Czech Republic rather than to the new Länder,
in Austria, to eastern areas. Regions bordering the CECs are also likely
to experience increased temporary inward migration and commuting. This
concentration could, however, give rise to social tensions in the areas
concerned.
…and could ease labour shortages
Perhaps the most interesting and potentially important conclusion from
recent studies is that, unlike the EU, many CECs are likely to experience
a significant growth in younger people aged 20 to 35 over the next decade
or so. This represents an opportunity for the enlarged EU, insofar as
it gives employers the possibility of taking on young people with high
education attainment levels. Indeed, if economic recovery continues at
the pace currently expected, then it will also be a time when skill shortages
are likely to become more acute.
In fact, there is also evidence in the EU of labour shortages in less
skilled activities in a number of regions, even in some where unemployment
is relatively high. Immigrants could potentially help to relieve shortages
in these areas as well, though it is important that adequate measures
are introduced at the same time to integrate those concerned into the
local community and prevent them becoming socially excluded.
In this regard, a recent Commission Communication on a Community Immigration
Policy (COM(2000)757) proposed the adoption of a controlled immigration
policy as one of the responses to the problems implied by demographic
trends and pointed to the potential contribution of immigration to the
European Employment Strategy.
Although the outflow of young people might tend to damage the development
potential of the regions from which they move in the short to medium-term,
especially as those moving are likely to include a disproportionate number
of the most highly educated, their subsequent return, with the expertise
and know-how they have acquired, could give a major stimulus to development
in the CECs.
Nor is enlargement likely to pose serious problems for EU labour
markets
It is unlikely that the free labour movement will have a major effect
on EU labour markets as a whole, though it could affect Member States
differently according to the specific circumstances which exist. CECs
at present are small in economic terms, which means that increased imports
from them are likely to affect prices in goods markets, and so wages and
employment, only to a limited extent. According to a recent study, for
example, immigration averaging some 200,000 a year over the next 15 years
would reduce earnings by under 1%.5 In border
regions, however, the effect on labour markets could be more significant,
as it could be in sectors which are most exposed to competition from CEC
imports, though equally there are potential gains from the proximity of
new markets.
BACK
- These projections do not take account of future EU
membership, which could affect the underlying trends, particularly of
migration, though most of this movement is likely to occur between these
countries and the existing EU Member States, but also, in the longer-term,
birth and death rates.
- These ratios, it should be noted, are only demographic
indicators. While they reflect the problems implied for social welfare
and taxation systems, there are other equally important factors which
need to be taken into account, particularly, the number of people of
working age who are actually in employment and paying taxes and social
contributions.
- Based on the latest Eurostat regional labour force
scenarios, compiled in 1998, which are combined with the population
projections produced in 1997. The scenarios cover 204 regions NUTS 2
level regions in the EU over the period 1995 to 2025. The baseline scenario
which is referred to in the text assumes the continuation of most current
trends but some reduction in regional imbalances.
- European Integration Consortium (DIW/CEPR/FIEF/IAS/IGIER)
2000 : The Impact of Eastern Enlargement on Employment and Labour Markets
in the EU Member States, study for DG Employment and Social Affairs
of the European Commission; Berlin/Milan.
- Bauer, T. and Zimmermann, K.(1999) : Assessment of
Possible Migration Pressure and its Labour Market Impact following EU
Enlargement to Central and Eastern Europe, Study for the UK Department
of Education and Employment, IZA and CEPR, Bonn/London, Germany/UK.
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