EUROPE: EU Official Warns Of Looming Demographic Crunch

BRUSSELS, Belgium (EurActiv), February 5, 2008: European society is at risk of losing its dynamism if it does not develop a coherent approach to an ageing population and decreasing workforce, Economic Affairs Commissioner Joaquin Almunia said in Brussels. The over-40s will be in the majority across Europe for the first time in history by 2020. Meanwhile, the number of people over 65 will have doubled by 2050, making up around 30 percent of the total population, changing the current ratio of four working-age people per pensioner to just two. Since 2001, the Commission has been publishing regular analyses of the economic impact of ageing. What's more, companies have become increasingly aware of the implications of ageing societies for the labour market and economic performance, as the Adecco Fitness Survey 2008 shows. Speaking last week at a Friends of Europe conference entitled "Europe's looming demographic crunch", Almunia warned that "postponing inevitable policy choices will only make them more difficult to implement later". Although living longer is "clearly considered good news", Almunia also identified the risks of ageing "for the sustainability of our social model". He warned that the absolute drop in the number of workers will be "so dramatic that even if the EU reaches its Lisbon target of 70% in employment, we will still face reductions in the workforce". The Commissioner identified the decreasing share of the working age population as a "major factor" influencing stuttering economic prospects, projected to fall from the current rate of about 2.5% to about 1% between 2030 and 2050. This development requires a mix of measures on different levels, Almunia pointed out, referring to the three prongs of the Commission's "comprehensive strategy" published in 2001: 1. Consolidate public finances to create some budgetary room for manoeuvre before the full impact of ageing unfolds. 2. Raise employment rates, especially amongst women, youth and older workers. 3. Reform pension, health-care and long-term care systems. Despite the almost 6.5 million new jobs created in the last two years and unemployment being at the lowest level in 15 years, employment rates among women and older workers are still rather low, Almunia said. Flexible working arrangements – 'flexicurity' – combined with life-long learning approaches are needed to help modernise European labour markets and ensure that people have access to employment throughout their working lives, stated the commissioner. "We need good education and training systems that allow people to gain new skills whether they are 16 or 60," Almunia explained. Moreover, the EU and its member states should develop labour market policies which reconcile work and family life, allowing more women to participate in the labour market, Almunia added. A very positive development is the increased value of older workers for companies, declared the commissioner. Since 2000, the employment rate for workers over 50 has increased from 36% to almost 44%, and companies plan to continue to hire older people in future, Wolfgang Clement, Adecco chairman and former German minister for Economics and Labour, told the conference, citing the Adecco Survey. Despite such positive developments, older people should be given further incentives to extend their working lives and hence accrue pension benefits, stressed both Almunia and Clement. Almunia also highlighted the importance of immigration in compensating for current shortcomings in European labour markets. "Immigrants already play a vital role for Europe in alleviating the labour shortages in some member states and will increasingly do so as populations become older […] They will also help fill skills shortages that are already present in Europe today, both in high-skilled and low-skilled work," said the commissioner. © EurActiv.com PLC