Sustainable development - demographic changes
From Statistics Explained
- Data from July 2011. Most recent data: Further Eurostat information, Database.
This article provides an overview of statistical data on sustainable development in the area of demographic changes. They are based on the set of sustainable development indicators the European Union (EU) agreed upon for monitoring its sustainable development strategy. Together with similar indicators for other areas, they make up the report 'Sustainable development in the European Union - 2011 monitoring report of the EU sustainable development strategy', which Eurostat draws up every two years to provide an objective statistical picture of progress towards the goals and objectives set by the EU sustainable development strategy and which underpins the European Commission’s report on its implementation.
The table below summarises the state of affairs of in the area of demographic changes. Quantitative rules applied consistently across indicators, and visualised through weather symbols, provide a relative assessment of whether Europe is moving in the right direction, and at a sufficient pace, given the objectives and targets defined in the strategy.
Overview of main changes
The demographic indicators, life expectancy and fertility, as well as those related to the adequacy of income in old age, have been developing favourably. However, even if substantial progress has been made, the employment rate of older workers missed the 2010 target. Furthermore, the indicators monitoring the sustainability of public finances have developed unfavourably. Levels of public debt, for example, rose to 80 % on average within the EU in 2010 and there has been insufficient progress in increasing the average age of retirement.
Main statistical findings
Employment rate of older workers
From 2000 to 2010 the proportion of 55-64 year-olds in employment increased in the EU, however the 50 % target was not reached
- Nine out of 27 countries had achieved the 50 % employment target in 2010
The proportion of 55-64 year olds in employment rose from 36.9 % in 2000 to 46.3 % in 2010, at an average annual growth rate of 2.3 %. Yet this increase was not sufficient to reach the 2010 target rate of 50 %.
There is considerable variation between Member States. Nine Member States have achieved the EU’s 50 % target. Countries that had the largest percentage point increase from 2000 levels include Bulgaria, Germany and Slovakia. Two countries (Romania and Portugal) have lower levels of older worker employment in 2010 than in 2000. The discrepancy between countries may be attributed to a number of industrial and policy factors within individual Member States, such as different employment sectors, retirement ages and policy initiatives, including life-long learning to acquire new labour skills , whilst other countries subsidise their pension schemes to cover the additional costs of early retirement. Additionally work types – part-time or full-time employment – may also vary amongst Member States.
Life expectancy at age 65
Life expectancy at age 65 in the EU for both men and women advanced steadily over the period 2002 to 2008
- Life expectancy continues to rise
Life expectancy for both males and females increased between 2002 and 2008. Females had a steady increase of their life expectancy after the age of 65, from 19.5 to 20.7 years. Male life expectancy also increased from 15.9 to 17.2 years. While male life expectancy still remained lower than females’, the rate of increase for males was slightly higher, at 1.3 % per year, compared to 1.0 % per year for females.
Differences between Member States remain evident, and the eastern European counties in particular tend to have the lowest levels of life expectancy. This variation can be attributed to dissimilarities in living and working conditions amongst Member States. Life expectancy, however, is expected to increase in these Members States, as improvements are made in primary and preventive care in addition to removing barriers affecting accessibility to healthcare.
The average number of children borne to each woman in the EU increased between 2002 and 2008, moving closer towards the 2.1 children per woman needed to maintain the current population
- Fertility rates have increased although they remain below the replacement level
Fertility rates provide information on population renewal through births within a given society. Between 2002 and 2007, the average fertility rate increased in the EU from 1.45 to 1.56 children per woman, which is well below the 2.1 children considered necessary to maintain the population in developed countries.
Fertility rates vary widely between the Member States. In 2009 Ireland had the highest rate (2.07), followed by France (2.0) and Sweden (1.94), whilst Hungary (1.32), Portugal (1.32) and Latvia (1.31) had the lowest . The differences between countries are due to a mixture of cultural and economic factors, such as educational level, labour market scenarios, material aspirations, social security arrangements and migration.
The net rate of migration into the EU increased slightly between 2000 and 2009
- The migration rate has increased between 2000 and 2009 from 1.5 to 1.7 immigrants per thousand inhabitants
Between 200 and 2009 net migration in the EU, the difference between immigration and emigration, increased from a level of 1.5 immigrants per thousand inhabitants in 2000 to 4.2 in 2003, followed by a decline from 3.9 in 2007 to 1.8 in 2009. This latest decline is probably related to the economic crisis, as fewer immigrants were able to find employment and left the EU.
