Brussels sounds alarm about EU’s rapidly ageing population

These are some of the disquieting findings from a new report on demographic change released by the European Commission on Wednesday, which paints an alarming picture of the profound societal and economic transformation triggered by a shrinking workforce.

In short, the EU is getting too old too fast.

“Each member state is dealing with its own challenges,” said Dubravka Šuica, the Commission’s vice president in charge of democracy and demography.

“In the Netherlands, housing and population density are a key challenge, while in some regions of Spain, it is population decline. In Italy, the key challenge is declining birth rates and an ageing population. Greece is the member state with the fastest ageing population. Croatia struggles with brain drain of younger persons.”

According to the report, the EU’s population, which was slightly over 448 million people earlier this year, is projected to reach its peak around 2026 and then gradually decrease, losing 57.4 million working-age people by 2100. More worryingly, the bloc’s dependency ratio — the ratio of the number of elderly people compared to the number of people of working age — will surge from 33% today to 60% by the end of the century.

The drastic shift in the demographic pyramid will upend the labour market, with widespread shortages that could inhibit growth, productivity and innovation rates, and therefore accelerate loss of competitiveness vis-à-vis other major economies.

A dwindling workforce will inevitably reduce revenue for state coffers while piling additional pressure on public budgets to spend more on healthcare and pensions, an explosive combination that could divert attention away from the much-needed investments in renewable energy and cutting-edge technologies.

This, in return, will undercut social cohesion, Šuica said, and “in the end, the trust in democratic institutions and processes in Europe.”

Before the damage becomes irreversible, the Commission recommends member states take decisive action, such as closing the gender pay gap, improving work-life balance, offering tax benefits, reducing childcare costs, and making it easier for young people to access quality jobs and affordable housing earlier in their adult lives.

Brussels also says it is “crucial to empower older workers to remain active for longer” through upskilling programmes and flexible working hours, and urges businesses to overcome “preconceived notions and stereotypes” about the elderly.

“Longer lives create new opportunities and usher in a shift from an ageing society to a  longevity society,” Šuica said, calling on countries to tap into the new economic opportunities created by the so-called “silver economy.”

In another recommendation, the report calls for “managed legal migration” to fill the surging number of job vacancies, which are already at record highs.

The bloc, which is in the midst of a hard-fought push to reform its asylum policy, received last year 3 million migrant workers via legal pathways compared to 300,000 who arrived through irregular means.

During the presentation, Šuica underlined several times that, while legal migration was a valuable option to address the demographic challenge, it was not the only one, a clarification that appeared designed to avoid the wrath of hard-right governments that have espoused pro-natality policies in a bid to boost the birth rate of local population without relying on migration flows.

“We are 27 democracies,” Šuica said. “It’s a different situation and this is the reason why we say that there is no one size fits all.”