This week, the Financial Times published an article highlighting the European Union’s (EU) shrinking population which has put a strain on the bloc’s finances. The article notes that a dip in the bloc’s population rose in the year that ended in January 2023, thanks to the influx of displaced Ukrainians.
The London-based paper wrote earlier this month that the “trade-off between ethnic homogeneity and prosperity is set to become more acute over the next decade”. The newspaper has also noted that the participation of immigrants and women working in the labor force is no longer enough to keep afloat the EU’s falling percentages of those who are considered “working-age”, or people who are aged 20 to 64.
According to United Nations (UN) data, those in the working-age bracket shrunk from 270 million in 2011 to roughly 261 million this year; dropping to 58% from a peak of nearly 62% in 2008.
And one European country in particular stands out regarding this drop: Germany has lost about 2 million people in the working age bracket since that group’s number peaked in 1998, according to the article’s analysis of UN data, and is set to lose another 10% in the next decade. The Institut der Deutschen Wirtschaft has estimated that a lack of workers could cost Germany €49 billion of lost output for this year alone.
The EU's population numbers for the year 2023 were below expectations as birth levels fell to a number that the European Commission's Eurostat had not predicted would occur for at least another two decades. This suggests that the forecast for the EU’s peak population - 453 million - may occur sometime before 2026.
The article notes that in addition to the failure of EU governments' pro-natal policies, anti-immigration parties are predicted to make strides in the European parliament elections this June.
Dubravka Šuica, the European Commission’s vice-president for democracy and demography, explains that if these dropping population numbers are not addressed, the bloc will suffer threats to its competitiveness, budgets, public services, pensions and unemployment.
According to the article, experts are now urging European governments to invest in skills and education to increase the value of what is produced per hour worked.
Šuica adds that affordable and efficient family policies, which worked in the past to help support fertility rates, no longer work as well as they once did. In 2022, the number of babies born in the EU fell below 4 million for the first time since data was first kept in 1960.
Europe also has the highest life expectancy of any continent as well as the highest median age, yet they fall far past Japan (25%), the US, OECD countries, and the UK in the percentages of those 65 years of age and older who still participate in the labor force, with just 6% of older Europeans still working. The number of those living over the age of 85 is also growing, which adds a pressure on the wallets of younger generations and strains public finances.