Friday

29th Mar 2024

Ageing population puts six EU state budgets at 'high risk'

Ageing populations in across Europe will result in "high risk" public finances in six member states with average EU debt set to reach 200 percent of GDP by 2050 if national governments do not push through structural and budgetary changes.

According to a report adopted by the European Commission on Thursday (12 October), the EU as a whole will see a hike of 4 percent of GDP [Gross Domestic Product] in age-related public costs by mid-century due to demography changes.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In some countries - like Spain, Ireland, Portugal and the Czech republic - these costs are set to jump by 7 percent of GDP while in others - like Poland or Latvia - they will decrease.

The rising budgetary pressures are caused by the demographic changes Europe is currently undergoing - mainly a significant fall in fertility, with only a two percent rise in population expected between 2005 and 2025, as opposed to 25.6 percent boost in the US.

Longer life expectancy is also contributing to serious concerns about the sustainability of pension systems.

The six countries with the highest risk forecasts - the Czech republic, Greece, Cyprus, Portugal, Hungary and Slovenia - face a combination of problems including high ageing costs, large state deficits and a high level of debt.

A slightly better situation has been recorded in ten member states - including Germany, France, the UK, Italy, Spain - with "medium" risks and nine countries - including Denmark, Finland, Sweden, Poland - with "low" risks for their future public expenditure.

Some states, even those considered the least problematic such as Denmark, the Netherlands and Finland, may still have to consider further pension reforms to offset the costs of ageing populations even if they are are fairly strong in terms of budget deficit.

'What to do' list

Overall, the EU executive is suggesting three types of measures to member states - fix their public deficits, reform their pension and health systems to cut expenditure and boost employment, mainly of old workers – possibly by raising the retirement age.

Boosting employment has been one of the key goals of the so-called Lisbon agenda - an ambitious reform plan aiming at making the EU the most competitive economy in the world.

Under the latest projections, the Lisbon goal of 70 percent employment by 2010 looks likely to be achieved ten years later - with the current average figure at 63.8 percent.

The other challenge of boosting participation of older workers in the labour market has been so far achieved by eight countries, mainly Sweden, Denmark and the UK.

Asked whether it is not controversial to promote the employment of older workers while a high number of young people remain out of jobs in several EU member states the social policy commissioner Vladimir Spidla commented that the two groups are "not competing with one another."

"Old people will not damage job opportunities for the young. We have to realize that our work force will be reduced by 20 million workers in the long run - and our recommendations are indeed of long-term nature," Mr Spidla told journalists.

He also suggested that the EU could in future use its tools - such as structural funds - to tackle demographic changes and help governments to pay for kindergartens or other facilities making it easier for women to work.

In terms of pension reforms, EU economic commissioner Joaquin Almunia suggested the EU executive should only ask national governments to secure their sustainability, without prioritising one type of pension system over another.

Commissioner Spidla suggested the best solution is a mixture of pay-as-you go systems and private pension funds.

EU labour market reform 'urgent'

The European Union needs to undertake far-reaching labour market reforms if it wants to be able to safeguard its social security system, experts have said.

Ukraine slams grain trade restrictions at EU summit

Restrictions on Ukrainian agricultural exports to the EU could translate into military losses in their bid to stop Russia's war, Ukrainian president Volodymyr Zelensky warned EU leaders during their summit in Brussels on Thursday.

Difficult talks ahead on financing new EU defence spending

With the war in Ukraine showing no signs of ending any time soon, EU leaders will meet in Brussels on Thursday and Friday (21 and 22 March) to discuss how to boost the defence capabilities of Ukraine and of the bloc itself.

Opinion

Why UK-EU defence and security deal may be difficult

Rather than assuming a pro-European Labour government in London will automatically open doors in Brussels, the Labour party needs to consider what it may be able to offer to incentivise EU leaders to factor the UK into their defence thinking.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us