Tag Archives: ageing

Committee of the Regions 2009 Ageing Report

The 2009 Ageing Report of the Committee of the Regions provides some interesting proposals for managing the ageing of populations in the European Union. The topic is very important given the fact that 9 out of the 10 countries with the oldest population in the world are EU Member States.

The report proposes three main priorities:

(1) healthy ageing;

(2) labour market participation and productivity; and

(3) access to services and facilities.

The idea is to merge those priorities in the Europe 2020 strategy.

The Bulgarian Problem of the European Union

The European Union has a big problem with Bulgaria, and may not know it. Here is why.

The purpose of the International Civic and Citizenship Education Study (ICCS) is to investigate the ways in which young people are prepared to undertake their roles as citizens in a range of countries. The study includes all students enrolled in the grade that represents eight years of schooling, provided the mean age at the time of testing is at least 13.5 years. The results from the study are out, and they paint a bleak picture for Bulgaria.

But here I will focus on only one particular finding. Two thirds of eighth graders in Bulgaria may prefer to live permanently in another country. Two thirds of all young Bulgarians at the age of 13-14 that is.

Now, a lot can be said about the implications of this result for the overall demographic development in Bulgaria. The trouble is that even today Bulgaria is aging at a very fast pace. In fact UN data shows that in 2050 the overall dependency ration in Bulgaria will almost double from its 2010 levels. Population will decrease from 7,5 million to 5,4 million. But that is a conservative assessment based on current demographic trends and excluding serious migration movements out of the country. Yes, the intentions of 14-year olds are probably not the best indication of future demographic development, but they certainly give us a warning signal.

Let us not forget that only in a few years all labor restrictions for Bulgarians in the European Union will be lifted. Many EU countries are aging at a fast pace, and their labor markets will welcome Bulgarian migrants.

So far, so good. But these migrants will leave behind an almost dysfunctional pension system, a rapidly ageing society and bleak economic prospects for the young people remaining in Bulgaria. At that point Bulgaria can become a real problem for the European Union due to its failing budget, expansion of poverty (especially in old age groups and the Roma population), and not least – all kind of criminogenic social disturbances.

Obviously we cannot stop young Bulgarians from emigrating if they want to. What they need is sound education and good job prospects in Bulgaria. What they don’t need is escalating government costs, and hence – escalating taxes and social security contributions. Bulgaria finds it difficult at the moment to provide quality education to its children, and is, frankly speaking, quite incapable of developing a robust, sustainable economic system. That is why external help, and probably political pressure, are needed. The prospects for the Bulgarian economy are worsening by the day, and a lot must be done to convince our few children to stay at home.

Report on the Public Finances of the EU

The European Commission has published the 2010 Report on Public Finances in EMU. The report reviews how Member States’ fiscal policies have evolved in the wake of the financial and economic crisis. It assesses the prospects for public finances and policy needs ahead.

The report says that both government deficits and debt have deteriorated markedly, reaching levels unprecedented in recent times in the EU. This strong deterioration in the public finances is due to both the automatic effect of economic performance and the support measures introduced by EU governments. According to the Commission these temporary measures have had positive effects on employment and economic activity during the crisis, by supporting private demand and maintaining fundamentally sound activities and jobs that could otherwise have been lost.

The report further notes that reduced fertility and increased life expectancy are set to have a considerable impact on both the growth potential of Member States’ economies and on public budgets. Member States with large deficits and large projected costs from ageing facing the biggest risks, and the most urgency in terms of addressing long-term sustainability issues.

An alarming finding of the report is that the significant consolidation of budgets set out in the Stability and Convergence Programmes are not sufficient to stem or reverse the increases in debt from
the crisis. According to the Commission Member States should seek to shift the tax burden from labour to energy and environmental taxes as part of a “greening” of taxation systems. The report says that expenditure-based consolidations have better track records of success than ones based on tax increases, while gradual consolidations tend to have higher success rates than “cold shower” ones.