An Ageing Population: The European Facts and Figures

Global Populations are Ageing: Spotlight on Europe

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Worldwide, the population aged 60 and over is growing faster than any other age group. The 60+ population, at 605 million today, will almost double by 2025, to 1.2 billion. By 2050, it will reach 2 billion—marking the first time in history when people aged 60 and over outnumber children aged 14 and under.1

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The trend toward ageing is most pronounced in Europe, which by 2025 will have eight of the 10 « oldest » populations—that is, percentage of people above age 60—among countries worldwide with at least 10 million people.2

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By 2050, an estimated 35% of the European population will be over the age of 60, compared to 20% today.3

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Why is this happening?

– People are living longer. Worldwide, life expectancy at birth has increased by 20 years since 1950. Although in part reflective of a declining infant mortality rate, this figure has more to do with increasing life expectancy at older ages. Today, European men at age 60 can expect to live for an additional 17 years and women can expect another 22 years of life.4

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– Fertility rates have fallen throughout much of Europe. In 1970, European women, on average, gave birth to 2.16 children each, a rate that today has dropped to 1.38. In individual countries the drop is even more pronounced: Poland has fallen from 2.25 to 1.26; Italy, from 2.33 to 1.23 and Spain, from 2.86 to 1.15.5

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– The post-war generation is reaching retirement age. Babies born in the post-World War II boom reach retirement age over the next 30 years.

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What does it mean?

– The European working-age population will fall as its ageing population grows. By 2050, the number of people of working age (defined as 15 to 64-years-old) in Europe will plummet by approximately 130 million. The ratio of workers to pensioners, now almost 5:1, will be cut by more than half.6

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– With fewer workers per pensioner, existing pension funds will be severely strained. Under most state-administered pension systems, the pensions of those who have retired are paid by those still working. As the number of workers per pensioner decreases, the sustainability of current pension systems diminishes. In Italy in 2000, public pensions consumed as much as 15% of annual GDP. In Austria, France, the Netherlands and Germany, the figures were between 13% and 14%.7 As the size of Europe‘s ageing population grows in coming decades, public expenditure on pension benefits may be pushed to even higher levels.

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– To sustain strained pension systems, Europe‘s elderly may need to work longer. To maintain current retirement benefits whilst holding tax levels constant for the young, retirement ages across Europe would have to rise. By 2030 in France and Italy, retirement would need to start at 73 and 74 respectively, compared to an average of 58 in each of these countries today.8

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– Like pensions, national healthcare systems will be strained, though to a lesser degree. According to OECD projections, an ageing European population could cause public expenditure on health and long-term care to rise from 6% of GDP today to 9% in 2040.9

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Government, EU and Business Respond

– National governments are pushing for delayed retirement. This year, Austria opted to increase retirement age gradually, from 61.5 to 65 for men and from 56.5 to 60 for women. Germany, which has already raised its retirement age from 63 to 65, is considering a further incremental increase to 67. In Italy, a proposal to raise retirement age from 60 to 65 beginning in 2008 has been approved by the cabinet and submitted to parliament.

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– The EU has called for legislation to combat age discrimination. The EU Employment Directive, issued in 2000, requires all 15 EU Member States to introduce legislation prohibiting age discrimination by December 2006. In several countries, including the UK, Finland, Ireland and the Netherlands, voluntary codes protecting older workers have already been put in place.

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– Businesses must prepare to meet the needs of an ageing population. Although some businesses have been wary of the potential liabilities of an older workforce, many recognise that changing demographics present significant business opportunity.

« Designing products, goods and services to take account of population ageing will be paramount in order to increase the length of disability-free life and meet the aspirations of the ageing population, » writes Philip Taylor, executive director of the Cambridge Interdisciplinary Research Centre on Ageing.10 From the provision of financial, healthcare, tourism and leisure services to the design of living spaces, working spaces, communities and transportation systems, business innovation can allow older people to remain independent for longer.

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1. An Aging World 2001, U.S. Department of Commerce, UN Department of Public Information, DP/2264, March 2002.

2. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects.

3. Ibid

4. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, Population Ageing 2002.

5. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat, World Population Prospects.

6. Ibid

7. Eurostat-ESSPROS, Population and Living Conditions, « Social Protection: expenditure on pensions, » November 2003.

8. « Democratic Risk in Industrial Societies: Independent Population Forecast for the G7 Countries, » World Economics, Volume 1, No. 4, October-December 2000, http://www.csis.org/gai/worldecon.pdf.

9. OECD Health Data, 2002, 4th ed.

10. Taylor, Philip, « Global ageing – meeting the business challenges, » prepared for the symposium: An Ageless Workforce – Opportunities for Business, Sydney, Australia, 27 August 2003.

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SOURCE: The Alliance for Health & The Future

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