Sustainable development - demographic changes

From Statistics Explained

Data from October 2013. 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, they make up the report Sustainable development in the European Union - 2013 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.

Table 1: Evaluation of changes in the demographic changes theme (EU-27, from 2000)

Overview of main changes

Trends in the sub-theme ‘demography’ have been favourable, albeit to varying degrees. The fertility rate and life expectancy of women have increased very marginally, by less than 1 % per year. Substantial progress has been made in the employment rate of older workers, which is also reflected in a slight increase in the duration of working life. However, the employment rate of older workers has remained well below the employment levels of younger age groups. The income level of elderly people has developed favourably, even though this might be linked to economic factors other than real gains in pensions. As a persisting effect of the recession, public debt levels rose to an average of 85 % in the EU by 2012.

Main statistical findings

Headline indicator

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Employment rate of older workers

12 percentage points increase in the proportion of 55 to 64 year olds in employment in the EU between 2000 and 2012. The economic crisis has not had an impact on the trend so far

Figure 1: Employment rate of older workers, EU-27 (%) - Source: Eurostat (tsdde100)
Figure 2: Employment rate of older workers, by country (%) - Source: Eurostat (tsdde100)
Figure 3: Life expectancy and healthy life years at age 65, by sex, EU-27 (years) - Source: Eurostat (tsdde210,tsdph220)
Figure 4: Life expectancy at age 65, by country, 2011 (years) - Source: Eurostat (tsdde210)
Figure 5: Total fertility rate, EU-27 (number of children per woman) - Source: Eurostat (tsdde220)
Figure 6: Total fertility rate, by country (number of children per woman) - Source: Eurostat (tsdde220)
Figure 7: Total fertility rate, by NUTS 2 regions (number of children per woman) - Source: Eurostat (demo_r_frate2)
Figure 8: Crude rate of net migration plus adjustment, EU-27 (per 1 000 inhabitants) - Source: Eurostat (tsdde230)
Figure 9: Aggregate replacement ratio, EU-27 (%) - Source: Eurostat (tsdde310)
Figure 10: Aggregate replacement ratio by sex, by country, 2012 (%) - Source: Eurostat (tsdde310)
Figure 11: General government gross debt, EU-27 (% of GDP) - Source: Eurostat (tsdde410)
Figure 12: General government gross debt, by country (% of GDP) - Source: Eurostat (tsdde410)
Figure 13: Pension expenditure projections (baseline scenario), EU-27 (% of GDP) - Source:Economic Policy Committee (tsdde520)
Figure 14: Old-age-dependency ratio, EU-27 (%) - Source: Eurostat (tsdde510,tsdde511)
Figure 15: Duration of working life, by sex, EU-27 (years) - Source: Eurostat (tsdde420)

In 2012, 48.9 % of 55 to 64 year olds in the EU had been in employment compared with 36.9 % in 2000. This positive trend has persisted over the years for both men and women. The employment rate for older women increased steadily from 27.4 % in 2000 to 41.8 % in 2012. Over the same period, the rate of working men aged between 55 to 64 years increased from 47.1 % to 56.4 %.

Despite a significant increase, the employment rate of older workers in 2012 remained well below other groups. While less than 50 % of older workers were employed in 2012, the employment rate of prime-aged workers (aged 30 to 54) was 78.3 %. Increasing employment rates of older workers is a focus of policy actions, because this is seen as a promising answer to the demographic challenge of structural longevity[1].

  • Why did the economic crisis not affect older workers?

At the EU-27 level, the recession has not yet affected the proportion of older people in employment. An increase in the share of older workers in employment stopped temporarily during the period following the crisis. While the year-on-year increase was one percentage point or above between 2005 and 2008, it was only 0.4 percentage points in 2009 and 0.3 percentage points in 2010. In 2012 the rate of older workers increased again at a higher level of 1.5 percentage points per year.

Experience and better integration into the labour market may be a reason why older workers have been more resistant to the crisis. Older workers are also more likely to be on open-ended contracts. Still there is a risk that this positive trend could weaken in the future. Because older workers often tend to work in the public administration, health and education sectors, their jobs could be in danger due to future public spending cuts [2]. This seems already be the case in Greece where since 2010 the employment rate of older workers has fallen to below the 2000 level.

