The Council of Ministers for Employment and Social Affairs in particular served the purpose of preparing the European Council on 18th/19th June, whose aim it will be to formulate solutions and strategies respectively against the rapidly increasing unemployment in Europe. The basis for the discussion among others was a Commission Communication on the demographic challenges facing the EU. Making forecasts about increased age-related government expenditure for the year 2060, the Commission uses its Communication to demand budget discipline and structural reforms. In times of the most serious economic and employment crisis since the Second World War, this demand is met with a complete lack of understanding by the experts.
In accordance with calculations carried out by the Commission, at 500 million in 2060, the population in the EU will be roughly as high as today; it will, however, be significantly older. By 2060, the number of over 65-year olds will have risen from 17 % (2008) to 30 % of the population. Based on this development, the Commission expects that the number of people in work during this period will fall by 19 million. The relationship of persons of employable age to those over 65 in the EU will develop at a ratio from 4:1 to 2:1. Hence, the Commission is not only apprehensive of a lower economic growth but also of a rise in social expenditure for pensions, healthcare and care for the elderly. On average, the age-related government expenditure in the EU will be 4.7 % higher in 2060 than it was in 2007. At 3.1 %, the projected additional expenditure for Austria is below European average. For the Commission, the consolidation of budgets and structural reforms are absolutely essential components in order to be able to react to demographic ageing. That is why the Commission - even in the current economic crisis - demands more budget discipline. The structural reforms relate to an extension of the working lifetime, a stronger integration of young people and women in the labour market, an efficient reform of tax and social systems and more investments in education and science. The importance of immigration policy will also be pointed out.

In times, where Nobel Prize winners worldwide, such as Paul Krugman promote greater economic stimulus pacts, the demand for speedy debt reduction due to demographic ageing seems like a paradox. The Commission Communication is not only worrying because of the bad timing and the many uncertainties, which are associated with the forecasts to the end of 2060, but also because due to the fact that in the past this argument pattern was mainly used for the shift of retirement pensions from pay-as-you-go schemes to capital covered models. The risks associated with capital covered pension models have definitely become apparent during the financial crisis.

Further information:

Press release of the Commission on Population Ageing

Commission Communication on Population Ageing

Ageing Report 2009