europe's labor potential

The EU is confronted with a growing, but ageing population, which is driven by low fertility rates and a continuous rise in life expectancy. This ageing, already apparent in many Member States, means older people will make up a much greater share of the total population in the coming decades, while the share of the population aged 20 to 64 years will fall (see Figure 4). This in turn means that despite a growing population, the EU labor force is shrinking, increasing the burden on the employed population to provide for the social expenditure needed by an ageing population. Over the past two decades the total EU population grew

rom 475 million in 1990 to 507 million in 2013. Between 2002 and 2013 the number of older persons aged 65 and above in-creased by 17.7%. There was a particularly steep rise of 44.8% for the group aged 80 or over. The population aged 20 to 64 years grew only slightly, by 3.6% over the same period. In contrast, the number of 0 to 19 year olds fell by 5.8%.

While the most recent projections predict rapid growth in the number of older people, particularly in the group aged 80 years or over, the population aged 20 to 64 years is expected to start shrinking in the next few years as more baby boomers enter their 60s and retire. As a result, the share of 20 to 64 year olds is expected to gradually decline from 60.8% in 2013 to 58.9% in 2020. This equals a reduction of 6.5 million people. At the same time, the number of older people aged 65 or over will grow by about 12 million, reaching 20.4% of the total population in 2020. As indicated in Figure 4, these trends will continue at an even faster rate in the following decade, with the population aged 20 to 64 shrinking to 55.9  % and those aged 65 or over climbing to 23.9  %, thus making up almost a quarter of the total population in 2030.

Figure 5 shows how the baby boomer generation has moved up the age pyramid since 2002. This generation is the result of high fertility rates in several European countries over a 20 to 30 year period to the mid-1960s. Baby boomers continue to comprise a significant part of the working population, however, the first of these large cohorts are now reaching retirement age. As a result of these demographic changes the old-age dependency ratio has increased from 26.3% in 2002 to 29.9% in 2013. This ratio shows the share of the population aged 65 and above compared with the population of 20 to 64 year olds. This means that while there were 3.8 people of working age for every dependent person over 65 in the EU in 2002, this number had fallen to 3.3 people by 2013. By 2020, the old-age dependency ratio is projected to reach 34.6%, meaning there will be fewer than three people of working age for every dependent person over 65.

These trends underline the importance of making the most of the EU’s labor potential by raising the employment rate for men and women over the coming years. To meet labor market needs in a sustainable way, efforts are needed to help people stay in work for longer. Particular attention needs to be given to women, older workers and young people. With regard to young people, it is important to help them find work as soon as they leave education and ensure they remain employed.

Source – Eurostat

More Articles

The Skills Most In Demand By American Employers

NEW YORK — Wanted: Americans with coding skills.

Learn more

5 workplace trends driving change in offices

From implementing wellness and sustainability initiatives, to leveraging technology investments

Learn more