  • How the employment rate of older workers varies between Member States

Across EU Member States, employment rates of older workers have slightly converged since 2000. In 2012, they ranged from 32.9 % in Slovenia to 73.0 % in Sweden. Compared to the year 2000, with country rates between 20.8 % (Bulgaria) and 64.9 % (Sweden), the spread has fallen by four percentage points.

In 2012, 10 countries had an employment rate of older workers of 50 % or more. The other Member States, with less than half of their older workers in employment, still have yet to reach the EU SDS target of 2010. Countries with the largest percentage point increase on 2000 levels include Bulgaria, Germany and Slovakia. Between 2000 and 2012 employment rates of older workers fell in only two countries: Portugal and Greece.

This discrepancy between countries is the result of several factors such as different employment sectors, retirement ages and policy initiatives [3]. Variations in policy reforms may also help to explain the differences. Incentives to work longer, the retirement age, opportunities for early and partial retirement and retention of older workers are some of the impacts explaining the different employment rates of older workers between countries. Furthermore, many Member States focused on continuous skills development (employability) and provided incentives to employees and employers to ensure lifelong learning [4]

EU trends in employment rate of older workers compared with other countries in the world

Compared with other countries, the EU-27 average employment rate of older workers is clearly lower than in the two G7 countries United States (US) and Japan. In 2012 the employment rate of older workers was 60.7 % in the US and 65.4 % in Japan. In both countries the rate was already higher in 2000 with 57.8 % in US and 62.8 % in Japan compared to the EU-27 average of 36.9 %. Among the Member States, seven countries (Germany, Denmark, Estonia, Finland, the Netherlands, Sweden and the United Kingdom) had similar employment rates of older workers to the US and Japan in 2012.

Demography

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Life expectancy at age 65

9 % increase in the life expectancy at age 65 for women and 12 % increase for men in the EU between 2002 and 2011. However, these improvements did not lead to a longer healthy life

The expected number of years left to live at the age of 65 increased for men and women between 2002 and 2011. For women life expectancy at age 65 increased only slightly, but continuously, from 19.5 to 21.3 years. Life expectancy for men started from a lower level of 15.9 years in 2002 and reached 17.8 in 2011. The gap between men and women has been gradually reduced by 3 %. As the annual increase rate for women between 2002 and 2011 has gradually fallen to below 1 % it is unclear whether this positive trend will persist in the future. The rate of increase for men over the same period was 1.3 % per year.

  • How life expectancy at age 65 varies between Member States

Life expectancy at the age of 65 has diverged between Member States for both sexes. The rather lower levels of life expectancy in Eastern European countries have persisted up to 2011. In fact, the range between the lowest and the highest life expectancy at age 65 among the EU-27 has even increased, especially for men. Between 2002 and 2011 the range for women increased by 14 % and for men by 31 %. In 2011 the expected years to live for women ranged from 17.3 years in Bulgaria to 23.8 years in France. For men the lowest level was in Latvia with 13.4 years to live and the highest was in France with 19.3 years.

  • Longer life expectancy and public spending

Medical progress and socioeconomic factors have reduced mortality in the past decades and are expected do so in the future. The impact of falling mortality rates of older people on the costs of public health depends on their health status. If longer life expectancy at age 65 is linked to an increasing number of healthy life years, longevity does not automatically lead to higher public spending. Also older people are not simply recipients of pensions, but provide a large proportion of care for other elderly people (for example spouses and relatives) [5].

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Fertility rate

8 % increase in fertility rate in the EU between 2002 and 2011. Nevertheless after stabilising between 2008 and 2010 at 1.6 children per woman, the average number of births decreased slightly in 2011

The average fertility rate in the EU increased from 1.45 children per woman in 2002 to 1.57 in 2011. Despite the positive overall trend, the rate decreased slightly by about 2 % from 2010 to 2011. Whether this most recent development is a turnaround or just a temporary dip has to be observed in the future. Possibly uncertainty over future prospects due to the economic crisis have had a negative influence on individual decisions to bear children.

