Commission Communication - The demographic future of Europe – From challenge to opportunity
Date: 2006-10-12
Institutions: European Commission
Subjects: EU migration policy, economic and social cohesion, employment policy, labour market, older worker, pension scheme, population ageing

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.10.2006 
COM(2006) 571 final 

COMMISSION COMMUNICATION 

The demographic future of Europe – from challenge to opportunity 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

The ageing population in Europe: trends and outlook ................................................. 3 

Impact of the ageing population................................................................................... 5 

Impact on the labour market, productivity and economic growth ............................... 5 

Impact on social security and public finances.............................................................. 6 

A constructive response to the demographic challenge ............................................... 7 

Promoting demographic renewal in Europe................................................................. 7 

Promoting employment in Europe: more jobs and longer working lives of better 
quality........................................................................................................................... 8 

A more productive and competitive Europe .............................................................. 10 

Receiving and integrating immigrants in Europe....................................................... 11 

Sustainable public finances in Europe: guaranteeing adequate social security and 
equity between the generations .................................................................................. 12 

4. 

Conclusion: from challenge to opportunity................................................................ 12 

APPENDIX: Main European Demographic Trends and Data ................................................. 15 

Projections – EU-25 ................................................................................................................. 15 

Projections by country.............................................................................................................. 16 

Employment rate of older workers........................................................................................... 17 

Fertility and female employment rates..................................................................................... 18 

Net migration rate vs. natural population growth .................................................................... 19 

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1. 

THE AGEING POPULATION IN EUROPE: TRENDS AND OUTLOOK  

Demographic ageing, i.e. the increase in the proportion of older people, is above all the result 
of significant economic, social and medical progress giving Europeans the opportunity to live 
a long life in comfort and security that is without precedent in our history. However, as was 
stressed by the Heads of State and Government at their Hampton Court informal Summit in 
October 2005, it is also one of the main challenges that the European Union will have to face 
in the years to come. 

This Communication responds to the concern raised at this Summit, which is also widely felt 
by Europe’s citizens. It is a follow-up to the Commission’s communication to the European 
Council  entitled  “European  values  in  the  Globalised  World”  and  the  Commission’s  Green 
Paper  on  “Confronting  demographic  change:  a  new  solidarity  between  the  generations”1.  It 
examines  the  possibilities  for  Europeans  to  confront  the  demographic  challenge  by  drawing 
on  the  renewed  Lisbon  strategy  for  Growth  and  Jobs  and  the  Sustainable  Development 
Strategy.  More  specifically,  it  underlines  how  the  European  Union  can  support  its  Member 
States  as  part  of  a  long-term  strategy,  the  implementation  of  which  essentially  depends  on 
their  willingness  and  competences.  In  so  doing,  it  sets  out  the  main  factors,  evaluates  the 
various  complex  impacts  and  identifies  the  main  courses  of  action  at  national,  regional  and 
local levels, as well as at European level. It concludes that we can take up the challenge of the 
ageing population if we create conditions in support of people who wish to realise their desire 
to  have  children  and  take  full  advantage  of  the  opportunities  offered  by  longer  and  more 
productive lives in better health. 

The ageing of the European Union’s population is the result of four interactive demographic 
trends.  However,  their  magnitude  and  rhythm  may  vary  substantially  from  one  country  to 
another and from one region to another, ruling out a uniform response. In summary: 

–  The  average  number  of  children  per  woman  (the  current  fertility  rate)  is  low,  at  1.5 
children  for  EU-25,  well  below  the  replacement  rate  of  2.1  required  to  stabilise  the 
population  size  in  the  absence  of  immigration.  A  limited  increase  of  1.6  is  projected  for 
EU-25 by 20302. 

–  The decline in fertility in recent decades followed the post-war baby boom which is today 
causing the bulge in the size of the population aged 45 to 65 years. The gradual progress of 
the  baby-boomers  towards  retirement  age  will  lead  to  a  substantial  increase  in  the 
proportion of old people, who will need to be supported financially by a reduced working-
age population. This phenomenon will disappear, but not for several decades. 

–  After increasing by eight years since 1960, life expectancy at birth could continue to rise 
by  at  least  a  further  five  years  by  2050.  The  projected  increase  would  have  its  greatest 
impact  on  the  older  generations,  so  that  Europeans  reaching  the  age  of  65  in  2050  can 
expect to live on average between four and five years longer than those reaching 65 today. 
This will lead to a spectacular increase in the number of people surviving to the ages of 80 

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COM(2005) 525, 3.11.2005 and COM(2005) 94, 16.3.2005, respectively. 
Some  demographers  have  expressed  the  hypothesis  that  a  very  low  fertility  rate  could  become 
irreversible,  cf.  “The  low  fertility  trap  hypothesis:  forces  that  may  lead  to  further  postponement  and 
fewer births in Europe” by Lutz, Skirbekk and Testa, Vienna Institute of Demography research paper 
No 4 2005. 

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and 90, leading to many of them spending several decades in retirement and reaching an 
age frequently characterised by infirmity and disability, although the proportion of people 
in poor health in this age bracket could fall. 

–  Europe is already the recipient of major inflows of net migration from third countries. In 
2004,  the  EU  registered  1.8  million  immigrants,  i.e.  an  influx  greater  than  that  of  the 
United States relative to the total population. The EU is set to remain a popular destination 
for migrants over the coming decades. Eurostat’s conservative projection is that around 40 
million people will emigrate to the European Union between now and 2050. As many of 
them are of working age, migrants tend to bring down the average age of the population. 
However, the longer-term repercussions remain uncertain, as they depend on the more or 
less  restrictive  nature  of  family  reunification  policies  and  birth  patterns  of  migrants. 
Despite the current flows, immigration can only partially compensate for the effects of low 
fertility and extended life expectancy on the age distribution of the European population. 

