EU banks on 'silver economy' to counter aging population

The European Union is experiencing an unprecedented demographic shift, with its population reaching a record 450.6 million and average life expectancy climbing to 81.5 years. This historic milestone, detailed in the European Commission's third report on demographic transformation, highlights a significant increase in the number of older citizens.

However, this growth masks a stark reality: the birth rate has not recovered to levels seen in 1964, when 6.8 million children were born. In 2024, only 3.55 million births were recorded, meaning more people are dying than being born. Projections from the Commission paint a clear picture of an aging continent: by 2050, almost a third of the EU population will be 65 or older, a significant increase from the current one in five. By 2070, the number of individuals aged 80 and above is expected to double.

This demographic trend presents considerable challenges, including a shrinking working-age population. The 15-64 age group is projected to decrease by 1.2 million people annually by 2050. Simultaneously, difficulties in recruiting healthcare staff, concerns over pension funding due to a declining contributor base, and increased pressure on health and education budgets are mounting.

In response, the European Commission is advocating for policies to expand the working-age population, focusing on two key areas. The first is the "silver economy," leveraging the potential of a healthier, longer-living older population to contribute to society beyond traditional retirement ages. The Commission suggests reforms such as indexing the retirement age to life expectancy, similar to Denmark's model where the legal age is set at 70 for those born after 1971. The second lever involves labor market support policies to facilitate employment access for all age groups.

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A more aged but healthy population can mean more 'contribution to society beyond the traditional retirement age'.