  • How fertility rates vary between Member States

In 2011 Ireland (2.05), France (2.01) and the United Kingdom (1.96) had the highest fertility rates, which were very close to the replacement level of 2.1 children per woman. The lowest fertility rates were in the eastern countries Hungary (1.23), Romania (1.25) and Poland (1.3). Overall 19 Member States had a fertility rate below the EU average.

The fertility rate might be affected in various ways by the economic crisis. The impacts of the crisis on individual childbearing decisions may be softened by government interventions and therefore vary across Member States. Other factors such as education, migrant status and employment status may also mean some population groups feel the impacts of the crisis more strongly than others [6].

  • Regional disparities in fertility rates

The French overseas departments Guyane, Réunion and Guadeloupe as well as Pas-de-Calais and Picardie in northern France were among the European regions with the highest fertility rate. Among the same top 10 group were five regions of the United Kingdom, as well as the Spanish region Ciudad Autónoma de Melilla (located at the north coast of Morocco) and the capital region of Belgium, Région de Bruxelles-Capitale. The regions with the lowest fertility rates were in Eastern and Southern European Member States (Hungary, Romania, Poland, Spain and Italy).

  • More children due to changing family models?

Due to changing family models, the linkage between the birth of a child and marriage is weakening. The possibility of flexible and less traditional family-forming seems to have a positive impact on individual child-bearing decisions [7]. An increasing number of children were born to unmarried women. Live births outside marriage increased from 27.4 % of total live births in 2000 to 39.5 % in 2011. Countries with a high rate of extramarital births even tend to have a higher fertility rate than others. For example, in Sweden, France, Denmark, the United Kingdom and Belgium fertility rates above the EU-27 average of 1.57 children per woman were combined with a rate of extramarital births above 45 % in 2011.

Migration

One quarter decrease in net rate of migration in the EU between 2000 and 2011. It is unclear whether the downward trend due to the economic crises has already drawn to a halt

The difference between immigration and emigration has decreased from a level of 2.3 migrants per thousand inhabitants in 2000 to 1.8 in 2011. After increasing steeply between 2001 and 2003, the rate has been falling since 2004, with a short interruption in 2010. The economic crisis, by reducing the number of job offers in the EU, was probably the driver behind this downward trend. Because many people move to the EU for work, the lack of labour demand influences the amount of people entering the Member States.

Not all Member States had decreasing net migration rates. Cyprus and Luxembourg even had a very high rate of 21.3 and 21.2 migrants per 1 000 persons in 2011. Because these two countries have a very small population size, migration flows are relatively large compared with the total population. In nine Member States (Bulgaria, Estonia, Croatia, Ireland, Lithuania, Latvia, Poland, Portugal and Romania) emigration was higher than immigration in 2011.

Old-age income adequacy

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Income level of over-65s compared to before

10 % increase in the ratio of income levels from pensions of elderly people relative to the income level from earnings of those aged 50 to 59 between 2005 and 2012. Since 2007 the ratio has been rising steadily

The aggregate replacement ratio — the median income level of pensioners aged between 65 and 74 compared with the income of the working population in their 50s — has increased from 51 % in 2005 to 56 % in 2012. During this period there was only a slight dip to 49 % in 2007.

Over the past decade some Member States have reformed their pension systems to prevent pension expenditure increasing as a share of GDP [8]. Facing the pressure on pension funds due to demographic change and the economic crisis, it is very unlikely that elderly people would in fact receive higher pensions. The increase in the replacement ratio might rather depend on the lower incomes of the working population due to the recession.

  • Older people aged 65 and above are less at risk of poverty

Despite the economic crisis, the share of people at risk of poverty or social exclusion among older people aged 65 and above has fallen continuously since 2005. Compared with other age groups, in 2012 older people showed lower poverty or social exclusion rates, at a level of 19.5 % (16.3 % for men and 22.0 % for women). In contrast, young people aged 18 to 24 have been increasingly affected by the risk of poverty and social exclusion. Thus, the age gap has widened over the past years.

  • How income level of over-65s compared to before varies between Member States

In 2012, the replacement ratio in the 27 EU Member States ranged from 39 % in Cyprus to 79 % in Luxembourg. Compared to the year 2005, when country rates were between 29 % (Cyprus) and 68 % (Austria), disparities across the EU have increased slightly, by one percentage point. In 2012, Luxembourg, Romania (67 % each) and Italy (66 %) had the highest relative income levels of the over-65s, while Denmark, Bulgaria and Cyprus (42 %, 42 % and 39 % respectively) had the lowest.