As a result of these trends, the total population of EU-25 will fall slightly, but will become 
much  older.  In  economic  terms,  the  main  change  will  involve  the  size  of  the  working-age 
population  (15-64  years),  which  will  decrease  by  48  million  between  now  and  2050.  The 
dependency ratio (the number of people aged 65 years and above relative to those aged from 
15 to 64) is set to double and reach 51% by 2050, which means that the EU will change from 
having four to only two persons of working age for each citizen aged 65 and above. 

The regional and social implications of population ageing are also worth noting. Regions with 
declining  populations  consisting  mainly  of  senior  citizens  will  face  difficulties  in  supplying 
essential  public  goods  and  services,  such  as  health  care,  housing,  urban  planning,  transport 
and  tourism  services,  so  that  their  environmental  balance  will  also  reflect  the  impact  of  an 
ageing  population.  Demographic  change  is  also  accompanied  by  profound  social  changes 
affecting  the  composition  of  families,  particularly  evident  in  the  growing  number  of  elderly 
persons  living  alone.  The  increase  in  the  number  of  very  old  dependent  persons  also  raises 
new problems of an economic, social or even ethical nature. 

The ageing population of the EU needs to be examined against the background of the global 
expansion  of  the  world’s  population.  Following  a  worldwide  population  increase  from  2 
billion in 1950 to 6.5 billion today, the United Nations' key projection is that this growth will 
continue, albeit at a slower pace, to reach a population of 9.1 billion by 2050. Around 95% of 
the overall growth of the population will occur in the developing countries, and the population 
of  the  50  least  developed  countries  is  set  to  double.  The  fastest  growth  will  take  place  in 
Africa.  As  a  result,  the  proportion  of  the  worldwide  population  accounted  for  by  the  25 
Member States will decrease. 

However, Europe will not be ageing alone. Significant increases in the dependency ratios will 
appear between now and 2050 in emerging economies such as China and India. If developing 
countries can exploit the demographic dividend and integrate young working-age people into 
the  labour  market,  global  production  will  increase  and  provide  profitable  investment 
opportunities for Europeans saving for their retirement. Conversely, the combination of a high 
birth  rate  and  slow  development  could  lead  to  instability  in  these  countries  and  increase 
pressure to emigrate. 

Global migration flows have and will continue to have major repercussions for the countries 
of destination and departure. For the EU, the impact of immigrants on population ageing will 
depend  on  how  well  they  integrate  into  the  formal  economy,  bearing  in  mind  that  the 

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employment rate for immigrants is still lower than that of non-immigrants in many Member 
States.  Immigration  may  temporarily  help  to  reduce  the  financial  impact  of  an  ageing 
population when legally employed immigrants pay contributions into public pension schemes. 
However, economically active immigrants will also, over time, accumulate their own pension 
rights. Their longer-term contribution to a sustainable balance in public finances will therefore 
depend  on  the  existence  of  well-designed  pension  schemes.  For  the  countries  of  origin, 
emigration to the EU can be beneficial, specifically through the reduction of pressure on the 
labour market, transfers of funds and the contribution of migrants returning to their countries 
with new skills and capital. However, the emigration of a large section of the young educated 
population is likely, for certain countries and sectors, to give rise to a “brain drain” with its 
negative impact on the economy and the country's prospects for social development. Against 
this  backdrop,  we  must  not  ignore  the  possibilities  offered  by  temporary  migration  and  the 
voluntary return of migrants to their countries of origin. 

2. 

IMPACT OF THE AGEING POPULATION 

2.1. 

Impact on the labour market, productivity and economic growth 

Over the next decade, the working-age population will begin to decline when a large number 
of  the  “baby-boomers”  retire.  However,  with  the  support  of  specially-adapted  employment 
policies,  this  phenomenon  is  likely  to  be  temporarily  offset  during  the  next  decade  by 
increasing  rates  of  employment.  Recent  projections3  show  that  although  the  working-age 
population will begin to fall from 2010 onwards, the total number of persons in work in EU-
25 will continue to increase until around 2017. More than two thirds of this increase will be 
the result of  a higher number of women in work,  older  women  being gradually  replaced by 
better-educated  younger  women  with  greater  involvement  in  working  life.  The  remainder  is 
accounted for by the substantial increase anticipated in the employment rate for older workers 
(aged from 55 to 64 years). The expected positive developments tend to create a “window of 
opportunity” permitting the implementation of reforms before the effects of population ageing 
make  themselves  fully  felt.  However,  higher  employment  rates  can  only  offer  temporary 
respite, and the full burden of the demographic changes would subsequently be felt. Even if 
the  objective  of  70%  in  the  overall  rate  of  employment  as  set  out  in  the  Lisbon  strategy  is 
reached, the total number of persons in work is set to decrease by 30 million between the end 
of the decade and 2050. 

Economic growth rates are set to decline with the ageing of the population, mainly owing to 
the reduction in the working-age population. The projections show that, if current trends and 
policies  remain  unaltered,  the  average  annual  growth  rate  in  GDP  for  EU-25  will  fall 
systematically from 2.4% over the period 2004-2010 to only 1.2% between 2030 and 2050. 
Over time, Europe will increasingly have to rely on its productivity gains as a major source of 
economic growth. Older workers will constitute an increasing proportion of global labour and 
economic production resources. However, many countries still employ only a relatively small 
number  of  older  workers  owing  to  excessive  recourse  to  early  retirement,  insufficient 
financial incentives to work offered by tax and social security systems, and poor management 

3 

Economic  Policy  Committee  and  European  Commission  (2006),  “The  impact  of  ageing  on  public 
expenditure:  projections  for  the  EU-25  Member  States  on  pensions,  health  care,  long-term  care, 
education and unemployment transfers (2004-50)” in European Economy Reports and Studies, No 1. 

