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EU-28

6 June 2018

EU: updated report on the labour market and socioeconomic consequences of ageing

In recent years, the EU's ageing population has become a key concern for policymakers in relation to questions of employment, working conditions, living standards and welfare. It has also led to debates on the sustainability of pension systems and the supply of labour. The evolution of ageing-related costs, will vary widely among Member States, but it will increase substantially overall in the EU.

The European Commission published its 2018 Ageing Report. The report, published every three years, complements the analysis of the 2018 Pension Adequacy Report (see our News item of 3 May 2018) that assessed past key reform measures aimed at securing adequate and financially sustainable pensions. The ageing report, published with separate cross-country tables and country fiches, shows that fiscal costs linked to pensions, health care and long-term care are expected to rise over the coming decades, as Europe’s population continues to age significantly. The working-age population (people aged between 15 and 65) will decrease from 333 million in 2016 to 292 million in 2070. The calculated changes in the population structure are based on assumptions on fertility rates, life expectancy and migration flows.

In the report, the old-age dependency ratio (people aged 65 and above relative to those aged 15 to 64) in the EU is projected to increase by 21.6 percentage points, from 29.6% in 2016 to 51.2% in 2070. This could imply that the EU would go from having 3.3 working-age people for every person aged over 65 years to only 2 working-age persons. The report calculates that, overall in the EU, the total cost of ageing (public spending on pensions, health care, long-term care, education and unemployment benefits), is expected to increase by 1.7 percentage points to 26.7% of GDP between 2016 and 2070.

Demographic change will also have significant implications for the labour force, the composition of the workforce and the organisation of work across the EU. The expected shrinking pool of workers has been an argument for policies leading to a lengthening of their working lives. At the end of 2017, Eurofound published a report that complements this picture. The report analysed a range of factors that influence workers’ decision to continue working into old age – including health and well-being, work-life balance, career prospects and job security, and working conditions such as autonomy, hours of work and psychosocial aspects of the workplace, using data from Eurofound’s European Working Conditions Survey. In general, the policy reforms have focused on raising the statutory retirement age and providing financial incentives for older workers to remain in work beyond retirement age.

In the meantime, serious concerns have come up in relation to questions about how to make the workplace fit for the elderly; sustainability over the life course; and how to deal with arduous work. The Eurofound authors conclude that poor working conditions have a negative impact on sustainable work outcomes for all employees, regardless of age. Employees who are exposed to physical risks and quantitative demands (working at high speed and to tight deadlines) are more likely to experience worse health and poorer work-life balance. Their analysis of the working conditions of workers of different ages, taking into account differences between occupations, leads to the conclusion that a lower occupational level can be associated with poorer health and well-being in general, and poorer career prospects.

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