Opinion of the Committee of the Regions on the 'Demographic situation in the European Union` (98/C 251/07)

THE COMMITTEE OF THE REGIONS,

having regard to the Demographic Report 1997 ();

having regard to the decision of 18 September 1997, in accordance with the fourth paragraph of Article 198c of the Treaty establishing the European Community, to issue an opinion on this subject and to instruct Commission 8 for Economic and Social Cohesion, Social Policy and Public Health to prepare it;

having regard to the draft opinion (CdR 388/97 rev. 2) adopted by Commission 8 on 27 November 1997 (rapporteur: Mr Roscam Abbing),

adopted the following opinion at its 23rd plenary session on 13 and 14 May 1998 (meeting of 14 May).

Introduction

In 1994 for the first time the European Commission published a report on the demographic situation in the European Union (). It contained mainly general statistics.

In 1995, the Commission's demographic report () was centred around the theme of demographic ageing and its consequences. The committee of social affairs of the European Parliament appointed Mrs Boogerd Quaak (ELDR, NL) as rapporteur. Her report was adopted by the European Parliament in March 1997 (). The main aim of the EP rapporteur was to draw the attention of the policy makers to the importance of the demographic factor in many policy areas, like: economic policies, labour market policies, social security, public health, regional policy, environmental policies, etc. Mrs Boogerd-Quaak stated: '...policy makers do not usually give this factor much consideration. Current policy is often based on the assumption that the demographic structure of the population is a static factor, and consequently policy measures may prove to be ineffective in the long term`.

Awareness for the issue is growing only slowly. The first ones to ring the alarm bells on demographic ageing were insurance companies and pension funds, who foresaw considerable difficulties in the not so very remote future, regarding the financing of old age pensions. By now, the demographic factor appears in policy documents from time to time, but it has not become an integrated policy element yet.

It is a good sign that the Commission's report on Employment in Europe 1997 () pays extensive attention to the demographic impact of population ageing and migration on the labour market situation. The European Parliament in its report on social protection in Europe (report Weiler, PES, D) (), asks for permanent monitoring of the demographic trend as the basis for the continuous adjustment of the Community's Social Action Programme, in the shape of a newly worded Article 122 of the Treaty.

In July 1997 again the Commission has published a demographic report (), this time focussing on three issues: the labour market, the regional dimension and demographic trends in the applicant states.

At the occasion of this report, the Committee of the Regions in turn wishes to underline the importance of this subject, and highlight in particular the consequences at local and regional level. The central question is: in what way must EU policies take account of the impact of demographic trends at the local and regional level?

The first chapter gives a brief introduction to the demographic situation and to the current and foreseeable developments. The second chapter will indicate in which areas these demographic developments will affect local and regional policies. In the third chapter the relevance for the policies of the European Union will be clarified, and the fourth chapter finally puts forward concrete recommendations.

Chapter I: Demographic developments

I.1. Demographic ageing

The most significant development is the demographic ageing of the population, and its impact on the structure of the labour force. The demographic developments are expected to be much more rapid and radical over the next few decades, than they have been in the past.

The population of the European Union is still growing, but the growth is slowing down. As a result the relative importance of the European Union in the world population is gradually decreasing. Most remarkable however, is the change in the population pyramid, in particular in the groups of people of working age. The average age of working people will rise sharply over the next few decades, and the group of 65 and over will almost double. In ten to twenty years from now, the largest part of the baby boom generation will reach the pensionable age. The group of very old and dependent people will triple. The age group 15-30 on the other hand, will decrease both in absolute and relative terms. It is clear that these developments will have far-reaching consequences in the social and economic area.

Although the demographic ageing of the population is a general EU-wide trend, the pace and the intensity of the development varies greatly from one region to another. By consequence, the regions will be affected in different ways, at different moments and to differing degrees by the demographic changes. The 1997 demographic report of the Commission indicates that existing differences between regions could be sharpened as a result of the diverging demographic developments. An important observation, given the conclusion of the First Cohesion Report () that although the economic differences between the Member States have become smaller, the differences between the regions have grown.