The Member States with the largest net increases in migration in 2009 include Luxembourg, Sweden and Belgium with 13.2, 6.7 and 5.9 migrants per 1 000 persons respectively. Member States that experienced net losses include Ireland, Lithuania and Malta with -6.2, -4.6 and -3.8 migrants per 1 000 inhabitants respectively – where emigration was higher than immigration.
Elderly population compared to working-age population
The ratio of elderly people to the working age population in the EU has been constantly increasing until 2010 and is expected to continue to increase
- The old-age dependency ratio has steadily increased
The ratio of elderly people to the population of working age in the EU has steadily increased from 23.2 % in 2000 to 25.9 % in 2010. Projections indicate that the old-age-dependency ratio will continue to increase, reaching 53.5 % in 2060, or more than double the level of 2010 (14). The share of people aged 65 years or over in the total population is projected to increase from 17 % to 30 % by 2060.
- The ratio is projected to double by 2060
The Member States with the highest old-age-dependency ratios in 2010 are Germany, Italy and Greece at 31.4 %, 30.8 % and 28.4 % respectively as these figures are projected to rise. In 2060 17 Member States are projected to have ratios larger than 50.0 %. Many of these countries are one of the 12 accession Member States whom have experienced a large increase in emigration of the working age population in recent years.
Old-age income adequacy
Income level of over-65s compared to before
The income level from pensions of people aged 65-74 relative to the income level from earnings of those aged 50-59 remained stable in the EU between 2005 and 2009
- In 2009, the majority of Member States had aggregate replacement ratios below 50 %
The aggregate replacement ratio gives the average level of income pensioners aged between 65 and 74 receive in comparison to the average level of income of the working population in their 50s. Between 2005 and 2009 the aggregate replacement ratio for the EU remained stable at 51 % – meaning that pensioners have to live on roughly half the income of those just before retirement. In 2009 the ratio varied within Member States between 34 % and 68 %, with the highest ratios in France, Austria and Hungary, while the lowest ratios were in Bulgaria, Latvia and Cyprus. 15 Member States have ratios below 50 %.
Over the past decade some Member States have reformed their pension systems to prevent pension expenditure increasing as a share of GDP. Differences between Member States result from different demographic situations, including the old-age dependency ratio, and the extent to which Member States have reformed their pension systems. A risk still remains for those countries which have not done enough to compensate for the demographic changes which are expected to lie ahead.
Risk of poverty for over-65s
The risk of poverty for elderly people in the EU decreased overall between 2005 and 2009. In 2009, less than one out of five people aged over 65 was at risk of being poor
- The risk of becoming poor varies significantly within EU Member States
The proportion of individuals of more than 65 years of age who are at risk of poverty in the EU decreased by an average of 1.5 % per year between 2005 and 2009, falling to 17.8 % in 2009.
In 2009 the at-risk-of-poverty rate for over-65-year-olds varied between Member States from 4.6 % to 48.6 % – Cyprus, Latvia, and Bulgaria having the highest rates of poverty of older persons, while Hungary, Luxembourg and the Czech Republic having the lowest. While current pensioners appear to have been protected against the economic crisis, the sustainability of future pensions may be affected by long periods of unemployment, lower contributions and poorer returns from the financial market stressing the need to restructure pension schemes to prevent future pensioners from facing poverty in old-age.
Public finance sustainability
Changes in general government debt as a percentage of GDP in the EU moved away from sustainable public finance levels between 2000 and 2010, sharply deviating from the 60 % EU reference value
- In 2010 the government debt of Member States ranged from 6.6 % to 142.8 % of GDP
The overall general government debt-to-GDP ratio in the EU rose over the period 2000 to 2010 from 61.8 % to 80.0 %. Only in 2007 did it fall below the euro-zone reference value of 60 % before rising to 80.0 % in 2010 due to the financial crisis when a number of Member States implemented stimulus packages in an attempt to buffer themselves against the effects of the global recession.
General government debt-to-GDP ratios within Member States in 2010 ranged from 6.6 % to 142.8 %, with Greece maintaining the highest level of debt and Estonia the lowest. Fourteen Member States remained above the 60 % euro-zone reference line. In the years running up to the financial crisis, those countries that faced the greatest deterioration in public finances had a mixture of external imbalances along with booming credit and domestic demand, while the countries that experienced the smallest had shown stable or falling macro-economic risks .
Over the period 2000 to 2010, general government debt-to-GDP ratios rose in more than two-thirds of the Member States (see Figure 11). Of the countries that were able to reduce their public debt, Bulgaria had the most pronounced decline (from 72.5 % in 2000 to 16.2 % in 2010). Much of this can be explained by introducing the time adjustment method of cash incomes when reporting taxes in accordance with Regulation (EC) No 516/2000 .
