Memo to Eastern and Southern Europeans: Please procreate

January 8, 2013
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January 8, 2013
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Who will support us in our old age?(Vienna Institute of Demography)

Fertility rates have been falling across Europe for decades and economists are worried, as political leaders should be, about who exactly will support Europe’s aging populations. Countries in eastern and southern Europe are of particular concern, suggest recent data from the Vienna Institute of Demography, with troubling combinations of aging populations, increasing migration, and far too few babies.

A ratio worth noting is called the old-age dependency ratio (OADR), which shows the financial burden of elderly people on working-age populations. Historically, the OADR has been defined as the number of people aged 65 or older, divided by the number of people aged 20 to 64. The map above, projected through to 2030, shows that Western Europe has a relatively high OADR, and Eastern Europe has a considerably lower one—meaning Western Europeans are worse off because there will be a dwindling number of workers supporting a growing number of retirees. But according to the Vienna Institute, there’s an issue with these numbers and the real problem is in Eastern Europe.

The numbers informing the map above are based on the assumption that 65 year olds of today are like 65 year olds of yesteryear. But this isn’t the case. Europeans, particularly in Western Europe, are healthier nowadays, are living longer and working longer. And so demographers at the institute took into account life expectancy to produce the map below:

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Aging populations more of a problem in Eastern Europe(Vienna Institute of Demography)

With these different metrics the problem changes, and a potential crisis comes in Eastern Europe. Life expectancy is lower in this region, according to the Vienna Institute, and so by using a new ratio that defines those dependent on help as those with life left of 15 or fewer years, the map shifts. Other trends are also at work that could exacerbate the problem. The population of Eastern Europe is shrinking. Between 2004 and 2008, the region’s population decreased by more than 2%, amid plummeting fertility rates and increasing migration from Eastern Europe to Western. During the same period, the population of Western Europe increased by 5%. Going forward, Eastern Europe’s population is expected to continue dwindling (-3.4% projected between 2011-2050), compared to a rise of 5.3% in Western Europe. Taking all of these factors into consideration—and assuming that young people are more likely to migrate, while older people stay home—you’re left with a potentially dire social welfare situation in the future.

Meanwhile, slowing birthrates across Europe, and in other countries—Japan’s population fell by the highest rate on record in 2012—is a problem for all. A Wall Street Journal story (paywall) today reported that of 22 European Union countries with comparable data, 15 have seen fertility rates drop since the start of the financial crisis in 2008. During better economic times from 2005-2008, fertility rates increased in 19 of 22 countries.

Whether people are choosing not to have children (or putting it off) because of lousy economic conditions is unclear (though past downturns have also resulted in lower fertility rates), but what’s truly worrying is that fertility rates in some countries are at levels deemed unstable. Economically fragile Greece, Spain and Portugal are in this territory, and by 2050, the Vienna Institute estimates that people 65 and over will make up one-third (paywall) of these three countries’ populations (up from 18% now), putting enormous pressure on already hard-hit social welfare systems. Overall, birthrates are lowest in eastern and southern Europe. (See the full report here.) Here’s a snapshot of fertility rates by regions:

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Worrying fertility trends(Vienna Institute of Demography)

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