Prime Minister Paavo Lipponen at the European Population Conference 2001 June 7, 2001
Over the next few years, European societies will face a major challenge as their population is ageing rapidly. As yet this is not a problem, as most of the baby-boom age groups born after the Second World War are still at work. There are enough people to pay for the needs of the welfare state. During the next couple of decades, though, the situation will become more threatening.
Economically speaking, the main issues concern financing pension systems, and the consequences of an ageing population. The number of people of working age will already start falling by the end of this decade and the ranks of pensioners will grow rapidly all over Europe. At the moment, the average ratio of people over 65 to the working population in the EU is 27 per cent; by 2020 it will be 35 per cent. By 2050 the forecast is already 53 per cent.
In Finland, the working-age population will already start to decline in a few years' time. While there are currently 1.9 working people per pensioner, there will only be 1.1 by 2030. Because people live longer these days, they will spend nearly as many years in retirement in future as they do at work, assuming they retire as early as at present. At the moment, the average Finn spends 21 years in retirement and about 30 years at work.
The latest forecasts predict that by 2050 the average life expectation of people in EU countries will rise by nearly five years. In itself, this is cause for pride and celebration. But it also brings with it serious social challenges. Who will look after the growing ranks of old people? How can we guarantee them good, quality services?
The ageing of the population has come as no surprise. Demographic calculations provide a good basis for social policy strategy. We are able to prepare for what is happening. This new decade is precisely the time to prepare ourselves. In Finland, we will be paying special attention at least to the following:
- the public economy will be kept in surplus. By reducing the government debt we will create means to finance welfare services,
- if we invest in education and training, infrastructure and services we will promote economic growth,
- we will boost employment by reducing the tax on low-paid work,
- by funding pensions we can keep future pension contributions moderate
- the retirement age will be raised,
- by changing the education system, we can get people into the labour market earlier.
During the Finnish EU Presidency in the second half of 1999, the Special Meeting of the European Council in Tampere set some important new targets for Union cooperation in justice and home affairs. This area of policy also covers immigration matters. The Tampere meeting adopted a comprehensive approach to immigration issues. A common Union policy involving concrete action programmes is to be embarked upon. At the same time, the debate on a common immigration policy must be incorporated into the strategy on economic and social reform.
We will be faced by an immediate challenge related to immigration and labour markets with the next enlargement of the Union. Integrating new countries into the internal market will mean adding tens of millions of new citizens to those entitled to seek work in other Member States.
Ladies and gentlemen. My response to the question "How can Europe respond to the challenge posed by its ageing population?" is short and sweet: By working.