I.2. Migration

Next to natural population growth, migration is a factor that influences the size and structure of the population. Here we have to distinguish several aspects:

1) migration flows into and out of the EU: this kind of migration has an impact on the size of the total EU population. The 1995 demographic report concluded that the declining growth of the population, due to reduced fertility, cannot be compensated for completely by immigration.

2) migration flows between regions of the EU: people tend to move towards economically attractive areas. The 1995 demographic report mentioned in particular the move towards southern coastal areas.

3) migration flows between urban and rural areas: there is a global trend of increasing urbanization (), combined with depopulation of the country side. Noteworthy is that in some areas the move towards the city has a gender-aspect: it is in majority young women who are looking for jobs in the services sector in the city.

The other side of the coin is that the population has fallen sharply in old industrial areas, particularly in towns and cities. Population decline in these areas is most attributable to emigration and a downturn in natural population growth rates. This generally provokes sharp imbalances in the population structure and increased population ageing.

I.3. Enlargement of the EU

Though enlargement as such is not a demographic phenomenon, it has an impact on the size and structure of the Union's population. Section three of the 1997 demographic report of the Commission deals with this subject. The Commission's opinions ('annex` to the Agenda 2000) on the application for EU membership of the accession countries have dedicated a few lines to demographic data. But despite their obvious relevance for the economic outlook of a country (room for growth, productivity, consumption, etc.), these data do not seem to have been integrated in the chapters concerned.

The demographic developments in the twelve applicant countries studied by the Commission, show a somewhat different pattern than those in the EU. In contrast to the - albeit slower - population growth of the EU, the population in most of the applicant countries will decrease. Life expectancy is on the whole lower than in the EU countries and infant mortality higher. Demographic ageing occurs in the applicant countries as well, but to a far lesser extent that the EU countries. Urbanization and depopulation of the countryside on the other hand, are even more accentuated in the applicant countries.

Chapter II: impact on local and regional policies

The above described developments affect many policy areas at local and regional level. In some cases demography is already considered as a standard element of policy making, like housing or education. Another example is of course the creation of Objective 6 for scarcely populated areas. Also depopulation of the countryside and the increasing urbanization have already been noted, and several of the COR's opinion paid attention to these developments.

Taking account of the differences between the Member States, the following policy areas are to a larger or lesser extent affected by demographic change.

Labour market

The changes in the structure of the labour force will be felt strongly at the regional level. It is often thought that a decrease in population will solve the unemployment problem. This is not true however, if supply and demand of labour do not match. The size, structure and quality of the labour force are aspects that are influenced by demographical developments. In making labour market policies it deserves recommendation to take into account the demographic element. As a result of demographic change, some of the current measures may not have the desired effect, or even an adverse effect. For instance, the promotion of early retirement may not be the correct policy in times of a contracting labour force. Anticipating demographic change may also lead to the conclusion that it is not only necessary to create new jobs, but also to increase employability of groups of people with low participation rates. The growing demand in the labour market will offer good opportunities for young people, women, elderly people and immigrants in the next decades. An extra effort in the field of education and training has to be made to mobilize the potential in the labour supply. Measures must be taken to facilitate entering the labour market. An interesting detail is that currently women are still at a disadvantage in the labour market, in respect to men. This could change however. Boys who are now in school, are still being trained for jobs in traditionally 'male` sectors like industry, agriculture, etc. Girls are being trained for jobs in the services sector. It so happens that the services sector is booming.

Regional economic development

Closely connected to labour market policies are the regional development plans. Economic development depends to a large extent on the quality of the available labour force. It is to be expected that a considerable number of regions will see the start of the fall of their active population before the year 2004 (). This may have an important impact on their economic growth and productivity. Economic and labour market measures to offset a possible negative impact of demographic trends have to be taken at regional level, geared towards the specific regional circumstances. The abovementioned training facilities and special measures for target groups, may be adjusted to the specific needs of the regional labour market.

