Tuesday

23rd Jul 2019

Brussels warns of unsustainable pensions

The European Commission has unveiled gloomy figures about the EU's economic prospects due to ageing population problems, warning that several member states might face unsustainable health and pension costs.

The paper to be presented to EU finance ministers on Monday and Tuesday (13-14 February) predicts that while Europe's overall economic growth is set to fall from today's 2.2 percent of GDP to 1.9 percent in the next decade, public spending will also soar to 4 percentage points by 2050.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"For most countries, a drop in growth like this predicted for such a long period is something we have never observed before and it remains the main challenge for the future," commented one commission official.

The "new" member states are likely to see the greatest reduction in economic output, starting with their current growth of 4.3 percent which is expected to go down to 0.9 percent by 2050.

On the other hand, several "old" EU countries will face "somewhat stronger" pressure on their public spending due to ageing populations, with pension costs set to soar by 9.7% in Portugal, 7.4% in Luxembourg, 7% in Spain and 6.5% in Ireland.

EU economic commissioner Joaquin Almunia has called on his colleagues from national governments to "exploit a fast-closing window of opportunity to intensify reform efforts."

"Unless this is done, many EU countries...will simply not be able to face the cost; not when there will be two workers per elderly citizen as opposed to a ratio of four to one now," Mr Almunia stated.

Good and bad news

The demographic changes in Europe are linked to both the so called "baby boom" generation of the 1950s - who will be retiring in the coming years - and to low fertility rates, mainly in Germany, Austria, the Mediterranean countries, and central and eastern European states.

The most worrying result of these changes is that the working age population (between 15 to 64 years) in Europe is likely to shrink by 48 million (16%), while the number of elderly people will jump by 58 million (77%) by 2050.

The commission argues the good news is that Europe is still showing potential for a growth in the labour market, with employment expected to rise from 63 percent to 67 percent in 2010, while the Lisbon goal of reaching 70 percent employment, is to be reached ten years after the initial deadline, in 2020.

Also, the EU executive says some countries that have introduced pension reforms, like Germany, France or Austria, already face more optimistic scenarios about their future budgetary contraints.

Euro under threat

The Brussels paper does not link the projected fiscal problems of individual EU member states to the performance of the bloc's common currency.

But some experts argue the euro could come under threat when the pensions boom hits Europe.

Dutch ex-commissioner Frits Bolkestein recently pointed out that within ten years, when the difficulties associated to ageing start to more clearly put pressure on public expenditure, some countries unprepared for it will be forced to borrow more and increase their budget deficit.

This could have serious consequences for interest rates and inflation, and on the whole for the EU's stability and growth pact - the set of rules underpinning the euro - threatening the euro, Mr Bolkenstein pointed out in January.

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.

EU parliament backs whistleblower law

MEPs backed an EU law to protect whistleblowers from retaliation in both the public and private sectors. EU states will have two years to transpose the directive.

EU commission to map gender recognition

The European Commission will start looking at how EU states determine genders - as part of an effort to make it easier for people to determine their own identities.

News in Brief

  1. Johnson is next British prime minister
  2. Johnson set to be announced British PM on Tuesday
  3. UK-based owners of .eu domains could keep name
  4. Weyand: EU would respond to US tariffs on cars
  5. UK foreign office minister quits ahead of Johnson as PM
  6. AKK to boost Bundeswehr budget to Nato target
  7. Police arrest 25 after Polish LGBT-march attack
  8. Ukrainian president's party tops parliament election

Stakeholder

FIFA's schools programme aims to reach 700m children

Football clubs today invest huge sums of money in youth development and court talented young players from an early age. Children are the future – not only where football is concerned, but also for society in general.

Opinion

A fundamental contradiction in EU drug policy

The knock-on affects from a 'war on drugs' in Europe is creating problems in Albania - and as far afield as Guinea-Bissau, Mali, Bangladesh and the Philippines.

Stakeholders' Highlights

  1. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  2. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  3. Nordic Council of MinistersNo evidence that social media are harmful to young people
  4. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  5. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  6. Nordic Council of MinistersEducation gets refugees into work
  7. Counter BalanceSign the petition to help reform the EU’s Bank
  8. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  9. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  10. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  11. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  12. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North

Latest News

  1. Macron: 14 EU states agree on a migration 'mechanism'
  2. As Johnson set to become PM, ministers pledge to resign
  3. Poland's PiS prepares 'failsafe' for October election
  4. Abortion Wars
  5. EU goes on holiday as new UK PM arrives This WEEK
  6. Survey: Half of EU staff 'don't know' ethics rules
  7. Von der Leyen signals soft touch on migrants, rule of law
  8. Timmermans: von der Leyen will be tough on rule of law

Join EUobserver

Support quality EU news

Join us