In the UK and across continental Europe, our world is being relandscaped by the opposing forces of greater longevity and plummeting birthrates.
The ageing of Europeans is the much-welcome result of dramatic improvements in medicine and health care, which we rightly celebrate. But it comes with major downsides that we have been slow to recognise, and slower still to respond to.
Looking after older people isn’t an insurmountable challenge for sophisticated societies such as ours. The snag is that we don’t have the manpower or economic muscle to do so because of the abrupt slowdown in fertility. There simply won’t be enough taxpayers to fund the growth in pensionable retirees, nor will there be enough carers, unless we open our doors much more widely to immigrant labour.
The economic consequences of an ageing society
These don’t sound to the average person like particularly worrying factors when set against growing turmoil around the world – be it climate change or conflict in Ukraine and the Middle East. Stop and think, though, and it becomes clear we’re talking about unprecedented change. Never have humankind’s generations differed so much in size, yet now we’re living through an extraordinary upset in the intergenerational balance.
The over-60s in Europe and the UK currently approach a quarter of the population, and within 25 years that will rise to a third. The average age will, by then, be about 50 years old, up from 36 in the mid 1970s.
Just as the pensionable population requiring advanced health care will be booming, the proportion of under-40s will have shrunk significantly. Birthrates, which for some time have been falling to 1.5 children per couple, mean the younger population who pays taxes and makes the economy go around will be down by at least a quarter.
The last time Europe suffered such a cataclysmic shock was with the Black Death in the mid 14th century, when the population was halved by bubonic plague in the space of a few years. But that killed young and old alike, whereas our 21st-century challenge is the upending of deeply rooted socioeconomic structures based on generational equilibrium and continuity.
The silent squeeze on the younger generation
Vote-seeking politicians are understandably reluctant to tell electorates that tax levels should be raised to fund future crises that we cannot predict. Unless they do so, however, today’s Gen-Zers and the slightly older Millennials are going to be burdened with unaffordable costs to ensure our social structures do not collapse.
We all know that money is tighter nowadays than back in the relatively good times of the late 20th century. Many of us also believe that the wealth divide between the ‘haves’ and ‘have nots’ has been widening, and that digitalisation and the information age have yet to narrow a gap that is threatening to become a chasm.
The dilemma is that radical change is needed urgently if younger people are to be equipped to handle ageing pressures. Today’s young people – defined as 18- to 45-year-olds, are worse off than their parents were at the same age. There are exceptions to the rule, of course, but overall, they are paid lower wages, have less job security, struggle with soaring housing costs, and often have only one child per couple, and not before they reach their 30s.
Why politicians won’t talk about the ‘grey’ elephant in the room
The ingredients for social upheaval and political extremism are already present. The most striking aspect of the simmering problems of an ageing, shrinking population is arguably that these have little or no media profile. Neither commentators nor decision takers choose to focus public attention on irreversible trends that, year by year, will be making us poorer.
Quite apart from any reluctance to focus on bad news until it’s hurting us, the explanation may be that we confuse demographic figures with economic statistics. The former are hard facts about births and deaths, while the latter were famously branded by Benjamin Disraeli as “lies, damned lies, and statistics”.
That’s an excuse for downplaying the ageing crisis as it gathers momentum, but it isn’t an acceptable response. There’s a slew of practical policy measures that could and should be implemented, and it’s time influential experts in the most affected sectors started to raise the alarm and agitate in unison for action.
What needs to change: Six urgent reforms for an ageing Europe
- Caring for the elderly should be split off from overall healthcare;
- Jobs for older people should be incentivised;
- Younger people’s spending power should be boosted through higher wages and lower taxes;
- Housing construction should return to its post-World War II levels;
- Taxation reform should adapt to 21st century needs, not 20th century practices;
- Pension systems must be overhauled to ensure a fair deal for Millennials, Gen-Zers and their successors.
The list of steps that could at least soften the impact of ageing is long, not to mention endless. But the thread running through it is that although they could be rude shocks to the system, they would also act as a dynamo for economic growth. The UK and EU, too, have been trapped in the doldrums of poor productivity and weak demand, yet all the measures to counter ageing would electrify our market economies. So, what are we waiting for?
Giles Merritt is a veteran journalist and think-tanker on European affairs, founder of Friends of Europe and author of five books, known for his influential commentaries on EU policy and politics.
Timebomb by Giles Merritt is available on Bristol University Press. Order here for £12.99.
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