The European Union has been facing, in the past 10 years, a destabilizing demographic decline, influenced by low natural growth, a decrease in employment, less births and an increasingly aging population.
After years of baby boom we now find ourselves in a “baby crash” due tothe decrease in birth rates and fertility (the lowest being in countries such as Germany, Italy, Romania and Bulgaria and the highest in Ireland, France and the UK). Most would say that, with the current economic crisis, having a baby is a luxury because, honestly, it’s an expense that many aren’t able to afford. The fact that most companies, organizations and workplaces aren’t thrilled about having pregnant employees that will ask for maternity leave and benefits doesn’t exactly encourage women and couples to expand their families either.
Although the increase in life expectancy and the aging population are both positive results of and efficient medical and social progress, higher life expectancy results in an increase of the elderly, specifically of those aged over 80, a resource intensive community that needs more medical assistance, thus resulting in more expenses for their governments. At this pace, by 2050 the segment aged over 80 will be the fastest growing and rising by almost 77%. According to the European Union Center of Excellence, over the last 25 years Europe’s young population (aged 14 and under) has decreased by 21 per cent and currently more elderly than children live in the EU. In 25 years the number of working-age Europeans will fall by 7%, while those older that 65 will increase by 50%. After the Lisbon European Council of March 2000, former Dutch Prime Minister Wim Kok wrote that “the pure impact of ageing populations will be to reduce the potential [economic] growth rate of the EU from the present rate of 2–2.25% to around 1.25% by 2040. The cumulative impact of such a decline would be a GDP per head of some 20% lower than could otherwise be expected.” With the decrease in the working-age group, older employees will be kept at work as much as possible and eager university graduates won’t find work due to the occupied and limited job offers.
Another obstacle that impedes this continent to reach economic stability and prosperity is the inability it has to break away from the chains of tradition. Europe was once the cultural taste-maker and political role-model of the world, which leads to its inability to fully embrace modern ways, new theories and different methods that are part of other countries.
Ironically, immigration, a much debated topic, is mostly viewed as a source of “job stealing” from locals and yet, in 2000-2006, 83% of the population growth in the EU was the result of immigration. Only in France and in the Netherlands were birth rates higher than immigration rates in 2006.
The Lisbon European Council of March 2000 had as its objective that to make of the EU “the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion”1 and suggested various paths to do so, although little progress was reached at the set deadline.
A refocus on the Lisbon strategy would give the economy the chance to adapt to the fast demographical changes of our times, promote diversity against prejudice and encourage trade and economic integration between countries.
Active employment policies could increase the employment rates and create new opportunities for the younger generations to sustain the demands on pensions. It has been suggested to restrain and lower pensions and increase social security, which would obviously please no one due to the higher taxes, but do we really have a choice? Borrowing and public debt will increase and then, who will pay the debts off if the population is shrinking?
Privatization of the pension system is an option that a few countries have chosen, and to much surprise, it has showed that it has lead to better public spending trends.
Europe is quickly becoming an old continent with increasingly older employees leaving no, or little, chance for the new generation to succeed.
Chiara Romano Bosch.