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of age-related issues in the workplace. This is in particular reflected by insufficient access to 
training, or even discrimination against older workers. 

An  older  labour  force  and  longer  working  lives  need  not  imply  less  productive  labour.  The 
available  data  do  not  suggest  that  older  workers  are  necessarily  less  productive  and  less 
innovative. The decline in physical and mental capacity occurs only at an older age, is very 
gradual,  is  subject  to  wide  variations  depending  on  the  individuals  concerned,  and  can  be 
reduced  by  preventive  health  policies.  Moreover,  it  may  be  offset  by  greater  experience, 
changes  to  work  organisation  and  more  effective  use  of  information  and  communication 
technologies  (ICT).  In  addition,  the  future  cohorts  of  older  workers  will  also  benefit  from 
higher levels of training, reducing the risk of a slower spread of new technologies that could 
be associated with ageing. 

In addition, we cannot take it as read that the reduction in the number of young people will 
facilitate their access to the labour market. Factors like education and suitable skills will still 
be essential in securing stable employment. In the context of an ageing society it is therefore 
of vital importance to provide quality training for young people, thereby meeting the needs of 
the  labour  market  and  of  a  knowledge-based  society,  and  to  develop  lifelong  learning  to 
ensure that individuals maintain their human capital. 

2.2. 

Impact on social security and public finances 

On the basis of current policies, ageing will lead to ever greater pressures on public spending, 
although the situation varies widely from one country to another. For EU-25, it is projected 
that  age-related  public  spending  will  rise  by  3-4  GDP  points  between  2004  and  2050, 
representing an increase of 10% in public spending4. These upward pressures will be felt from 
2010  onwards  and  will  become  particularly  pronounced  between  2020  and  2040.  They  will 
relate to pensions, health and services for the elderly.  

Overall  public  finances  risk  becoming  unsustainable 
thereby 
compromising  the  future  equilibrium  of  pension  and  social  security  systems  in  general. 
Allowing  public  spending  linked  to  ageing  to  create  budget  deficits  would  lead  to  an 
intolerable  spiral  of  debt.  Such  consequences  would  undermine  the  potential  for  economic 
growth  and  compromise  the  functioning  of  the  single  currency,  thereby  requiring  pensions 
and health benefits to be seriously called into question, with considerable negative impact on 
the future wellbeing of pensioners and taxpayers.  

in  many  countries, 

Delaying reforms until public spending on pensions and health has risen would be missing an 
opportunity  to  ensure  that  every  generation,  including  the  baby-boomers,  contribute  to  the 
necessary process of adjustment.  

However,  the  EU  governments  have,  in  general,  not  remained  inactive  and  recent  reforms, 
especially in the fields of public pensions, health, employment and education systems,  have 
begun to pay off, as evidenced in particular by the employment rate for older workers, which 
has been rising rapidly since 2000. These reforms have also aimed to transfer responsibilities 
from governments and companies to individuals; citizens will thus have to play a much more 
active role as regards both the amounts they save for retirement and choosing when to retire.  

4 

Communication  from  the  Commission  -  The  long-term  sustainability  of  public  finances  in  the  EU  - 
COM(2006) 574, 12.10.2006. 

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Ageing will also bring about sharp rises in public spending on health and long-term care, even 
if much will depend on the future improvement in the state of health of the elderly. Such an 
improvement  will  require,  in  particular,  better  adapted  healthcare  services  and  a  preventive 
approach  to  chronic  diseases  which  could  be  helped  by  the  use  of  new  technologies.  If  the 
gains  to  be  made  in  terms  of  life  expectancy  were  generally  acquired  in  good  health  and 
without  disability,  the  projected  increase  in  public  spending  on  health  and  dependency  care 
due to ageing would be reduced by half5. 

3. 

A CONSTRUCTIVE RESPONSE TO THE DEMOGRAPHIC CHALLENGE  

In view of the complexity of the challenges of ageing, an overall strategy appears essential. 
Both at EU and at national level it will be necessary to review existing policies to determine 
whether they need to be adjusted to take account of the changing demography of the EU. 

Five core policy directions are outlined below: 

3.1. 

Promoting demographic renewal in Europe 

The  EU  Member  States  can  prevent  demographic  decline  or  react  to  the  falling  birth  rate, 
which for some of them is reaching a worrying level. These reactions are both necessary and 
realistic: necessary because surveys show that in all EU countries couples would like to have 
more  children;  realistic  because  international  comparisons  underline  the  effectiveness  of 
family and other policies consistently implemented by some countries over several decades to 
create conditions supportive of those who wish to have children6. 

There  are  many  different  such  policies  but  they  generally  have  three  aspects  in  common, 
aiming  to  (i)  reduce  the  inequality  of  opportunities  offered  to  citizens  with  and  without 
children,  (ii)  offer  universal  access  to  assistance  services  for  parents,  in  particular  for 
education and care for young children, and (iii) manage working hours to offer both men and 
women better opportunities for lifelong learning and for balancing their private and working 
lives. 

Furthermore,  the  most  recent  analyses  of  the  fall  in  the  birth  rate  emphasise  the  substantial 
impact  of  the  rise  in  the  age  at  which  women  have  their  first  child,  reflecting  the  growing 
reluctance of couples to have children. These analyses attach growing importance to reducing 
uncertainties  accompanying  the  entry  of  young  adults  into  the  labour  market  and,  more 
generally, to the improvement of their living conditions. In addition, effective gender equality 
policies  make  it  easier  for  parents  to  consider  when  to  have  children.  We  must  therefore 
tackle  the  problems  of  access  to  accommodation,  facilitate  access  to  affordable  and  quality 
childcare and generally improve the work-life balance through flexible forms of work, making 
use  of  new  technologies.  We  must  also  tackle  child  poverty,  the  extent  of  which  remains 
worrying and also reflects the relative deterioration of the situation of families with children.  

