Fear of ageing? ” “

The question of the ageing of the population and its consequences on public finances (pension systems, social security, welfare) is slowly capturing the international spotlight. In collaboration with the Center of Strategic and International Studies (CSIS) in Washington, the General Directorate of Economic Affairs of the European Commission held a conference on “The economic and budgetary implications of global ageing” in Brussels in recent days. The European Commissioner for the economy, the Spaniard Pedro Solbes de Mira , described the emergency situations that the European Union is called to tackle in the mid term, as well as the measures that need to be adopted immediately with a view to preparing member states to manage a situation whose consequences are in large part unknown. SirEurope sounded out the Commissioner’s views. Situation and forecasts. “Europe is faced by a real demographic challenge. In the course of the coming decades – said the Commissioner – the enlarged Union will be impacted by unprecedented changes in the number and age structure of its population. Birth-rates are set to remain at levels lower than the natural generational replacement of the population, while life expectancy will grow by a year every decade. Immigration – continued Solbes – in the absence of radical changes in immigration policies is unlikely to reverse the current demographic trend. According to Eurostat data, the major impact will be had on the number of persons of working age (15-64 years). If, on the one hand, the working population will decline by forty million in the next fifty years, on the other, the number of the over-65s will concurrently grow by more or less the same quantity. If today there are four citizens of working age for every single elderly person (pensioner), in 2050 that proportion will be halved, with two workers for each pensioner”. The implications. “From an economic point of view – emphasized Solbes – our fear is that member states will not be able to manage the budgetary consequences of the ageing of their population; the impact on public finances will be highly negative. The most optimistic predictions speak of a growth in public expenditure linked to the elderly (pensions, health care, social security) from 5 to 8 percentage points of GDP by 2040. The entry into pensionable age of the children of the post-war baby boom from 2010 on will have the consequence of reducing the European growth rate by 0.8%, with the consequent lowering of average living standards. These are not long-term fears – insisted the European Commissioner – but effects that are already emerging in some member states”. Possible solutions. “The heart of the problem remains the impact of the ageing populations on labour markets and on potential growth,” Soldes explained. “The Commission and the European Council have agreed a three-point strategy to cope with the demographic changes: rapid reduction of public debt; growth of employment rates, especially for women and the elderly; reform of pension and social security systems. The EU – following the example of the Security Pact – may introduce useful Community constraints aimed at helping Administrations to introduce difficult reforms at the national level. The Union may also intervene in the comparative analysis of problems and solutions: the question of the ageing of the population may represent a natural laboratory of political challenge for international collaboration. Lastly, it is indispensable – concluded Solbes – to open a wide-ranging public debate on the issue: to re-think our approach to working life and to re-allocate the cost of demographic expenditure by alleviating its burden on public finances. These are difficult decisions, but no country can afford any longer to ignore them”.