The 2024 Ageing Report

European Commission

It provides in-depth economic and budgetary projections for the EU Member States over the period 2022-2070. It offers vital insights into how demographic changes will impact public finances, particularly in the areas of pensions, healthcare, long-term care, and education. This report is a critical resource for policymakers navigating the challenges posed by Europe’s rapidly aging population.


Demographic Changes and Their Implications

The EU population is undergoing significant demographic shifts, with the share of people aged 65 and older projected to increase from 20% in 2022 to 30% by 2070. This transformation is driven by declining birth rates and increasing life expectancy. As a result, the old-age dependency ratio (the ratio of older dependents to working-age individuals) is expected to double, from 32% in 2022 to over 57% by 2070.

This demographic change presents substantial challenges for economic growth, labor markets, and public spending. The shrinking workforce will strain productivity and economic output, while the rising number of retirees will increase demand for pensions, healthcare, and long-term care services.


Public Expenditure on Pensions

Pension systems represent the largest component of age-related spending. The report projects that public expenditure on pensions will increase marginally from 11.3% of GDP in 2022 to 12.5% by 2070. However, the impact will vary significantly across Member States depending on the structure of their pension systems.

Countries with largely pay-as-you-go pension schemes will face higher fiscal pressures compared to those that rely on funded systems. Policymakers are encouraged to explore reforms to ensure the sustainability of pension systems, such as gradually increasing retirement ages and encouraging private pension savings.


Healthcare Spending

Healthcare expenditure is projected to rise substantially due to aging populations and advancements in medical technology. The report estimates that healthcare spending will increase from 7% of GDP in 2022 to 8.5% by 2070.

Aging-related conditions, such as dementia and cardiovascular diseases, will account for a significant portion of this increase. Governments will need to focus on preventive healthcare measures, promote healthy aging, and invest in healthcare efficiency to manage these costs effectively.

 

Long-Term Care Expenditure

Long-term care is expected to experience the largest relative increase in public spending, growing from 1.6% of GDP in 2022 to 2.8% by 2070. The rising demand for long-term care reflects the growing number of very elderly individuals (aged 80 and older), whose share of the population is set to triple by 2070.

Strategies such as promoting home-based care, leveraging technology, and supporting informal caregivers will be essential to addressing these challenges sustainably.

 

Education and Workforce Development

Education expenditure as a share of GDP is expected to decline slightly, reflecting the shrinking youth population. However, the report emphasizes the importance of investing in lifelong learning and upskilling initiatives to enhance the productivity of the workforce.

Addressing the skills gap and increasing labor market participation among women, older workers, and underrepresented groups will be critical to mitigating the effects of an aging population on economic growth.

 

Economic Growth and Productivity

The report predicts a slowdown in GDP growth across the EU, with annual growth rates decreasing from 1.4% in 2022 to 0.8% by 2070. Labor shortages and reduced workforce participation will contribute to this decline.

To counteract these trends, Member States are encouraged to adopt policies that boost labor market participation, improve productivity through innovation and technology, and create incentives for longer working lives.

 

Policy Recommendations

To ensure fiscal sustainability and maintain social cohesion, the report outlines several key policy recommendations:

  • Pension Reform: Gradually increase retirement ages, link benefits to contributions, and promote private pension schemes.
  • Healthcare Innovation: Focus on preventive care, adopt cost-effective technologies, and improve service delivery efficiency.
  • Long-Term Care Support: Invest in community-based care and support informal caregivers through training and financial incentives.
  • Labor Market Activation: Encourage participation from underrepresented groups, including women and older workers, while promoting reskilling programs.

The 2024 Ageing Report highlights the pressing challenges and opportunities posed by Europe’s demographic transformation. While aging populations will increase fiscal pressures, strategic reforms and investments in healthcare, education, and labor markets can help sustain economic growth and ensure social welfare systems remain resilient. The report underscores the importance of proactive policy action to turn these challenges into opportunities for building a sustainable and inclusive future.