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Europe's Slow Demographic Bleed

BRUSSELS, Belgium, JULY 17, 2005 (Zenit) - Europe will soon face serious economic problems caused by a decline in its active workforce. This was one of the concerns expressed by Vladimir Spidla, European Union commissioner for employment, social affairs and equal opportunities, at a recent conference in Brussels.

In a press release dated July 11 the commissioner's office explained that not only does the so-called European Social Model need to be modernized. There is also a need for more children, and to better balance work and family life. Failing in these tasks "would directly hit Europe's future economic growth, as well as putting a potentially unbearable burden on women's shoulders," the release noted.

The conference is part of what is termed "the Green Paper process," which continues until Oct. 15. Following the publishing of a Green Paper last March the European Commission is now holding a period of consultations, entitled "Confronting Demographic Change: A New Solidarity Between the Generations."

The Green Paper, released March 16, contains a hard-hitting outline of the demographic challenges facing Europe. It started by noting that even though families still constitute an essential part of European society they do not find the surrounding environment conducive to child-rearing.

In 2003, the natural population in Europe rose by just 0.04%. Population growth is forecast to continue, albeit slowly, until 2025. The population in the European Union member states should reach 458 million this year, increasing to 469.5 million in 2025.

But, without exception, the fertility rate everywhere is below the threshold needed to renew the population, around 2.1 children per woman, and has even fallen below 1.5 in many countries.

In fact, 55 of the 211 regions of the 15 older-member EU states already saw a fall in population during the second half of the 1990s. And in the 10 new states there was a fall in 35 out of 55 regions, because of natural decrease and net emigration. The result: between 2000 and 2030 the share of the 25 EU member states in world population is likely to plunge from 12% to 6%.

Countries that could enter the European Union during the coming years also face severe demographic problems. Forecasts for Bulgaria and Romania show negative growth (-21% and -11% respectively, by 2030). Croatia's population is also forecast to decline, by 19%. The big exception is Turkey, where the population is set to rise by more than 19 million between 2005 and 2030, an increase of 25%.

Economic threat

The economic consequences of the population changes pose a severe challenge. The Green Paper baldly states: "Never in history has there been economic growth without population growth."

The demographic crunch is especially pronounced when it comes to those of working age (15-64 years). Between 2005 and 2030 the numbers in this age bracket are set to fall by 20.8 million.

The number of young adults (25-39 years) will begin to fall in 2005, and this trend is set to accelerate significantly after 2010, with a decline of 16% between 2010 and 2030. The number of 40- to 54-year-olds will start to fall in 2010. By contrast, the number of people aged 55 and over will grow by 9.6% between 2005 and 2010, and by 15.5% between 2010 and 2030.

A previous report by a group chaired by Wim Kok noted that this aging process could cause potential annual growth in gross national product in Europe to fall from 2% to 2.25% range today, to 1.25% in 2040.

The report suggests a number of steps that could be taken to face up to this threat.

-- Policies should focus on getting people into jobs, especially certain groups in the population such as women and both younger and older people. In this area Europe is behind countries such as the United States. The employment rate of 65- to 74-year-olds in the European Union was 5.6% in 2003, compared to 18.5% in the United States.

-- Greater efforts are particularly needed to integrate young people into the labor market and to support them as they pursue "non-linear" careers, which will see them alternating between employment, study, unemployment and retraining or the updating of skills.

This will not be easy. The report notes that the unemployment rate for those under age 25 was 17.9% last December, compared with 7.7% for those over age 25. Moreover, the skills learned at school are not always in line with the requirements of today's economy, and the level of school failure is still a source of concern. In 2002, some 16.5% of 18- to 24-year-olds left school with no qualifications.

-- More attention must be paid to innovation and increasing productivity, including investment in human resources and higher productivity through economic reforms, research and innovation.

-- Social welfare systems, especially pensions, need to be modernized to ensure their economic sustainability and to enable them to cope with the effects of demographic aging.

When it comes to increasing the number of children the Green Paper observes that surveys have revealed a gap between the number of children Europeans would like (2.3) and the number that they actually have (1.5).

This implies that, if appropriate measures are taken, the fertility rate could rise. The current low fertility rate is the result of a series of obstacles, the report explains. These include difficulties in finding a job; expensive housing; and a lack of incentives, such as family benefits, parental leave, child care and equal pay.

Another remedy is immigration, even though the report argues that on its own this will not be sufficient to solve all the problems. Immigration will also be needed to supply people of working age, and to reinforce the population in general.

But this brings with it the need for admission mechanisms for immigrants to be managed effectively and transparently. In addition, integration and equal opportunities policies need to be reinforced, to achieve a balance between the respective rights and responsibilities of migrants and host societies, the report explained.

Solidarity

The demographic changes will bring with them a new series of challenges for society. "Our societies will have to invent new ways of liberating the potential of young people and older citizens," the Green Paper stated. Dealing with these changes will require an increase in the solidarity between generations, "based on mutual support and the transfer of skills and experience."

A notable feature will the aging of the European population. There will be an increase in the numbers of very elderly persons (those 80 and over) of 17.1% between 2005 and 2010, and of 57.1% between 2010 and 2030. By 2030 this age group will number nearly 34.7 million, compared with about 18.8 million today.

This will pose problems particularly for women, owing to female widowhood resulting from the difference in length of survival between the sexes. And retirement pensions for women are significantly less generous than for men. Women also have shorter careers and earn less during their working lives.

As to achieving a return to demographic growth, the report said there are two basic questions: "What value do we attach to children? Do we want to give families, whatever their structure, their due place in European society?" The answers might determine Europe's future.

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Keywords

Economic, Europe, Employment, Green Paper, Solidarity, Economy

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