3.3. Population ageing

 

The slowing down of population growth in the E.U. leads to shifts in the age structure of a population, generally referred to the population ageing. Population ageing is caused by declining fertility and increasing life expectancy. Young populations normally have relatively elevated levels of fertility and low levels of mortality which make them grow (significant excess of births over deaths), while older populations normally have a much smaller or even negative natural increase (excess of deaths over births). The absolute number of births and deaths in a population result from the relative levels of fertility (number of children per woman) and mortality (life expectancy) in combination with the age structure, i.e. the number of individuals present in each of the age-specific bars in the population pyramid. In turn, changes in the absolute numbers of births and deaths have effects on the shape of the population pyramid. Such changes may result from changing fertility and mortality levels, for example if the number of children per woman rises or declines, or if life expectancy changes.

 

Figure 3.4. Age composition in EU27 in 2006

 

Figure 3.5. Age composition in the NMS12 in 2006

 

Currently, all European countries are facing population ageing albeit in various degrees. In many countries, the population has already been ageing as long as reliable population statistics are available, for the past 50 or 100 years or so. The issue is expected to stay on the agenda for the coming decades. Generally the effect of fertility decline on ageing trends is much more profound than the effect of increasing life expectancy. Migration usually only has a small effect on population ageing if any effect at all. In the second half of the 21st century many EU Member States may face some ‘population juvenation’ as soon as the post Second World War baby boom disappears.

 

Together with the initial age-sex structure of the population, the fertility, mortality and migration rates in a specific period constitute the age-sex structure at the end of that period (Figure 3.4 and Figure 3.5). Since population pyramids depict persons of 0 to about 100 years of age, these pyramids illustrate the demographic history of a country in the past 100 years. In addition to population dynamics, also changing social, economical and political contexts are reflected in these pyramids.

 

Currently the largest age bracket in the EU pyramid consists of those born in 1963 (43 years of age in 2005). People born in later years are less numerous and their numbers decrease almost linearly. While about 1.6% of all EU citizens were born in 1963, this diminishes to 1.0% for those born in 2002, about as many as today’s survivors born in 1940. Some slight indentation is visible for the cohorts born during the Second World War (around 60-65 years of age now), as well as for those born during the First World War (around 85 years now); both are more related to lower fertility than to higher mortality. The pyramid for the New EU Member States (NMS12) shows two bulges: those born just after the Second World War (1946-1955), and those born around 1972-1990. These cohorts are larger in EU27, whereas other cohorts are smaller.

 

Obviously all other indicators are in accordance with this trend in ageing. Figure 3.5.3 shows the percentage of the population aged 0-14, 15-64 and 65+. They picture the decreasing shares of youngsters and increasing shares of older people over the past and in the coming decades. They clearly show that the trends in the 12 new Member States are fluctuating more than in EU15. In a certain way, NMS12 is lagging behind in ageing trends. Moreover, the share of the potential labour market population will be, in the years to come, much larger in these countries than in EU15 (the so-called ‘demographic dividend’). As a consequence, the demographic dependency ratios are ‘much milder’ in NMS12 than in EU15. That is expected to be so up until about the middle of this century. The EU15 countries can also still make a profit of their demographic bonus, since their total dependency ratio is currently at the lowest level. However, that will change within the coming decade.

 

Figure 3.6. Share of EU27 population aged 0-14 and 65 or more from 1950 and forecasts up to 2050

 

The absolute numbers of young people will diminish substantially and those of older persons will increase. While the number of youngsters will continue to diminish further, the number of people aged 15-64 is nearing its top around 2010 and will start to diminish from then onwards, while the number of 65+ will not diminish before 2050.

 

Over the past two decades, old-age dependency — the ratio of the number of older, in general economically inactive people (65+) to the number of people of working age (15 to 64)— rose in the European Union from 21.6 in 1980 to 25.5 in 2005. The country specific trends are rather similar: after a decline at the beginning of the 1980s in most countries, caused by the baby-boom generation entering the working age population, old-age-dependency rose steadily afterwards. This effect was chiefly driven by a subsequent fall in fertility rates in the late 1960s and by an increased life expectancy. In 2004, Italy was the country with the highest dependency value (28.9), followed by Germany (26.8), Sweden (26.4) and Belgium (26.1). In this group of countries only Sweden shows an atypical trend, having reached declining ratios more recently.

 

On average, the overall annual growth of the old-age dependency ratio within the European Union was 1.5% during the last 20 years. The country with the most rapidly ageing population over the whole period of observation is again Italy with an average annual growth of 2%, followed by Portugal (1.6%) and Spain (1.5%).

