Long-Term Labour Force Projections for the 25 EU Member States: A Set of Data for Assessing the Economic Impact of Ageing

Abstract

This paper presents the methodology and results of labour force projections over the long term (until 2050) for each of the 25 EU Member States. These projections were undertaken in order to provide the background technical inputs for the assessment of the potential economic and fiscal impact of an ageing population. This assessment is carried out in the framework of the EU Economic Policy Committee's Ageing Working Group by projecting public expenditure on pensions, health care, long-term care, unemployment insurance and education.

The projections presented in this paper are based on a common methodology for all countries and the first to include estimates for the new Member States. They show the outcome for the labour force of extrapolating recent trends in labour market behaviour (entry and exit rates from the labour market). These base case projections reflect the working assumption of "no policy change" and are neither forecasts nor predictions in that they are not based on any assessment of more or less likely future changes in working patterns or economic conditions. To summarise the outcome of projections, the baseline scenario indicates that, notwithstanding the projected increase in the participation rates and the reduction in unemployment rates, the pace of labour force and employment growth in the EU25 will be weakly positive over the next 15 years and will turn negative over the period 2018 to 2050. This is mainly the outcome of projected declining trends for the working-age population and a shift in the age structure of the population towards older, less participating groups - a consequence of the baby-boom generation approaching retirement and the succeeding lower-birth-rate cohorts reaching working age.

Keywords: Labour force projections, population projections, cohort method, ageing population, pension reforms, dependency ratios

JEL Classification: J10, J11, J14, J21, J26, I00