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Communication  from  the  Commission  -  The  long-term  sustainability  of  public  finances  in  the  EU  - 
COM(2006) 574, 12.10.2006. 
Cf.  for  example  “The  Demographic  Future  of  Europe  –  Facts,  Figures,  Policies:  Results  of  the 
Population Policy Acceptance Study (PPAS)” published by the German Federal Institute for Population 
Research  and  the  Robert  Bosch  Foundation;  Eurobarometer  No  253  produced  in  2006,  for  which  an 
analysis of the results is to be published shortly. 

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Solidarity between generations could be jeopardised if the burden of ageing had to be carried 
by  the  younger  population,  decreasing  in  number  and  economic  strength.  Remedying  this 
situation is one of the priorities of the new pact between the generations. 

At the Barcelona European Council in 2002, Member States made a clear commitment to step 
up  provision  of  childcare:  by  2010  this  should  be  available  to  at  least  90%  of  children 
between 3 and 6 years old, and at least 33% of children under 3 years of age. It is now time 
for these national childcare facilities to be put in place.  

The Commission:  

–  will  consult  the  social  partners  on  the  measures  (e.g.  on  parental  leave,  or  more  flexible 
work arrangements) to be taken to improve the balance between the working, private and 
family lives of men and women, in order to take greater account of the needs of families7; 

–  will hold in October 2006 the first European Demographic Forum which will give rise to a 
Commission  analysis  report.  In  addition,  the  Commission  will  set  up  a  group  of 
government experts to accompany the work of the Forum. 

3.2. 

Promoting employment in Europe: more jobs and longer working lives of better 
quality 

Increasing the rate of employment is a vital component of the Lisbon Strategy. Some success 
has  already  been  achieved.  The  relevant  reforms  of  employment,  education  and  training 
policy  will  thus  have  to  be  expanded  and  pursued  beyond  2010.  Increased  efforts  will  be 
needed to reduce the segmentation of the labour markets, pursue the increase in the number of 
women  in  work8,  and  increase  the  efficiency  and  equity  of  education  systems  in  order  to 
enhance  skills  and  foster  the  integration  of  new  entrants  who  suffer  from  this  segregation. 
This, in particular, will be the aim underlying the implementation of “flexicurity” guidelines 
which  should  facilitate  the  transition  between  different  stages  in  the  life  cycle  by  means  of 
increased  flexibility  of  the  labour  markets,  lifelong  learning  and  active  labour  market  and 
social  security  policies.  The  involvement  of  a  large  number  of  stakeholders  with  different 
levels of responsibility - workers and companies – by means of social dialogue and corporate 
social responsibility will be required.  

Demographic ageing, however, calls for strategic importance to be given to increasing the rate 
of  participation  of  men  and  women  aged  over  55.  This  will  require  far-reaching  reforms  to 
remove incentives for early exit from the labour market and to encourage the employment of 
senior citizens. It must also be ensured that it is effectively possible to work for longer and 
that public employment policies as a whole create more job opportunities for older workers.  

“Active  ageing”  constitutes  in  itself  a  comprehensive  and  sustainable  approach  which  must 
employ a range of tools beyond retirement reforms. In order to be able to seriously consider 
working longer, people must not be faced with discriminatory prejudices, they must have been 
prepared to update and make the most of the skills they have gained with experience and have 
access to more flexible retirement schemes, and they must not only be in good physical and 

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8 

Communication  from  the  Commission  -  First-stage  consultation  of  European  social  partners  on  the 
reconciliation of professional, private and family life - SEC(2006) 1245, 12.10.2006. 
Communication from the Commission - A Roadmap for equality between women and men 2006-2010 - 
COM(2006) 92, 1.3.2006. 

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mental health but also have good prospects of remaining so for a long time to come. The EU 
has legislative instruments to ensure that the ban on age discrimination is enforced,  and  the 
2007  European  Year  of  Equal  Opportunities  for  All  will  be  an  opportunity  to  evaluate  its 
implementation  by  the  Member  States,  which  are  responsible  for  developing  training  and 
stepping up lifelong preventive health policies. Easier access to lifelong learning must reach 
everyone  and,  in  particular,  those  with  lower  skills  and  in  less  favourable  employment 
conditions.  While  these  areas  are  not  new,  demographic  ageing  now  makes  them  a  priority 
investment  in  the  future  which  the  European  Union  supports,  principally  through  its 
"Education and Training 2010" programme.  

Increasing the active population will be achieved partly by improving public health. First of 
all, we need to rationalise the structure of our health systems' provision of care, which often 
no longer meets current needs. The Commission's recent initiative to establish a Community 
framework  to  improve  cross-border  mobility  for  patients  and  free  movement  of  health 
services  will  allow  economies  of  scale  to  be  achieved  and  is  part  of  this  programme. 
Secondly,  effective  preventive  measures  to  tackle  obesity,  smoking,  alcoholism  and  mental 
illnesses  should  also  have  a  broad  impact  on  Europeans'  state  of  health  and,  therefore,  on 
productivity  at  work  and  future  healthcare  costs.  Thirdly,  the  increased  use  of  new 
technologies,  such  as  telemedicine  and  personalised  healthcare  systems,  available  to  senior 
citizens, their families and healthcare staff, could help to control healthcare expenditure and 
improve the wellbeing of citizens. Finally, the types of illnesses will certainly change with an 
ageing  population,  inevitably  raising  new  questions  about  the  types  of  care  required  in  the 
future.  

