Unemployment in Europe will fall, perhaps to zero in 15 years, and elderly people are getting healthier and more active. With projections up to 50 years ahead, there can be no single doomsday scenario, particularly since economists are divided on such basic questions as whether savings rates will fall or rise, a key factor in assessing investment and productivity levels. But there is broad agreement that aging will have a significant negative impact on economic growth and living standards, according to Robert Stowe England of the Center for Strategic and International Studies. It is no good looking to increased immigration as a panacea. To maintain today s ratio of active workers to retirees solely through immigration would require far more immigrants than would be politically acceptable, either in Europe or in the United States, according to Mr. Hewitt.
Immigration can help.
But people will also have to spend longer contributing to pensions and less time withdrawing them. Early-retirement incentives will have to be reversed and pension plans reformed and tightened. As widespread protests against pension reforms are currently demonstrating in France, it will not be easy. But if necessary reforms are postponed too long, the disaster scenarios will only become more likely.