 

Nevertheless, some countries show declining old-age dependency ratios in certain years. Ireland is the only country with a negative development (-0.4% per year) over the period of observation. Sweden and Denmark show some stagnation over the last 20 years. All other countries saw their old-age dependency ratios increase, varying from 0.3% for the United Kingdom to 2% for Italy. The country with the most rapidly ageing population during the last observation period (2000-2004) is Germany. Whereas the annual growth varied from 0.6% to 1.0% over the periods from 1985 to 1999, the old-age-dependency ratio rose by 2.8% in the period from 2000 to 2004. The recent value amounts to 26.8 for 2004, which corresponds to the second highest ratio after Italy.

 

According to the baseline projection of EUROSTAT, the old-age dependency ratio for EU15 will rise on average from 25.9 in 2005 to 53.2 in 2050. This means that in 2050 there will be two persons of 15-64 years per one person of 65+ (compared to the current four). Therefore, there will only be two people of working age for every elderly citizen. This is obviously of importance when considering the financing of long-term care.

 

These general trends are rather similar across Member States. Compared to the 2005 values, all ratios will increase in the coming decades. Nevertheless, there is still some variation. Whereas the increase is relatively low for Sweden, old-age-dependency ratios will rise by 43 points, for example, in Spain.

 

According to the baseline EUROSTAT projection, Spain and Ireland will have, in EU15 the highest average annual growth rates from 2005 to 2049. Their old-age-dependency ratios will increase by 2.3% per year. The countries with the lowest growth rates are again Sweden (1%) and Luxemburg (1.2%).

 

With relation to various age groups in 1975, 2005, 2010 and 2025, the following can be noted:

 

Children (0-14 years). Bulgaria, Italy, Greece, Spain and Slovenia have the lowest shares, while Luxembourg, Denmark, Cyprus, Ireland and Turkey have the highest. Over time the order is only changing to a minor extent. However, the variation between the Member States is diminishing substantially. This means that several countries witness large changes in the relative number of ‘children’ over time (Cyprus, Malta, Spain, Portugal), while others only have minor changes (Luxembourg, Sweden, Belgium, France, United Kingdom).

 

Young people (15-24) have currently small shares in Italy, Denmark, Luxembourg, Germany, and the Netherlands, while Cyprus, Ireland, Slovakia, Poland and Turkey have high shares. Also here the variation across countries diminished over time, although the variation over time was much lower than for Children. Sweden, Denmark, the United Kingdom, France and Austria had only minor changes over time, while those in Poland, Cyprus, Romania, Greece and Slovakia were substantial.

 

The shares of Young adults (25-39) have hardly changed over time. The rates slightly rose in the past few decades but will now start to decline. Spain, Turkey, Ireland, Romania and Luxembourg have the highest shares; Finland, Malta, Sweden, Estonia and Croatia have the lowest. Changes over time are most substantial in Spain, Italy, Turkey, Ireland and Greece.

 

Adults (40-54) are most prominent in Slovenia, Poland, Finland, Germany and Croatia. Small shares are characteristic for Turkey, Ireland, Sweden, the United Kingdom and Spain. Over time the variation has diminished somewhat, with the most heavy changes reported in Turkey, Cyprus, Germany, Slovakia and Spain.

 

The shares of the so-called ‘Older workers’ (55-64) has increased overtime, but the variation was only small and did not change much (Figure 14). Poland, Slovakia, Bulgaria, Lithuania and Turkey have the highest increases, while Sweden, the UK, Luxembourg, Belgium and France have the smallest. Currently, the shares are low in Turkey, Ireland, Poland, Slovakia and Cyprus, and high in Denmark, Sweden, the Czech Republic, Finland and Bulgaria.

 

The shares of Elderly people (65-79) are increasing substantially although the variation per period is small. Bulgaria, Poland, Spain, Slovakia, and Romania have the largest changes, while Luxembourg, Sweden, the UK, France and Belgium have the smallest. Figure 15 shows that currently Turkey, Ireland, Slovakia, Cyprus and Malta have low shares, while Greece, Italy, Croatia, Bulgaria and Germany have the highest.

 

Finally, the ‘Very elderly people’ (80+): in EU15 their share rose from 1.2% to the current 4.2%. A figure of 6.6% is expected in 2025. The EU27 figures are slightly less. This indicates that the NMS12 figures are significantly lower. The largest changes are in Italy, Germany, Spain, Austria, and Slovenia. Sweden, Italy, France, the UK and Germany are currently the ‘most aged nations’ within the EU according to this criterion, while Slovakia, Poland, Cyprus, Ireland and Malta and Romania are the ‘least’ aged ones.