Continuing to work after the age of 60 should no longer be, as it is today, the prerogative of 
high income earners and the highly qualified. This should lead to a reduction in the disparity 
in life expectancies, which today constitutes one of the most salient forms of social inequality, 
depending  on  income  and  level  of  education.  Preventive  measures  to  foster  lifestyles  and 
environmental conditions conducive to good health, within and outside the workplace, must 
henceforth lead to increased cooperation between the stakeholders in public health, education, 
the  media  and  work  organisation.  This  should  influence  at  an  early  stage  life  expectancy in 
good  health,  which  differs  markedly  from  overall  life  expectancy  and  varies  considerably 
between Member States. 

The  participation  of  people  aged  over  65,  including  those  who  are  officially  retired,  in  the 
economic  and  social  fabric  must  be  promoted  as  an  opportunity  and  not  presented  as  a 
constraint. This increased participation in social activity on a voluntary basis will be achieved 
by means which have largely yet to be created.  

Member States are invited to take the necessary measures to respect their commitments, taken 
at the Stockholm European Council in 2001, to raise employment rates for workers over 55 to 
over 50%. At the launch of a new cycle of the Lisbon Strategy for Growth and Employment 
in 2008, the Commission will examine the results obtained in each Member State as regards 
the employment rate  for  men and women aged over 55 and the age of withdrawal from the 
labour force. It will report on specific examples of best practices from the Member States in 
promoting active ageing. 

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The European Union has agreed to step up support to Member States to reach this goal with 
an  agreement  on  a  reinforced  European  Social  Fund  and  Lifelong  Learning  programme  for 
2007-20139.  

The  Commission  will  consult  the  stakeholders  on  initiatives  aimed  at  establishing  a 
Community  framework  to  improve  cross-border  supply  of  health  services  and  mobility  for 
patients10.  

Member States are invited to implement fully the Directive on equal treatment in employment 
and  occupation11.  In  2007,  the  Commission  will  review  the  state  of  implementation  of  this 
directive with regard to age discrimination. 

3.3. 

A more productive and dynamic Europe  

A third response to the demographic challenge is to improve the productivity of Europeans at 
work.  More  generally,  the  Lisbon  Strategy,  which  has  been  refocused  since  2005,  brings 
together  in  a  coherent  manner  all  the  structural  reforms,  including  microeconomic  ones, 
which are likely to optimise European performance. The European Union contributes to this 
directly  by  deepening  the  internal  market,  implementing  competition  rules,  prioritising  the 
quality  of  regulation  (specifically  with  regard  to  small  and  medium-sized  enterprises)  and 
through  social  cohesion  policy.  In  this  way,  the  Lisbon  Strategy  establishes  the  conditions 
required for optimising skills and the quality and productivity of work at all ages. 

The ageing population can even represent a good opportunity to enhance the competitiveness 
of  the  European  economy.  European  companies  should  be  able  to  take  advantage  of  better 
conditions to grasp the opportunities offered by demographic change in terms of creating new 
markets for goods and services which respond to the needs of an older clientele12. A first step 
in this direction would undoubtedly be to encourage companies and other economic actors to 
incorporate the ageing phenomenon into their innovation strategies. This concerns a number 
of  areas  such  as  information  and  communication  technologies,  financial  services,  transport, 
energy and tourism infrastructures and local services, in particular long-term care. In all these 
areas  the  European  Union  can  supplement  or  to  strengthen  planning  efforts  of  the  Member 
States.  

By the end of  2008, the Commission will adopt a Communication on how  best to  take into 
account  the  needs  of  an  ageing  population  in  areas  such  as  town  and  country  planning,  the 
environment or access to new technologies. It will pay special attention to the conditions and 
potential role for the Structural Funds for developing care provision adapted to the needs of 
dependent people and their families. 

9 

10 

11 

12 

Regulation (EC) No 1081/2006 of the European Parliament and of the Council of 5 July 2006 on the 
European Social Fund, and proposal for a Decision establishing an integrated action programme in the 
field of lifelong learning - COM(2004) 474, 14.7.2004. 
See  Communictaion  from  the  Commission  -  Consultation  regarding  Community  action  on  health 
services - SEC(2006) 1195, 26.9.2006. 
Council  Directive  2000/78/EC  of  27  November  2000  establishing  a  general  framework  for  equal 
treatment in employment and occupation. 
Communication  from  the  Commission  -  Putting  knowledge  into  practice:  A  broad-based  innovation 
strategy for the EU - COM(2006) 502, 13.9.2006. 

EN 

10 

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3.4. 

Receiving and integrating immigrants in Europe 

It  must  be  acknowledged  that  over  the  next  15  to  20  years  significant  net  immigration  into 
Europe will continue. This will at first meet the needs of the European labour market, which 
will  need  to  attract  a  qualified  labour  force  from  outside.  The  need  for  external  unskilled 
labour will also remain very high. Nor can we overlook the attractiveness of Europe owing to 
its  relative  prosperity,  its  political  stability,  the  desire  of  recently  arrived  immigrants  to  be 
reunited  with  their  families  and  the  dynamic  growth  in  the  populations  of  relatively  poor 
neighbouring regions. These different factors should be better reconciled by organising legal 
immigration  and,  correspondingly,  the  integration  of  immigrants,  while  at  the  same  time 
respecting the needs of the country of origin. 

Current  national  policies  on  immigration  from  third  countries  are  not  uniform.  In  some 
countries, legal flows are limited and illegal immigration remains more or less contained; in 
others,  the  large-scale  regularisations  of  recent  years  have  allowed  the  circumstances  of 
hundreds of thousands of immigrants who were living and working on an irregular basis to be 
legalised. These differences reflect, beyond the disparities in the labour market, the growing 
difficulties  of  immigrants  with  regard  to  economic  and  social  integration  in  countries  that 
have a long tradition of immigration. These differences  are not sustainable in the long term 
within a European Union characterised by the free movement of workers and an increasingly 
unified internal labour market. It is also the European Union, with its international weight, its 
commercial  role  and  its  international  cooperation  relations  with  the  Mediterranean,  African 
and  Latino-American  regions,  which  can  engage  in  partnerships  indispensable  to  the 
management of migration flows, a prerequisite for the success of immigration policies. It also 
falls  to  the  European  Union,  which  is  founded  on  non-discrimination  and  the  respecting  of 
differences, to inform public opinion and combat prejudice, to identify the real obstacles to be 
overcome and also to point out the riches of diversity13. 