Pensions and public health

These two sectors will have to adapt to fast and radical changes, as the group of 65 and over will increase considerably. The group will be divided into a group of active, healthy pensioners, and a group of very old, dependent people in need of much nursing care and medical care. Furthermore, the rise in life expectancy means that people are in retirement for a longer period of time. A larger group of people in retirement and an extension of the period over which pension is received make a revision of the current pension systems necessary. In many Member States the reforms have been set in motion.

The costs of health care for older people will grow exponentially. Technological progress, increased consumption of health care and a rising life expectancy will boost expenditure to record levels.

In many Member States pensions and public health are local or regional responsibilities, both in administrative and in financial terms, to the effect that they are confronted with the consequences of demographic changes. Local and regional authorities, as well as national and European policy makers should take this into account. Their policies should be based not only on the current demographic situation, but on the demographic trends.

Education, housing, services

The same applies to education, housing and public services. In these policy areas the demographic element is a determinant factor, as these provisions are destined at the local population. To some extent local and regional authorities have incorporated it into their policies. Housing for instance, has to take into account the size of the population, but also the composition (various age groups: children, pensioners, etc.), changing family patterns and migration. Here again, the acceleration of demographic change makes it advisable to look at the demographic factor from a wider and longer term perspective.

Spatial planning, infrastructure

Spatial planning, town planning and infrastructure are pre-eminently areas where a long term view is required, in order to meet the needs of the current as well as the future population. Changes in the size and composition of the population, migration and changing mobility patterns will have their impact on the environment as well. In previous opinions the Committee of the Regions already addressed the issues of urbanization and depopulation of the countryside, and gave due consideration to the demographic factor.

Chapter III: Relevance for European policies

Most of the EU policy areas concerned have been mentioned in the previous paragraph: economic policies, employment policies, social policy and public health. Many other areas are indirectly affected: agriculture, environment, transport, education and training. A good example has been given in the Commission's report on young farmers and the problem of succession ().

However, the main policy area concerned is that of social and economic cohesion.

The First Cohesion Report of the Commission, evaluating the effects of cohesion policies, observes a growing social and economic convergence between the Member States, but the gap between the poorest and the richest regions has widened. The conclusion that can be drawn from - amongst other things - the Demographic report 1997, is that the various regions of Europe have widely diverging demographic patterns and that the population is not distributed evenly over Europe. The maps of the report show very clearly the different demographic patterns between the regions within a Member State. About one-fifth of the regions of Europe will show population growth over the next two decades, a vast majority of the regions will show demographic neutrality, and some have already entered the stage of negative growth. Negative population growth, ageing of the population of working age, emigration to other, more prosperous regions: these factors are bound to have a negative impact on the social and economic development of a region. Economic policies, social policy, labour market policies, cohesion policies and structural policies must take into account the demographic developments, rather than the demographic situation at a given moment. These policies can only be effective if they can be adjusted flexibly to regional circumstances, otherwise they will lead to growing divergence between the regions. At the same time however, the need for coordination at EU level in various policy areas is once again made clear.

This issue must also be seen in view of the enlargement of the Union. The Commission's Demographic Report 1997 shows clearly that the demographic situation in the accession countries is somewhat different from the EU average. If EU policies will also be applied in these countries in the future, the need for regional differentation is even bigger.

Structural funds, education and training

The necessity of stepping up active labour market policies and an extra effort in education and training, especially for groups with low labour market participation rates may be evident. Already in certain sectors and regions, a shortage of labour can be observed, whereas at the same time a large group of people is excluded from the labour market, or no longer active. Demographic ageing of the population of working age will only worsen this problem. In the near future we cannot afford to underuse the human resources, as has already been pointed out by the Delors White Paper in 1993. Policies must aim at an efficient use of the labour pool. For instance in some Member States a majority of the 55-65 age group is no longer active in the labour market (). Rather than raising the pensionable age, policy measures should aim at keeping the elderly workers employable. Some progressive spirits in the private sector have acknowledged that training for the older employee can actually be a useful investment.

