Every industrial country is either considering or in the process of implementing major reforms to the web of pension, healthcare and social service programs for the aged sometimes called the ‘generational contract’. In the 1960s and 1970s, policy makers could reasonably assume that any sacrifices they imposed on younger and future generations in the name of dependent elders would be more than offset by rising incomes.
This is no longer the case. The demographic and economic challenges now facing ageing societies raise the prospect that, in some countries, non-health consumption will enter a period of decline — lasting not just for a few years, but decades — as the direct result of otherwise fiscally prudent reforms. A metric that identifies the impacts of benefit reforms on the lifetime consumption for different birth cohorts could help to avert such outcomes and, by so doing, undergird the political sustainability of residual benefit promises.
History is replete with instances where the policy mistakes of fathers have been visited unjustly upon their sons. Yet, in all but a handful of these tragedies, those setting policy did not contemplate that their actions would leave younger and future generations materially worse off. Modern economics and actuarial science provide today’s policy makers with the tools to peer into the future and assess, with reasonable credibility, the intergenerational impacts of current law and major adjustments thereto. These capabilities would be brought to bear in the Generational Impact Statement (GIS) — a measure similar in concept to the environmental impact statement — which could be used to evaluate all significant fiscal legislation.
While the GIS would be broadly applicable throughout the industrial world, for the purpose of illustration, I will confine my discussion to circumstances in the United States. The U.S. faces a particularly rapid increase in its elderly population, while health expenditures — driven disproportionately by the aged — are growing rapidly off of a very high base. There is a high probability that, in the name of good government, reformers will engineer a lengthy period of falling fortunes for today’s young and their children in turn.

2. A Troubling Baseline

What will the average American consume during his or her lifetime? Unfortunately, we cannot know, since a substantial portion of future worker income has yet to be allocated between dependents and workers. Various agencies of the U.S. Government have put the present value of unfunded liabilities for old age health and income security programs in the range of $70 trillion¹, or roughly five times national income. The question of when and how these gaps will be filled is a major source of uncertainty overhanging the financial future of practically every American under age 70.
Actuarial studies updated annually by the Social Security Administration (SSA) and Center for Medicare and Medicaid Services (CMS) provide important clues as to the wellbeing of future generations through long range projections of per capita incomes and health costs that incorporate variables such as economic output, demographic change, medical inflation and the composition of public and private health spending. These calculations permit the estimation of average lifetime gross incomes for each birth cohort.
Parallel long range studies by the Congressional Budget Office (CBO) add revenue projections to this mix. This allows CBO to estimate the size of the budget gap in any given year. Significantly, however, this exercise does not incorporate the economic feedback — or ‘dynamic’ effects — of new taxes or permanent budget deficits. Established economic theory suggests that both taxes and deficits will slow the rate of economic growth, which, in turn, can depress revenues and increase deficit pressures.
The GIS baseline would estimate average per capita lifetime disposable (after tax) income for selected birth cohorts — for example, for the cohorts born in 2007, 1977 and 1947. As with environmental impact statements, these calculations would be simplistic and illustrative. But they could be accompanied by more nuanced qualitative risk assessments that take into account potential economic feedback.
The simplest method for calculating the intergenerational impacts of current law or proposed legislation would be to assume that all shortfalls will be covered by new taxes. This calculation would effectively highlight policies that transfer resources from the future to the present — such as the 2004 Medicare Part D prescription drug entitlement, which substantially increased spending on the aged without specifying a way to pay for it. Yet the assumption that tax increases will be calibrated to rising benefit costs is neither politically nor technically realistic. If the past is any guide, electorates will tend to protect their consumption by endorsing the palliative of budget deficits.
Nothing in CBO’s long range projections suggests that deficits would have an adverse intergenerational impact. In CBO’s high health-cost/low revenue scenario (in which federal revenues remain stable at about 19% of GDP, while health costs continue rising at historical rates) deficits soar to 14% of GDP in 2030 and 38% in 2050. Under this scenario, borrowing costs remain constant while incomes and consumption continue rising. Much more likely is that bond ratings would fall, debt service would soar — eventually surpassing social spending as the primary engine of deficit spending — and, at some point, perhaps in the 2020s, GDP and personal income growth would lurch dramatically into reverse.
Such a collapse would have profound intergenerational impacts; but, counter-intuitively, they would tend to favour the young. This is because a lifetime of accumulation and diminished capacity for employment make older populations more vulnerable to an economic upheaval that undermines company profits and the performance of the stock, bond and real estate markets. In the Great Depression, older generations lost the most in the downturn, but gained the least from the subsequent recovery. By 1935 there had been a vast shifting of fortunes away from the contemporary old. The memory of this shock became the touchstone for a broad based, two-generation long political movement to increase income transfers from workers to retirees.
Inclusion of an economic risk assessment in the GIS would serve a dual purpose. It would outline an alternative (some would say, more realistic) scenario, in which deficits rather than taxes are used to fund the added cost of baby boom retirement benefits. By highlighting the heightened risk of economic upheaval, it would also underscore the importance to boomers themselves of prudent reforms designed to avoid what, for them, would be a catastrophic slump.
A balanced risk assessment, however, would also include a discussion of tax-related economic risk. The baseline GIS would incorporate the CBO methodology that excludes consideration of the dynamic effects of taxes. The risk assessment could provide bounds as to what those effects might be. For example, a 1997 study by the OECD estimated that an increase in the average tax take of 10% of GDP during 1960-1995 had reduced OECD annual growth rates by about one-half percentage point². In the U.S., a similar tax increase over the next 25 years could cut projected GDP growth rates by 26% — substantially mitigating the deficit-reducing impact of tax increases.
Two other measures might be added to the GIS in order to provide an even more comprehensive assessment of the impacts of current law and new legislation on the living standards of different birth cohorts. The first would be a measure of the lifetime health expenditure of various birth cohorts—information that can be abstracted from long range Medicare projections prepared by CMS. The second measure would subtract lifetime retirement saving from disposable income in order to calculate lifetime non-health consumption. Because health costs are projected to rise faster than wages, they are driving up the share lifetime income consumed in retirement. For example, CMS projects that out-of-pocket costs health costs for the aged will rise from 29% of the average Social Security benefit in 2006 to 42% in 2030. All other things being equal, this means that each successive cohort of workers must save a larger share of lifetime compensation in order to preserve pre-retirement living standards in old age. By taking these factors into account, the GIS could produce estimates of the full intergenerational impacts of reforms designed to contain health costs.