This  is  why  the  EU  today  is  working  with  the  Member  States  to  develop  elements  of  a 
common  policy  on  legal  immigration14,  focussing  particularly  on  immigration  for  work 
purposes in order to satisfy requirements in certain sectors of the labour market. This policy 
should be supplemented by tighter policies on integrating third-country nationals15, allocating 
greater financial resources, and by striking up partnerships with emigration countries.  

At the same time, with respect to the internal mobility of Community citizens, the transition 
towards full freedom of movement for workers within an enlarged EU of 27 Member States 
will continue up to 2014. This internal mobility helps offset imbalances in labour markets in 
Europe and should be taken into consideration in planning immigration policies.  

The  Hague  programme  of  2004  led  to  a  "Policy  Plan  on  legal  migration"  and  inspired  the 
establishment of the European Integration Fund. Such measures can support further action at 
all levels to help the integration of legal migrants.  

13 

14 
15 

See  the  results  of  Eurobarometer  No  64,  published  in  December  2005,  and  No  65,  published  in  June 
2006, on public opinion and migrations. 
Communication from the Commission - Policy Plan on Legal Migration - COM(2005) 669, 21.12.2005. 
Communication  from  the  Commission  -  A  Common  Agenda  for  Integration  -  Framework  for  the 
Integration of Third-Country Nationals in the European Union - COM(2005) 389, 1.9.2005. 

EN 

11 

   EN 

 
                                                 
The  Commission  will  continue  its  initiatives  to  stimulate  the  integration  of  migrants, 
specifically by holding discussions with Member States on obstacles to integration, to find out 
more  about  migrants’  profiles,  perceptions  and  policies  implemented.  Over  the  course  of 
2009, the Commission will consider the need to propose new measures relating to economic 
immigration,  taking  account  of  the  needs  of  the  labour  market,  and  taking  stock  of  the 
progress achieved on internal mobility. 

3.5. 

Sustainable  public  finances  in  Europe:  guaranteeing  adequate  social  security 
and equity between the generations 

In most Member States, public finances are not sustainable under current policies. Sustained 
efforts towards budgetary consolidation are nevertheless required. Increasing the participation 
rate in employment is an effective tool that governments have at their disposal for increasing 
their revenue and contending with expenditure linked to ageing, without increasing the rates 
of taxation. 

The  recent  retirement  reforms  in  several  countries  will  allow  the  financial  imbalance  in  the 
pension  systems  to  be  significantly  reduced.  Nonetheless,  some  countries  may  require 
additional reforms, aimed in particular at avoiding early withdrawals from the labour market, 
raising the age of definitive retirement, offering older people financial incentives to stay in the 
labour  market  and  allowing  individuals  to  increase  their  retirement  income  with  a 
supplementary  pension,  while  ensuring  a  better  balance  between  individuals'  contributions 
and benefits. 

New  challenges  are  emerging,  linked  to  the  development  of  private  savings  and  funded 
systems.  They  are  linked,  for  example,  to  the  cover  of  these  systems,  to  the  level  of 
contributions and to the increasing role of pension funds, which in turn raises questions about 
transparency  and  quality  of  supervision.  In  this  context,  it  is  of  key  importance  to  develop 
efficiently  functioning  financial  markets  and  to  create  stable  and  secure  conditions  for 
individuals to save and invest. Governments should also favour the emergence of a sufficient 
variety  of  financial  instruments.  Building  up  private  savings  and  capital  should  also  be 
promoted so that individuals can have more autonomy in determining the level of income they 
wish to have at their disposal during their retirement. There is also a need for communication 
and education in financial matters to help individuals adapt to new circumstances. 

Together with this communication, the Commission is adopting a report analysing the long-
term sustainability of public finances, based on population projections up to 2050 and on the 
financial strategies presented by the Member States in their 2005 Convergence and Stability 
Programmes. 

4. 

CONCLUSION: FROM CHALLENGE TO OPPORTUNITY 

The ageing of European populations is the inevitable  consequence of developments that are 
fundamentally positive: increased life expectancy, often in good health, and easier choice over 
whether and when to have children, in particular by increasingly educated women who enjoy 
easier  access  to  the  labour  market.  However,  these  far-reaching  demographic  and 
socioeconomic  changes  compel  us  to  reform  existing  institutions,  for  reasons  of  both 
economic efficiency and social equity. 

EN 

12 

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Our current policies are not viable in the long term, in that they do not address the expected 
decrease in the active population and the prospect of slippage in public finances. The source 
of the problem is not higher life expectancy as such, rather it is the inability of current policies 
to adapt to the new demographic order and the reluctance of businesses and citizens to change 
their expectations and attitudes, particularly in the context of labour market modernisation. In 
short, the Member States are facing a problem of retirement rather than a problem of ageing. 

Of  course,  it  falls  above  all  to  the  Member  States  to  formulate  specific  responses  to  the 
demographic  challenge.  Recent  experience  in  this  regard  is  encouraging,  as  the  first 
retirement reforms have begun to bear fruit. The challenge is not insurmountable if we make 
good use of our brief window of opportunity of about ten years. 