Foresight is the essence of government, to the effect that structural funds and EU programmes for education and training must aim not only at the present labour force, but also work pro-actively and look ahead to the needs of the labour market in the next decade. Special focus must be on the employability of disadvantaged groups.

Chapter IV: conclusions

The Committee of the Regions observes that demographic changes have an important impact on many aspects of the economy, notably the labour market and social and economic cohesion; and that these affect several areas of competence of local and regional authorities.

It is deeply concerned about the unawareness and underestimation of the importance of demographic trends; and is convinced that economic and employment policies can only be effective when taking account of the demographic circumstances.

The Committee of the Regions also feels that the envisaged enlargement of the Union may have a considerable impact on the demographic structure of the EU's labour force.

It welcomes the Demographic Report 1997 of the Commission, and in particular the section on regional trends.

It supports the conclusions of the European Parliament's report on the demographic situation in the European Union 1995.

It expresses its approval for the fact that the Commission has taken the demographic factor into consideration in its recent communications on employment; encourages the Commission to continue doing this, and to take into account the demographic differences between the regions of Europe.

It urges the Council, the European Parliament, the Member States and the decentralized authorities to fully integrate the demographic factor in the relevant policy areas.

It expresses its concern about the growing regional imbalances in Europe, and the need to closely monitor the role of the demographic developments in this; reiterates its suggestion to use the Structural and Cohesion Funds in a pro-active way.

It points out that the period in question - two to three decades - will probably witness the accession of new Member States with a different demographic structure; deems it sound government to anticipate this in the policy areas concerned.

It invites the Commission to come forward with a more detailed study of the demographic trends in the regions of the EU, as well as in the accession countries; this study will address issues like: urbanization, depopulation of the countryside, the demographic effect on the labour market and the relative competitiveness of the regions.

It is of the opinion that this must be an ongoing issue on the political agenda; it therefore requests the Commission to follow demographic developments in the EU Member States and the accession countries very closely, and to present its findings in an annual report.

It points to the need for special measures to improve the match of supply and demand on the labour market; underlines the role that European programmes and funds can play in this area; is of the opinion that pro-active use of the funds must be considered in areas where demographic developments threaten to aggravate economic decline.

It underlines the responsibilities of local and regional authorities in some Member States in pension matters, social security and health care.

It warns the Member States for the risks of short term financial policies, social security and pension policies, that will leave the next generation with a disproportionate financial burden, in particular in view of the European Monetary Union.

Lastly, the Committee of the Regions calls on its president to forward this resolution to the Commission, the Council, the European Parliament and the Economic and Social Committee.

Brussels, 14 May 1998.

The Chairman of the Committee of the Regions

Manfred DAMMEYER

() COM(97) 361 final.

() COM(94) 595 final.

() COM(96) 60 final: The demographic situation in the European Union 1995.

() A4-0042/97 (PE 218.695): Report of the EP on the Commission's report on the demographic situation in the European Union 1995 adopted on 14.3.1997, rapporteur: Mrs Boogerd-Quaak (Social Affairs Committee). OJ C 115, 14.4.1997, p. 238.

() COM(97) 479 final: Employment in Europe 1997: an employment agenda for the year 2000 (an executive summary).

() A4-0291/97 (PE 223.120 fin) report Weiler (ESP, D) On the communication from the Commission on modernizing and improving social protection in the European Union (COM(97) 102 final), adopted on 6 November 1997, OJ C 358, 24.11.1997, p. 51.

() COM(97) 361 final: Demographic Report 1997.

() COM(96) 542 final: First Cohesion Report.

() This trend was even the theme of the United Nations World Population Report 1996.

() Demographic report 1997, Map 3, p. 14 bis (English version).

() COM(96) 398 final: Young farmers and the problem of succession in European agriculture.

() In the Netherlands for example, only 27 % of this age group is still active in the labour market.