Last Tuesday, July 14, the European Commission published its third report on demographic transformation in the EU, highlighting both the challenges and opportunities it presents for competitiveness, innovation, social cohesion, and sustainable development if addressed early and effectively.
According to the report, “it is expected that the European population will decrease and age, which poses challenges for the labor market, healthcare, care systems, and public finances. However, a longer and healthier life also offers opportunities to boost participation, innovation, and growth. Through specific policies on qualifications, care, housing, and regional development, the EU is helping member states mitigate the effects of demographic change.”
The report, prepared by the Joint Research Centre, confirms that “the European population is currently at its peak; with 450.6 million people currently, it is expected that the EU population will be around 445 million in 2050 and 398.8 million in 2100, representing an overall decline of approximately 11.7%, reaching a level similar to that of the 1970s.”
“At the same time, Europeans are living longer than ever, with a life expectancy at birth reaching 81.5 years in 2024, reflecting advances in healthcare, living standards, and social conditions. By 2050, nearly one in three residents of the EU will be 65 years or older, compared to one in five currently, while life expectancy could exceed 90 years for women and 86 for men by 2100. A child born in the EU in 2023 could expect to live without serious illnesses until 75.3 years,” states the report from the European Commission.
These trends pose significant challenges, from labor shortages and pressure on public budgets to the overload of care, education, and training systems, and regional cohesion. However, these changes also create opportunities. One example is the growing longevity economy, which is opening new markets for products, services, and innovations specifically designed for older people, creating new pathways for economic growth and job creation. This can drive innovation in healthcare, technology, and financial services.
The report notes that the EU is experiencing a significant demographic shift that is transforming its labor market, requiring an increase in participation and productivity. “Around 20% of working-age people are outside the labor market,” the report states, “with a gender gap of 10% in employment, while 8 million young people are neither studying, working, nor receiving training. At the same time, employment among people aged 55 to 64 is increasing compared to a few decades ago.” The EU supports these trends by promoting women’s participation, helping young people acquire new skills, allowing older workers to remain active if they wish, and boosting productivity through innovation and AI.
“Boosting productivity and harnessing untapped talent will be key to addressing the impact of the declining workforce, contributing to sustaining economic growth and strengthening public finances,” asserts the European document.
The report also shows that birth rates have declined, while European society ages, meaning that the working-age population is decreasing. “Skilled migration is already playing an important role in helping to alleviate labor shortages. By attracting talent from outside the EU, skilled migration can boost key sectors, strengthen innovation, and help mitigate the effects of an aging population. While it may alleviate demographic pressures, the priority must remain on continuous training and professional retraining of people already residing in the EU,” it states.
The shift towards a longer-living society also increases the demand for healthcare and long-term care, with the report forecasting that the number of people needing support will rise from 36 to 48 million by 2070 and that the proportion of people over 80 years old will double. While this poses fiscal challenges, it also drives innovation and more efficient care systems.