These  reforms  are  also  part  of  a  European  framework,  already  applied  opportunely  and 
tenaciously  through  the  renewed  Lisbon  Strategy  for  Growth  and  Jobs,  the  Stability  and 
Growth Pact, the Sustainable Development Strategy, cohesion policy, and the open method of 
coordination in the area of social protection and inclusion. 

It is not now a question of introducing a new process of European coordination. We need to 
commit  to  continuing  and  deepening  these  efforts,  while  at  the  same  time  ensuring  that 
adequate account is taken of the multiple and complex facets of the demographic challenge as 
a whole and in each of our policies, at both national and Community level. 

In this respect, this communication develops a reference framework at Community level for 
Member  States'  policies.  The  framework  has  set  out  five  areas  that  respond  to  a  common 
perspective of restored confidence: 

•  Promoting demographic renewal in Europe 

•  Promoting employment in Europe: more jobs and longer working lives of better quality 

•  A more productive and dynamic Europe 

•  Receiving and integrating migrants in Europe 

•  Sustainable  public  finances  in  Europe:  guaranteeing  adequate  social  security  and  equity 

between the generations. 

Community and national policies need to be attuned to the demographic challenge described 
in this Communication. European policies, including the Commission's, need to be reviewed 
so  that  the  demographic  challenge  is  mainstreamed  into  tomorrow's  policy  choices.  The 
Commission  recommends  that  the  sectoral  Councils  and  the  sectoral  Committees  in  the 
European Parliament consider the impact of demographic change in the policy areas for which 
they are responsible. 

Confidence in the long-term future is to be built from today on the basis of men and women 
participating in working life, and on productivity and performance. This same confidence will 
also help Europeans to enjoy fruitful relationships with current and future migrants, based on 
mutual respect. 

Confronting the demographic challenge will be a long-term task for all of us. Progress in the 
implementation of these initiatives will be the subject of the European Demographic Forum to 

EN 

13 

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be  held  every  two  years,  for  the  first  time  in  October  2006.  The  results  of  the  initiatives 
announced in this communication between now and 2009 and the lessons of the Forum will 
form  the  subject  of  a  chapter  in  the  Annual  Progress  Report  (Lisbon  Process),  which  the 
Commission will devote every two years to the Union's state of preparedness for increasing 
life expectancy. 

EN 

14 

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APPENDIX: MAIN EUROPEAN DEMOGRAPHIC TRENDS AND DATA 

Projections – EU-25 

Projections for EU's population trend 2005-2050 

in thousands 

2005-2050 

2005-2010 

2010-2030 

2030-2050 

Total population 

-8659 

 Percentage change 

-1.9% 

Children (0-14) 

-13811 

 Percentage change 

-18.6% 

Young people (15-24) 

-14035 

 Percentage change 

-24.3% 

Young adults (25-39) 

-24867 

 Percentage change 

-25.0% 

Adults (40-54) 

-18666 

 Percentage change 

-19.0% 

Older workers (55-64) 

4721 

 Percentage change 

9.1% 

Elderly people (65-79) 

25688 

 Percentage change 

44.5% 

Frail elderly (80+) 

32311 

5563 

1.2% 

-2304 

-3.1% 

-2383 

-4.1% 

-3896 

-3.9% 

4116 

4.1% 

4973 

9.5% 

1947 

3.4% 

3109 

5312 

-19534 

1.1% 

4.2% 

-6080 

-8.5% 

-6663 

-5427 

-8.2% 

-4990 

-12.0% 

-10.2% 

-14883 

-6088 

-15.6% 

-7.5% 

-10029 

-12754 

-9.8% 

8717 

-13.8% 

-8969 

15.3% 

-13.6% 

22281 

1460 

37.3% 

1.8% 

11969 

17233 

 Percentage change 

171.6% 

16.5% 

54.0% 

50.8% 

Source : EUROSTAT, 2004 

EN 

15 

   EN 

 
 
