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BackThis week, the EU Commission published a study on the impact of demographic change, hence the ageing of the society, on future employment growth. The results indicate that the decline in labour force is practically unavoidable and that this development will only take between 10 and 20 years to lead to a decline in the entire labour force at EU level. The study concludes that investments in human capital and an active labour market policy would be able to cushion most negative effects; however, these would not be sufficient for Austria!
Ageing of the population is an immense challenge
Europa’s population is getting older. This realisation is not new. What is new, however, is the fact that the study presented by the EU Commission, analyses how demographic change would affect employment growth in the period between 2010 and 2060. To achieve this, a number of assumptions were made in respect of the future growth of the active population, based on a high (maximum) and low (minimum) employment scenario. Afterwards, the potential of employment growth in the coming years, based on the assumption of demographic change, was researched. The study came to the conclusion that some of the economically strongest EU Member States, among them Austria, would already within the next 5 years be confronted with serious employment growth restrictions, even based on the assumption of extremely high employment scenarios.
How does one create employment growth - by extending the working hours?
The study also explores the question how employment growth could be created. The ideas range from investments in human capital, via incentives for greater mobility with the EU to migration from third countries. Another option to enter the picture is to extend working hours. However, interestingly enough the conclusion has been reached that what will actually happen is a reduction of working hours, in particular if one intends to keep older employees in the labour market, because this group, which is close to retirement, prefers to work less rather than more. The study concludes that a general increase of working hours will probably not have the expected positive impact on per-head productivity and even if it was introduced successfully, it would not be a permanent source of growth.
Women and older employees as solution of the problem
Based on the study, the EU Commission wants to demonstrate once again that for example older employees and women could make a significant contribution to higher employment growth and that the potential has not been exploited yet. However, this requires necessary political framework conditions, such as - time and again demanded by the Chamber of Labour - more and improved childcare facilities. The Commission only marginally mentions the currently historically high level of unemployment in the EU with about 26.7 million people out of work, among them particularly many youths. Perhaps the EU Commission is working on the assumption that this problem will be solved in the near future.
Further information:
Working paper: Growth potential of EU human resources and policy implications for future economic growth
Europa’s population is getting older. This realisation is not new. What is new, however, is the fact that the study presented by the EU Commission, analyses how demographic change would affect employment growth in the period between 2010 and 2060. To achieve this, a number of assumptions were made in respect of the future growth of the active population, based on a high (maximum) and low (minimum) employment scenario. Afterwards, the potential of employment growth in the coming years, based on the assumption of demographic change, was researched. The study came to the conclusion that some of the economically strongest EU Member States, among them Austria, would already within the next 5 years be confronted with serious employment growth restrictions, even based on the assumption of extremely high employment scenarios.
How does one create employment growth - by extending the working hours?
The study also explores the question how employment growth could be created. The ideas range from investments in human capital, via incentives for greater mobility with the EU to migration from third countries. Another option to enter the picture is to extend working hours. However, interestingly enough the conclusion has been reached that what will actually happen is a reduction of working hours, in particular if one intends to keep older employees in the labour market, because this group, which is close to retirement, prefers to work less rather than more. The study concludes that a general increase of working hours will probably not have the expected positive impact on per-head productivity and even if it was introduced successfully, it would not be a permanent source of growth.
Women and older employees as solution of the problem
Based on the study, the EU Commission wants to demonstrate once again that for example older employees and women could make a significant contribution to higher employment growth and that the potential has not been exploited yet. However, this requires necessary political framework conditions, such as - time and again demanded by the Chamber of Labour - more and improved childcare facilities. The Commission only marginally mentions the currently historically high level of unemployment in the EU with about 26.7 million people out of work, among them particularly many youths. Perhaps the EU Commission is working on the assumption that this problem will be solved in the near future.
Further information:
Working paper: Growth potential of EU human resources and policy implications for future economic growth