Working away at the cost of ageing: the labour market adjusted dependency ratio
By: Benedetta Guerzoni and Fabian Zuleeg
Source: European Policy Centre
Population ageing and its implications on public finances (especially pensions and care) is one of the greatest challenges that EU economies and societies will be facing over the next couple of decades. In this Issue Paper, Fabian Zuleeg and Benedetta Guerzoni argue that pension system reforms will not be sufficient to guarantee the sustainability of the EU welfare systems, if they are not coupled with increased participation to the labour market. In order to assess the EU Member States’ performance, this paper proposes an indicator – the Labour Market Adjusted Dependency Ratio – which combines the demographic trend with the labour market dimension. The analysis shows that slightly less than half of the EU population is not working due to unemployment, retirement or other reasons, with this figure notably growing up by 2050. The authors suggest that policy-makers can play a significant role in tackling the demographic challenge, by boosting labour market participation and reshaping the structure of European labour force.