Impact Of The European Union’s Aging Population

According to data from Eurostat, due to the ageing population, the European Union‘s dependency ratio will reach 57 by the year 2100, which will impact taxes in the future.

Impact Of The European Union's Aging Population 1

The EU is a notable example of an area or country that is predicted to have populations that are ageing quickly. More than 30% of the population of the region is predicted to be 65 or older by the year 2100.

Using information from Eurostat, Gilbert Fontana’s graphic depicts how the population of the EU is expected to change by the year 2100.

Impact Of The European Union's Aging Population 2

Dependency Ratio from 2021 to 2100

The graph shows the old-age dependency ratio, which compares the proportion of adults 65 and older who are typically retired or in need of additional income to those of working age (15-64).

The dependency ratio for the EU was 32 in 2021. This meant that there were 32 elderly individuals for every 100 people of working age. This ratio is predicted to rise to 57 by the year 2100.

But what’s the real-life impact of this?

The Impact of the EU’s Aging Population

The majority of people who are approaching retirement age typically do not work and rely on pensions to sustain themselves. Therefore, the burden placed on a nation’s social safety net increases as the older population grows.

Impact Of The European Union's Aging Population 3

Taxes may increase as the population ages to help pay for the rising costs. Additionally, a decline in the number of people in a region who are of working age can have a big effect on how innovative and experienced the workforce as a whole is.

For instance, Japan’s population is ageing quickly as well. The IMF estimates that over the following 30 years, this will decrease the country’s annual GDP growth by 1 percentage point.

Main Causes of An Aging Population

The world’s population is ageing overall; Japan and the EU aren’t the only two regions that are experiencing this trend.

By 2030, one in six individuals worldwide will be 60 or older, according to the World Health Organization. There are two main reasons for this:

  • Drop in global fertility rates
  • Increased life expectancies

Governments must make sure their pension systems are adequate and adjusted to take into account rising life expectancies and a growing older population in order to reduce the dangers associated with ageing populations.

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