Between 2001 and 2009 the increase in the average retirement age in the EU has been too slow to reach an average of 65 years in 2010
- The target of delaying the average retirement age to 65 years by 2010 is unlikely to be achieved
The average exit age from the labour market in the EU increased very gradually between 2001 and 2009, from 59.9 to 61.4 years of age. Although this increase is positive it is insufficient to achieve the target of 65 years in 2010.
Men are closer to achieving the 2010 target level than women. In 2009, the average exit age for men was 61.8 years, while women on average left the labour market at 61.0 years. The variation of the average exit age for both men and women within Member States was between 64.3 years in Sweden and 58.8 years in Slovakia.
Expenditure on care for the elderly
In 2008 EU public expenditure on care for the elderly as a share of GDP remained at the same level as in 2000, although climbing in the intervening years
- Expenditure on care for the elderly in 2008 ranged from less than 0.01 % to 2.33 % in Member States
In the EU the share of social protection expenditure devoted to old-age care in GDP remained at 0.41 % in 2008, the same level as in 2000. This share did increase however over the intervening years to 0.49 % in 2004, but then fell back to the level of 2000 in 2007 and 2008. This decrease may be explained by the relatively strong GDP growth rate in a number of Member States including the Baltic countries during the economic upturn which lasted until 2007, which would be compatible with consistent spending on care for the elderly.
Member States’ expenditure on care for older people in 2008 varied from less than 0.01 % in Luxembourg and Cyprus to 2.33 % in Sweden, but was below 0.5 % in more than two-thirds of Member States. Only Denmark, Austria and Sweden spent 1 % of GDP or more on care for the elderly. Between 2000 and 2008 expenditures increased in the majority of Member States, although this did not lead to an increase in the EU aggregate because expenditures declined in Germany and the UK, two of the largest Member States.
The impact of ageing on public expenditure
Age-related public expenditure in the EU is projected to rise from 23.1 % of GDP in 2007 to 27.8 % of GDP in 2060
- Whilst pensions expenditure is expected to increase in most countries, the relative level of income of over-'65s is expected to increase only in some
The projections of current trends shown here provide an insight into the possible future development of age-related public spending. They are therefore a useful indication of where policy action could be needed.
Age-related public expenditure is projected to rise from 23.1 % of GDP in 2007 to 27.8 % of GDP in 2060. This increase is mainly driven by pensions and healthcare. Public expenditure on pensions is projected to increase from 10.2 % of GDP to 12.6 % of GDP over the period 2007 to 2060.
Changes in public pensions expenditure indicate the likely evolution of expenditure on pensions and changes in projected theoretical income replacement ratios indicate the likely income level of pensioners. Projections for the Member States indicate that more public expenditure in pensions will not necessarily result in higher income for pensioners. Whilst public pensions expenditure is estimated to increase in most EU countries, the level of income of pensioners relative to their income before retirement is estimated to increase only in 13 countries.
Further Eurostat information
- Combating poverty and social exclusion - a statistical portrait of the European Union 2010
- Sustainable development in the European Union - 2011 monitoring report of the EU sustainable development strategy
- The Social Situation in the European Union 2009
- Demographic changes
- More detailed information on demographic changes indicators, such as indicator relevance, definitions, methodological notes, background and potential linkages, can be found on page 163-189 of the publication Sustainable development in the European Union- 2011 monitoring report of the EU sustainable development strategy.
- Commission communication COM(2008) 868 - New Skills for New Jobs: Anticipating and matching labour market and skills needs
- Council and European Commission - Joint Report on Social Protection and Social Inclusion 2010
- European Commission - DG Economic and Financial Affairs - Progress and key challenges in the delivery of adequate and sustainable pensions in Europe
- European Commission - DG Employment, Social affairs and Inclusion - National Strategy Reports on Social Protection and Social Inclusion 2008-2010
- United Nations - Analysing and Measuring Social Inclusion in a Global Context, New York, 2010
- Migration and migrant population statistics
- Population and population change statistics
- Population projections
- Regional population projections
- ↑ Hartlapp, M. and Schmid, G., Employment risks and opportunities for an ageing workforce in the EU, Berlin, Wissenschaftszentrum Berlin für Sozialforschung (WZB), Discussion Paper SP 2008-105
- ↑ 2009 data for Italy unavailable at time of publication
- ↑ European Commission Public Finances in EMU-2010, European Economy. No 4/2010
- ↑ Deficit and Debt of General Government Sector in 2009, National Statistical Institute of the Republic of Bulgaria, Press release, 22 October 2010