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Why the tone of doom for Europe’s ageing?

The EU’s ageing problems can’t be stopped by either fertility or migration. But labour participation and education trends offer clear reasons for optimism, writes Nicholas Gailey

By: EBR - Posted: Friday, October 4, 2019

In prosperous countries – including every single EU member state – long life spans and low birth rates are driving the average age upward.
In prosperous countries – including every single EU member state – long life spans and low birth rates are driving the average age upward.

by Nicholas Gailey*

In prosperous countries – including every single EU member state – long life spans and low birth rates are driving the average age upward. This byproduct of medical success and personal choice has set the stage for labour force decline, risking Europe’s ability to support itself.

Many prominent voices clash over ways to infuse youth back into Europe and tackle a rise in dependency on the social systems. But the heated debates regularly misjudge the relationships that migration and fertility can have with EU ageing in the first place.

A recent demographic study from the European Commission reveals the reality of unstoppable ageing, while also showing that Europe has a way out of its dilemma.

The path is through broader and more efficient integration into the labour force of those already here, especially women and people who have often been considered too old.

To illustrate the point – if migration inflows doubled to four million each year, the EU would quickly grow by more than 150 million people by 2060, while the proportion aged 65+ still balloons. The current near-balance between workers and dependents would similarly deteriorate over the decades regardless.

Ageing momentum is so stubborn, in part, because migrants inevitably get older and add to the non-working populations just like everyone else does. Secondary effects on fertility also weaken with the adoption of host country norms and have limited influence on overall EU births per woman.

To ‘outrun’ these natural limits would require the physically impossible, ever-doubling of flows.

As an anti-ageing policy, boosting fertility through family support makes a bit more sense. The approach can alter age structure if successful, but still, it’s a far future investment as benefits only materialise with the cycling of generations and it cannot reverse EU ageing by 2060.

In spite of these realities, a weaker European labour force does not have to be our destiny.

A rising tide of dependents can be wholly averted if EU member states gradually move towards to the higher labour participation rates already reached in Sweden today for men and women at any given age. Such slow improvements over the next decades would make a decisive difference.

Even if female labour participation moves closer to that of men in their own country, almost half of the feared ageing burden will be avoided. Trends are already heading in that direction as a kind of ‘demographic metabolism’ continually renews the working-age population with a young woman more likely to work than previous generations.

Besides labour participation, furthering job-relevant education offers a second meaningful policy target to manage ageing on the horizon.

By 2060, Europe’s labour force will be much better educated than today. The expected declines come solely from fewer workers with secondary education or below, while workers with technical training or university education will be twice as numerous.

Flowing from this shift are gains in productivity and adaptability, critical qualities for an economy headed for transformation. A smaller, better educated labour force may, in fact, be best positioned to cope with the wildcards of artificial intelligence and automation, which put an almost unimaginable 46% of OECD jobs in jeopardy of elimination or significant alteration.

In the spirit of adaptability, our conception of who is ‘old’ also deserves an update.

Europeans are living longer, healthier lives than ever before. This achievement should be reflected in flexible retirement options as the relatively arbitrary age of 65 is increasingly not synonymous with an end to one’s active years.

What does belong in the retirement home is the idea that Europe’s ageing can be stopped in the coming decades, by any policy. Political leadership should instead reset expectations on ageing accordingly.

Family sizes remain under what people reportedly desire in Europe due to a variety of barriers. Raising children requires proper infrastructure, and sustained financial and cultural support if population ageing is to be moderated in the long-run.

But for the foreseeable future – at least through 2060 – incentivising labour participation and cultivating human capital offer powerful strategies to take the edge off ageing not only for Europe but also Japan, China, the US and other societies with similar futures ahead.

*co-author of Demographic Scenarios for the EU

**first published in: www.euractiv.com

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