Listen: Can Europe remain prosperous with a rapidly ageing population?

Production: By Europod, in co-production with Sphera Network.

EUobserver is proud to have an editorial partnership with Europod to co-publish the podcast series “Briefed” hosted by Léa Marchal. The podcast is available on all major platforms.

Find the full transcript below:

Europe has a demographic problem.

For the first time, the European Commission is warning that demographic change is becoming one of the biggest challenges to the EU’s competitiveness and welfare systems.

So the big question is this: can Europe remain prosperous with a rapidly ageing population?

By 2029, Europe’s population will reach its peak. Then, it will start shrinking. At the same time, Europeans are living longer than ever, while having fewer children than almost anywhere else in the world.

The most immediate concern isn’t that Europe will have fewer people. It’s that it will have far fewer workers.

According to the commission’s new demography report, published on July 14, the EU is expected to lose around 1.2 million people of working age every year until 2050. And that’s assuming migration continues at current levels.

Without migration from outside the EU, that number would double.

Migration is already slowing Europe’s demographic decline.

In the EU, only four small countries have a positive natural population balance: Malta, Luxembourg, Cyprus and Ireland. For the rest, the balance is negative, meaning that more people die than are born each year.

In that context, only migration can partly renew the population.

According to the Commission’s own figures, without legal migration, labour shortages would become dramatically worse, making it even harder to finance pensions, healthcare and long-term care for a growing elderly population.

The problem is that across Europe, governments are not only promising to reduce immigration, but they are actually cutting it.

The report argues that the EU needs to become more attractive to skilled workers from abroad. Compared with countries such as Canada, Australia and the UK, a much smaller share of migrants arriving in the EU are highly qualified—around 20 percent of all migrants.

To address this, initiatives such as the Union of Skills aim to attract more international talent.

But by focusing only on highly skilled migrants, the EU forgets that a large share of its economy depends on low-skilled migrants. Think about restaurants, seasonal work, cleaning services, and so on. And those jobs will not be fully automated in the future and will continue to require a workforce.

Which is why many civil society organisations argue that the EU should think twice before cracking down on migrants.

Now, the report is also clear: migration alone won’t solve Europe’s demographic challenge.

There simply won’t be enough workers to replace those leaving the labour market. That’s why every worker in Europe will need to produce more.

This is why the EU is often talking about productivity.

And here is the good news: Europe actually starts from a position of strength. Today’s workforce is more educated than ever before, and people with higher education tend to remain employed for longer.

The next step is making that workforce even more productive.

That means investing in new skills, encouraging older people who want to stay in work to do so, and, perhaps most importantly, accelerating the adoption of artificial intelligence and other digital technologies across the economy. It’s not about replacing workers with robots, but AI can improve each worker’s productivity.

Europe will also need more women in the labour market, and policies that make it easier for people to have children if they choose to do so.

All of these solutions will need to be implemented to minimize the impact of the ageing population.

And even then, adapting to an ageing continent may become one of the defining economic challenges of the coming decades.