 
Projections by country 

Population1 

Fertility2 

Life expectancy3 

Men 

Women 

Natural 
Increase4 

Net Migration5 

Old Age 
Dependency6 

2005 

2050  2004  2050  2004  2050  2004  2050 

2004 

2050 

2004 

2050 

2004 

2050 

EU25  459,5  449,8 

BE 

CZ 

DK 

DE 

EE 

EL 

ES 

10,4 

10,9 

10,2 

5,4 

8,9 

5,4 

82,5 

74,6 

1,3 

1,1 

11,1 

10,6 

43,0 

42,8 

FR7 

60,6 

65,7 

IE 

IT 

CY 

LV 

LT 

LU 

HU 

MT 

NL 

AT 

PL 

PT 

SI 

SK 

FI 

SE 

UK 

4,1 

5,5 

58,5 

52,7 

0,7 

2,3 

3,4 

0,5 

10,1 

0,4 

1,0 

1,9 

2,9 

0,6 

8,9 

0,5 

16,3 

17,4 

8,2 

8,2 

38,2 

33,7 

10,5 

10,0 

2,0 

5,4 

5,2 

9,0 

1,9 

4,7 

5,2 

10,2 

60,0 

64,3 

1,5 

1,6 

1,2 

1,8 

1,4 

1,4 

1,3 

1,3 

1,9 

2,0 

1,3 

1,5 

1,3 

1,3 

1,7 

1,3 

1,7 

1,8 

1,4 

1,2 

1,5 

1,2 

1,2 

1,8 

1,7 

1,7 

1,6 

73,7 

80,5 

80,4 

85,6 

211 

-48351 

1464 

39710 

1,7 

75,5 

82,3 

81,6 

88,3 

5 

-405 

1,5 

72,4 

79,7 

78,8 

84,1 

-18 

-2010 

1,8 

75,2 

80,9 

79,6 

83,7 

6 

-302 

24 

4 

8 

897 

647 

323 

1,5 

76,1 

82,0 

81,7 

86,8 

-143 

-17311 

211 

8980 

1,6 

65,5 

74,9 

76,9 

83,1 

1,5 

76,4 

80,3 

81,4 

85,1 

1,4 

76,6 

81,4 

83,4 

87,9 

-5 

-1 

67 

-248 

-2207 

1 

43 

-6007 

508 

1,9 

76,2 

82,7 

83,4 

89,1 

219 

2919 

1,8 

75,5 

82,4 

80,7 

87,0 

33 

814 

64 

16 

19 

1743 

6235 

2823 

645 

1,4 

77,3 

83,6 

83,2 

88,8 

-29 

-11278 

330 

5777 

1,5 

76,3 

81,9 

80,8 

85,1 

1,6 

64,9 

74,3 

76,2 

82,5 

1,6 

66,5 

75,5 

77,6 

83,7 

1,8 

75,0 

81,6 

81,4 

86,7 

3 

-12 

-11 

2 

8 

-484 

-606 

63 

1,6 

68,5 

78,1 

76,8 

83,4 

-36 

-2029 

1,6 

76,2 

81,8 

80,7 

85,0 

1,8 

76,2 

80,2 

80,8 

83,6 

1,4 

76,2 

83,6 

82,1 

87,7 

1 

52 

1 

-4 

-358 

-912 

1,5 

70,5 

79,1 

78,5 

84,4 

-26 

-5022 

1,6 

74,2 

80,4 

81,0 

86,6 

1,5 

72,6 

79,8 

80,2 

85,1 

1,6 

69,7 

77,7 

77,8 

83,4 

1,8 

75,3 

81,9 

81,9 

86,5 

1,9 

78,1 

83,3 

82,4 

86,5 

7 

-3 

-2 

7 

6 

1,8 

76,4 

82,9 

80,9 

86,6 

89 

-1326 

-390 

-781 

-303 

171 

-343 

6 

-2 

-6 

3 

15 

3 

21 

25 

-28 

42 

6 

-2 

6 

28 

139 

238 

30 

28 

131 

795 

113 

1480 

985 

318 

808 

287 

109 

288 

1069 

4939 

24,5 

26,1 

19,7 

22,5 

26,8 

23,8 

26,4 

24,6 

25,2 

16,4 

28,9 

17,5 

23,6 

22,3 

21,0 

22,6 

19,0 

20,5 

22,8 

18,6 

24,9 

21,4 

16,3 

23,3 

26,4 

24,3 

52,8 

48,1 

54,8 

40,0 

55,8 

43,1 

58,8 

67,5 

47,9 

45,3 

66,0 

43,2 

44,1 

44,9 

36,1 

48,3 

40,6 

38,6 

53,2 

51,0 

58,1 

55,6 

50,6 

46,7 

40,9 

45,3 

Source: EUROSTAT, 2004 
Notes: 
1 
2 
3 
4 

Population in million on January 1st (2050: trend scenario) 
Number of children per woman (2004: estimate; 2050: trend scenario) 
Life expectancy at birth in years (2050: trend scenario) 
Difference between the number of live births and the number of deaths (2004: estimated annual 
Flow, 2050: cumulative net migration between 2004 and 2050) 
Estimation  of  net  migration  in  thousands  (2004:  estimated  annual  flow,  2050:  cumulative  net 
migration between 2004 and 2050) 
Number of people aged 65+ as percentage of people aged 15-64 (2050: trend scenario)  
France: Metropolitan France (excluding overseas territories) 

5 

6 
7 

EN 

16 

   EN 

 
 
 
Life expectancy at birth 

Life Expectancy 1960-2050, Females

1960
2004
2050

90,0

85,0

80,0

75,0

70,0

65,0

60,0

LV HU EE LT SK

EU10 PL CZ DK SI

EU25 IE MT CY NL UK PT EL LU BE

EU15 DE FI AT SE IT ES FR

Life Expectancy 1960-2050, Males

1960
2004
2050

90,0

85,0

80,0

75,0

70,0

65,0

60,0

LV HU EE LT SK

EU10 PL CZ DK SI

EU25 IE MT CY NL UK PT EL LU BE

EU15 DE FI AT SE IT ES FR

Source: Eurostat 2004 Demographic Projections (Baseline scenario) 

Employment rate of older workers 

EN 

17 

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Employment Rate of Older Workers, 55-64 Years
(2005)

Females
Total
Males

80

70

60

50

40

30

20

10

0

l

p

i

k s
s

t

m

t
i

u

l

e
b

t
a

u f
r
h

r
g

5
2
u
e

s
e

5
1
u
e

z
c

l

e n
d

t
l

v

l

t
p

y
c

Source: Eurostat, Labour Force Survey 

Fertility and female employment rates 

e f

i

i

Female Employment Rates (15-64) and Total Fertility Rates
2004

Female Employment Rate

TFR

75

60

45

30

15

)

%

(
e
t
a
r

t
n
e
m
y
o
p
m
E

l

e
e

k
u

k
d

e
s

2,5

2

1,5

1

e
t
a
r

y
t
i
l
i
t
r
e
f

l
a
t
o
T

0,5

0

0
mt gr it pl es hu sk lu be

eu25 cz ie

eu15 fr lt lv cy de ee si at pt fi uk nl se dk

Source: Eurostat, Labour Force Survey and National data 

EN 

18 

   EN 

 
 
 
 
 
 
Net migration rate vs. natural population growth 

Net Migration and Natural Population Growth
Average 2001-2004

Net crude migration rate

Natural increase

LV EE HU LT CZ DE SI IT PL GR SK AT SE PT BE

EU15 DK ES UK FI MT LU NL FR CY IE

20

15

10

5

0

-5

-10

Source:  Eurostat.  Figures  exclude  intra-EU  flows  and  comprise  regularisations  of 
previously undeclared migrants 

EN 

19 

   EN