We welcome the opportunity to come before the committee to engage in a discussion on this issue. While we provided members with a briefing note on the issues raised in the discussion document, it might be helpful to give a brief overview and explain the next steps by the EU Commission in tackling these important issues. My colleagues will outline the implications of the demographic challenge in Ireland.
Last year, the European Commission published a Green Paper on confronting demographic change in the European Union and launched a public debate on the management of demographic change and the Commission's role within it. Over the next 25 years the overall population of the EU is expected to increase slightly from 458 million in 2005 to 469.5 million in 2025 and then to reduce slightly to 468.8 million in 2030. During the same period, the working age population will fall by 20.8 million, a drop of 7%, and the population aged 50 and over will increase by 51%. As the Green Paper explains, these demographic changes arise as a result of three basic trends: continuing increases in life expectancy; falling birth rates; and continuing growth in the numbers of workers over 60.
As a result of considerable progress made in health care and quality of life in Europe, people are living longer and older people are living healthier lives. By 2050 life expectancy is expected to rise to 81 for men and 86 for women and the number of people aged 80 and over will increase from 19 million now to approximately 35 million by 2030.
Fertility rates in all member states have fallen below the level — 2.1 children per woman — needed to maintain population levels across the Union. The Green Paper asked what could be done to meet the challenge of the increasingly low birth rates that have resulted from a number of obstacles to private choices. Such obstacles include late access to employment, job instability, expensive housing and lack of incentives such as family benefits, parental leave, child care and equal pay. The paper notes that incentives of this sort can have a positive impact on the birth rate and increase employment, particularly among females.
As stated, there will be 20.8 million fewer people of working age. The smaller workforce that will result from this will act as a brake on potential economic growth in the EU, reducing it from between 2% and 2.25% today to 1.5% in 2015. By 2040, growth will have fallen to 1.25%. Lower growth will come at a time when the costs relating to an ageing population — particularly those in the areas of pensions, health and long-term care — will begin to peak in many member states. While controlled immigration of workers is one possible way to increase the working age population and birth rates, it does not offer a long-term solution to falling birth rates and an ageing population. To meet the challenge, the Green Paper advocates that the Lisbon strategy for growth and jobs must be implemented in full.
Action is being taken at national and EU level to tackle the problem. At national level, member states are developing employment strategies aimed at attaining the overall EU employment target of 70% by 2010, including a 60% employment target for female workers and a 50% target for older workers. The Green Paper states that achievement of these employment targets is the minimum response required. It also stresses the need for member states to continue to modernise their social protection systems, especially those relating to pensions, to ensure their social and economic sustainability and enable them to cope with the effects of demographic ageing. Important reforms of pension systems and early retirement schemes have been introduced in several member states in recent years and are also being planned in others.
In its submission on the Green Paper, the Department of Social and Family Affairs highlighted a number of points. Employment conditions must be adapted to allow both parents the necessary flexibility to meet their care responsibilities. Family care of children and the elderly continues to be essential and must be backed up with adequate child care and elder care services, appropriate income support and other services. While well managed immigration can greatly assist in meeting labour market shortages, there is a real danger, in focusing on labour market needs, of losing sight of the social consequences of immigration for immigrants themselves and for society in their countries of origin and in the countries to which they emigrate. In this context, the European Commission could facilitate exchanges on challenges and responses among member states on immigration and mobility and the promotion of greater and more effective co-ordination of immigration, employment and social inclusion policies.
Many of the issues identified in the Green Paper on greater solidarity between the generations are being addressed at EU level through the open method of co-ordination. Policies are being developed in the fields of employment, social inclusion, pensions and health and long-term care. The focus should be on achieving the right mix of policies to more effectively meet the needs of individuals moving through the different stages of their lives. If demographic change is to be become an integral part of internal and external policy, comprehensive analysis of such change is required at both national and EU level in each relevant policy area. The life-cycle approach should be used to promote more effective co-ordination of policies to determine the policy mix required to secure the best outcomes in each category. Common indicators to measure progress in achieving these outcomes must also be developed.
While many of the policy areas affected are matters of national competence, the European Commission could adopt as its roles the facilitating of exchanges of information, analysis of demographic change and the encouragement of reforms where they are needed. It is understood that the Commission received approximately 240 contributions from member state governments and a wide range of stakeholders, namely, public authorities, non-governmental organisations, the social partners, academics and individuals. Later this year, it is expected to publish a communication, in the form of a White Paper on demographic change, setting out concrete actions for the future. It has also announced that it plans to establish a European demography forum to continue the debate on this subject.