Development & Aid, Europe, Headlines, Population

POLITICS: EU Heads Towards a Population Crisis

Stefania Bianchi

BRUSSELS, Mar 17 2005 (IPS) - The European Commission is warning that dramatic demographic changes will have serious consequences for the European social and economic model.

Better health, increased life expectancy and lower fertility rates will lead to dramatic demographic changes within the bloc, the European Union (EU) executive warned in its ‘Green Paper on Demographic Change Thursday (Mar. 17).

The new report is designed to kick start a Europe-wide debate over how to cope with the dramatic fallout from the bloc’s ageing and dwindling population.

In 2003 the EU fertility rate fell to 1.48 children per woman, well below the 2.1 children per woman level needed to maintain the population.

The paper predicts that this trend will continue for the foreseeable future. It says that the EU population will fall from 469.5 million in 2025 to 468.7 million in 2030.

By contrast, the U.S. population is set to increase by 25.6 percent between 2000 and 2025.

Of the five largest member states, only Britain and France are set to grow in population in the coming years, while in some countries the population will start falling by 2015, with a drop of more than 10-15 percent by 2050.

Ireland and Denmark are also nearing the fertility rate necessary to renew the population. The lowest birth rates are found in some of the newest member states, with Cyprus, the Czech Republic and Slovakia at the bottom of the table.

The Commission blames the impending crisis on changes in society which are constraining family choices – late access to employment, job instability, expensive housing and lack of child-rearing incentives through family benefits, parental leave, childcare and equal pay.

"Modern Europe has never had economic growth without births," the Commission said in a statement Thursday. "Incentives of this kind can have a positive impact on the birth rate and increase employment, especially female employment, as certain countries have shown."

It adds that the changes have major implications for prosperity, living standards and relations between the generations.

Presenting the report to media representatives Thursday (Mar. 17), Vladimir Spidla, EU commissioner for social affairs, said the effects of such a changing society will impact on all aspects of daily life.

"The issues are much broader than older workers and pension reform. This development will affect almost every aspect of our lives, for example the way businesses operate and work is being organised, our urban planning, the design of flats, public transport, voting behaviour and the infrastructure of shopping possibilities in our cities," he said.

Spidla said many of the issues involved were clearly responsibilities of individual member states but the commission wanted to launch a debate because the issues also concerned the whole EU.

"All age groups will be affected as people live longer and enjoy better health, the birth rate falls and our workforce shrinks. It is time to act now. This debate on European level is a first step," he added.

Ultimately, Spidla said, attitudes have to change.

"Politics alone cannot solve the problem. They have to go hand in hand with a picture in society that does not stamp women who re-enter the labour market after maternity leave as ‘bad mothers and men that take care of children as ‘softies’," he said.

The dwindling population will also have serious impacts on employment levels.

Between now and 2030, the EU will lose 20.8 million (6.8 percent) people of working age as the number of over-65s will rise by more than 50 percent and the number of people aged between 15-64 will decrease by nearly 7 percent.

To offset the dramatic rate at which people will drop out the job market, the report says the EU will need an average employment rate of more than 70 percent.

The report says that immigration is the only thing keeping the EU population growing for the time being, but says this is "no substitute for economic reforms", including modernising the pension systems, raising the retirement age and getting more people into jobs.

Many demographic experts agree..

Alasdair Murray, deputy director of the London-based Centre for European Reform says that while immigration may help the situation in the short term, long-term solutions also need to be found.

"Immigration can help solve particular skills gaps and keep the economy oiled. But it does not resolve the underlying ageing problem. Immigrants also get old and the EU would need to attract ever growing numbers to try and plug the gap," he told IPS Thursday (Mar 17).

Murray also warns of other dangers brought about by the changes.

"Europe’s ageing population will place a strain on healthcare and pensions systems. This, coupled with the decline in working age populations will act as a drag on economic growth. As a consequence, EU member states will find it difficult to continue to fund their social systems as in the past," he said.

Brussels currently does not have much power to influence social or pension policies in the member states. Instead, countries cooperate in these areas by comparing their systems and introducing their own policies to achieve better results.

In spite of such limited power, the Commission says it wants to open a debate on how to tackle them and what role the Union should play as the implications of the changes concern the whole of the EU.

Murray says that although a debate on the issues is welcome, it is "unrealistic" that the EU will be able to impose Europe-wide policies to solve the problem.

"The EU can help governments tackle the demographic challenge by sharing policy ideas, monitoring healthcare and pensions systems, and developing a common approach to immigration," he said. "However, social systems and cultural attitudes to immigration remain hugely diverse across the EU and it is unrealistic to expect a centrally imposed solution to resolve the problems. Reform – even if only slowly phased in – will continue to provoke strong opposition."

The launch of the new report will be followed up in July with a conference bringing together demographic experts, government ministers and policymakers to look at ways to combat the problems outlined in the paper.