Public finance sustainability

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Public debt

More than a one third increase in public debt in the EU between 2000 and 2012. No recovery since the onset of the economic crisis

Between 2000 and 2007 public debt in the EU was close to the reference level of 60 % of GDP, reaching its lowest point of 59 % at the end of this period. With the emergence of the economic crisis, a distinctive turnaround took place. Between 2007 and 2012 public debt increased considerably by 26.3 percentage points, reaching 85.3 %.

To combat the recession, many Member States adopted expansionary and counter-cyclical fiscal policies. Banks and other sectors were temporarily, and sometimes considerably, supported with state aid, which led to immense public spending. Because high levels of public debt are not sustainable in the long term, the Europe 2020 strategy calls for a coordinated exit from the state aid framework.

  • How public debt varies between Member States

General government debt-to-GDP ratios within Member States in 2012 ranged from 10.1 % in Estonia to 156.9 % in Greece. Compared to 2000, the range between the lowest and the highest level has increased by more than 40 %. Fourteen Member States (Belgium, Germany, Ireland, Greece, Spain, France, Italy, Cyprus, Hungary, Malta, Netherlands, Austria, Portugal, United Kingdom) also remained above the 60 % eurozone reference line in 2012. 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 [9].

Over the period 2000 to 2012, general government debt-to-GDP ratios rose in more than 80 % of the Member States. Of the countries that were able to reduce their public debt, Bulgaria had the most pronounced decline with 54 percentage points over the period.

  • Pension expenditure in the EU is projected to rise over the next decades

An important factor of age-related public spending is the expenditure on pension systems. With the ratio of elderly people to the working age population in the EU projected to increase, pension expenditure will probably have an even stronger impact on total public expenditure of the EU and, consequently, on public debt in the future. Over the period 2007 to 2060 public expenditure on pensions is projected to increase from 10.1 % of GDP to 12.5 % of GDP.

  • Old-age dependency expected to keep rising until 2050

Population ageing is a major driver of the expected increase in pension expenditure. The trend towards a growing share of older people aged 65 and above in the population and a shrinking working-age population (15 to 64 years) has long been observed, and is expected to accelerate in the future. The ratio of elderly people to the working age population in the EU has steadily increased from 24.5 % in 2000 to 25.8 % in 2012. Projections indicate that the old-age dependency ratio will continue to increase, reaching 51.8 % in 2055, or about double the level of 2012. The share of people aged 65 and above in the total population is projected to increase from 17.5 % in 2011 to 29.5 % by 2060.

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Retirement

1.8 years increase in duration of working life in the EU between 2000 and 2011. Women have been slowly but continuously catching up with men

The number of years a person is expected to be active in the labour market throughout their life slightly increased between 2000 and 2011 for men and women.

See also

Further Eurostat information

Publications

Main tables

Demographic changes

Dedicated section

Methodology

  • 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.

Other information

External links

Notes

  1. European Commission (Directorate-General for Employment, Social Affairs and Inclusion), Employment and Social Developments in Europe 2012, Luxembourg: Publications Office of the European Union, 2012 (p. 57).
  2. Eurofound, Employment trends and policies for older workers in the recession, 2012, p. 1.
  3. 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.
  4. Eurofound, Employment trends and policies for older workers in the recession, 2012, p. 8–9.
  5. Rechel, B., Y. Doyle, E. Grundy and M. McKe, How can health systems respond to population ageing?, Health Systems and Policy Analysis, WHO Regional Office for Europe and European Observatory on Health Systems and Policies, Policy Brief 10, p. 8.
  6. Towards a ‘baby recession’ in Europe? Differential fertility trends during the economic crisis, 2013, p. 1.
  7. DG Employment, Social Affairs and Inclusion/Eurostat, Demography Report 2010: Older, more numerous and diverse Europeans, 2011, p. 70.
  8. Joint Report on Pensions: Progress and key challenges in the delivery of adequate and sustainable pensions in Europe, European Economy, Occasional Papers 71, November 2010.
  9. European Commission, Public Finances in EMU-2010, European Economy. No 4/2010.
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