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In 2022, 2.9% of the population in the European Union were at least 85 years old. This share is projected to more than double by 2050 and almost triple by 2100, reaching about 10% of the total population. The 85+ group — or the ‘very old’ — will be the driver behind ageing populations on the continent. While longer life should be seen as a victory for past policies, the demographic shift will have significant repercussions across the economy. 

The Twin Transition will not be successful without considering an ageing and changing workforce. But a growing share of the ‘very old’ will have consequences for social security systems, notably pensions and long-term care (LTC). Pay-As-You-Go pension schemes are increasingly coming under financial pressure. Healthcare and LTC systems, already stretched today in many countries, will face a surge in demand. 

Today, countries largely rely on informal care for the elderly, which is predominantly supplied by women. This is unlikely to be possible in the future due to people having fewer children and because more women are participating in the labour force than in the past. Without any action, we risk losing progress made on gender equality. Moreover, ageing workforces will have implications for labour market dynamics, requiring investments in up-skilling and re-skilling programmes. 

To address this, policymakers must reform pension systems, invest in LTC infrastructure, increase the number of care workers and provide support for informal carers. Additionally, there is a need for EU-wide coordination to establish best practices and ensure equitable support across member states.  

Keep an eye out for the paper by David Pinkus and Nina Ruer on the topic of demographic change and ageing populations, coming soon.

The Why Axis is a weekly newsletter distributed by Bruegel, bringing you the latest research on European economic policy.