GOLDEN GROWTH
Figure 6.13: Aging in Europe is matched by a “surplus” of working-age people in the Middle East and North Africa (population pyramid Europe, Middle East and North Africa, years)
Source: World Bank staff calculations, based on the methodology described in Koettl 2009; and data from UN 2011.
The decrease in labor force participation varies considerably across European countries. The main reason is that fertility rates in Europe range from around 1.2 to 1.5 in the Eastern, Central, and Southern European countries, to 1.6 to 2.0 in the Benelux and Northern European countries. This is lower than the demographic replacement rate of 2.1 required to keep the size of the population stable. The fall in the labor force will be particularly severe for EU and EFTA countries. Their labor force will decrease by 39 million people (18 percent) over the next 50 years. The other Eastern European countries do not fare much better, with an equally steep decline of 16 percent. The only exception is Turkey, where the labor force is projected to increase 12 percent until 2060. The natural consequence of falling fertility and rising longevity is an increase in the old-age dependency ratio—the number of people older than 65 relative to those of working age (15–64). By 2050, this ratio will double to about 50 percent in Europe, with Spain (68), Italy (66), and Portugal (58) projected to have the highest ratios (Muenz 2007). The projected changes in Europe—especially Southern and Eastern Europe—contrast with trends south of the Mediterranean, where the population is still fairly young (figure 6.13). These trends are seen as complementary and fortunate by some but as a potential threat by others.
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