Ageing leads to higher public spending - especially in the health sector

Report on the effects of demographic change.

Dr. S-W – 06/2020

A report by the EU Commission dated 17 June 2020 on the effects of demographic change first sheds light on the driving forces of demographic change and then examines instruments that can help to guide people through the change.

In the beginning, there are the well-known factors that contribute to the ageing process of societies. An increasing trend in the evolution of life expectancy is still expected: By 2070, the average life expectancy in Europe will be 86.1 years for men and 90.3 years for women in Europe. Even the COVID pandemic will not change this. The number of years of healthy life expected for those born today is also increasing: to 64.2 years for women and 63.7 years for men. Although birth rates have been relatively stable in recent years, they are still not sufficient to maintain the size of the population without migration. The expected decline in the working population is a particular cause for concern; it will shrink by 18% by 2070.

Therefore, it is particularly important to increase the employment rate of women. In 2019, the gender employment gap was 12%. Moreover, in the same year, three out of ten working women were only working part-time – four times higher than men. The issue of balancing professional and working life is still a challenge. In addition, people will have to work longer and the Commission will address this issue in the forthcoming Green Paper on Ageing (due early 2021).

A separate section is devoted to the topic of "Health and Long-term Care". Due to the rising proportion of people over the age of 65, chronic diseases will increase and the demand for health and long-term care services will rise. In the absence of any political countermeasures, people in need of long-term care may have to bear a higher proportion of the costs themselves.

All in all, an ageing Europe will increase pressures on public finances – the total cost of ageing is estimated at 26.6% by 2070. Although the largest portion will be spent on health care and long-term care, an increase in old-age security systems is also expected by 2040. However, in the wake of the pension reforms made, these costs would then rise more slowly than GDP, so that their share would probably fall back to the 2016 level afterwards. Note: most projections have been based on a 65-year upper age limit for the working age. However, the results of the projections could still change significantly as people would probably have to work longer.

Finally, the regional and local dimension and the interactions with the green and digital transition are presented in detail. This is accompanied by the announcement of a "long-term vision for rural areas".

It is endorsed by detailed statistical studies, which can be found in a Commission working paper: