Declining Demographics in EU Impacting Competitiveness
The Oeconomus Economic Research Foundation recently published an article focusing on the challenges of an ageing society and its impact on global competitiveness, with Hungary as a focal point. The article highlights the demographic shift towards an older population in developed countries, including those in the EU, where the decline in the working-age population poses a significant challenge.
While the 20th century saw a rapid increase in global population, the current trend indicates a slowdown, with industrialized countries experiencing a drastic decline in birth rates while Africa continues to see significant population growth. By 2050, the global population over 65 is projected to reach 1.6 billion, with Europe surpassing the number of people under 20 by 2030.
Hungary, like other developed nations, is facing the repercussions of a declining birth rate and an ageing society. Data from the Hungarian Central Statistical Office shows that family policy measures have helped alleviate demographic pressure in recent years. However, the country still grapples with an increasing proportion of elderly dependents, with projections indicating a rise from 31.9% in 2023 to 45.5% in 2050.
As fertility rates remain low in advanced economies and life expectancy continues to rise, the strain on public finances and services becomes more apparent. The article emphasizes the need for strategic policy responses to address the impact of ageing on economic growth, productivity, and labor markets. Digitalization and automation are noted as potential solutions to enhance productivity, but investments and access to skilled workers are essential.
In response to these challenges, the European Commission proposed a four-pillar strategy to tackle demographic issues and enhance competitiveness. The pillars include support for families with children, improving labor market conditions for young people, ensuring the well-being of older age groups, and mobilizing young talent within the EU.
Looking ahead, the article suggests that Hungary’s upcoming EU Presidency could further develop the demographic toolbox and prioritize addressing demographic challenges at the EU level. By shedding light on the link between demography and competitiveness, Hungary aims to navigate the complexities of an ageing society and maintain its global standing amidst shifting demographics.