3. Measuring the Impacts of Legislation

The foregoing suggests that America’s 79 million member baby boom generation — currently aged 43-61 — has a strong financial interest in legislative remedies that prevent budget imbalances from triggering economic discontinuities that undermine the value of their retirement portfolios. Yet they also have an interest in shifting as much of the cost of reform as possible onto subsequent cohorts. Mitigating this latter impulse is a widely recognized, but poorly informed, legacy motive. Surveys show that older populations are willing to sacrifice in order to leave future generations better off; however, they lack authoritative information on the legacy effects of different policy choices. By providing this information, the GIS would enable legislators and the public to better align policy outcomes with stated intentions.
The potential for well-intended reforms to leave future generations worse off is large and growing. Reforms that are delayed or very gradually phased in will tend to affect later cohorts more than current ones. Meanwhile, in 2008, the first wave of baby boomers will enter a retirement that will last an average of 21 years. The typical member of this cohort has financial assets sufficient to replace barely one year’s pre-retirement income. On their current track, boomers will be more dependent on intergenerational transfers than any generation before them. Once they enter the retirement rolls, their neediness will provide a compelling rationale for exempting them from meaningful sacrifice.
The choices being forced upon us by population ageing and health cost growth will have profound intergenerational impacts. The inevitability of reform, and the important social principles at stake, mean that, no less than the environmental impact statement, the generational impact statement may be a policy tool whose time has come.

Paul S. Hewitt is Executive Director of Alliance for Generational Equity, www.age-usa.org
1 The 2007 Trustees Reports for Medicare and Social Security trust funds put the ‘infinite horizon’ liabilities for Part A of Medicare and Social Security at $27.5 trillion and $13.6 trillion, respectively. However, these estimates exclude Parts B and D of Medicare — which together are larger than Part A — and the federal portion of Medicaid — which provides long-term care — because these programs are financed out of general revenues rather than dedicated payroll taxes.
2 Leibfritz, W., Thornton, J. and Bibbee, A. (1977): “Taxation and Economic Performance”, OECD Economics Working Papers, No. 176, p. 49, See Paragraph No. 97, Paris, www.oecd.org/dataoecd/33/25/1863834.pdf.

References
Leibfritz, W., Thornton, J. and Bibbee, A. (1977): “Taxation and Economic Performance”, OECD Economics Working Papers, No. 176, p. 49, See Paragraph No. 97, Paris,

www.oecd.org/dataoecd/33/25/1863834.pdf

The need for pension system reform would appear to be ever more imperative for every European government and country. The immediate consequence for each and every country is the reorganisation of the whole political, economic and social system, indeed of the whole of Europe, since these reforms represent and will come to represent more and more the new post-euro political frontier for the enlarged European Union.
So from an urgent and apparently economic reform relating to intergenerational solidarity, the rethinking of the whole European model emerges, a model whose deep and basic philosophical and cultural roots are, at times, neglected.

2. The Risk and the Dignity of the Person: Philosophical Foundations in the Early Nineteen Hundreds

The appearance of a person is linked to the manifestation of a tension (De Rougemont, (1934), No. 8, p. 17); of a vital and creative conflict which ends in an action; this action causes a new conflict and a risk, which generate new creations. In this way action and person are indivisible (Rops, (1933), No. 3, p. 14). The conflict is within the person who, therefore is always able to overcome it. (Marc, (1937), No. 38, p. 47). And when he shows by action his raison d’être he creates something new, i.e. a new risk. His whole dignity in fact consists in taking on this new risk. Here we find the dignity of man as a responsible being (de Rougemont, (1934 ), No. 8, p. 18).
It is not enough for a person to reflect and adapt, to listen and obey: instead he must totally accept the taking on of risks and responsibilities (Marc, (1934), No. 11, p. 31). The reality of a person means taking action knowing its risks. To take responsibility is to have faith in the future and to affirm the capacity for bringing the absolute new into the world. This responsibility can be assumed only by those who act (Chevalley, (1935), No. 17, pp. 5-7).
It follows that society must guarantee “à chacun tous les empiétements impérialistes (…), l’aire de libre activité morale et matérielle don’t il a besoin pour dévolopper ses dons de creation; mettre à la disposition de chacun (…) le minimum d’aide matérielle et morale faute duquel l’individu est hors d’etat de tenter sa chance spirituelle et matérielle”, (Dupuis, (1936), No. 39, p. 33): a hypothesis which forms a theoretical background to all the proposals for a minimum social guarantee, living income, citizen’s grants, etc.
The culture of the person thus proposes the man who affirms himself, takes positions and responsibility in comparison to other human beings, on things and on life, committing himself and taking risks in every single moment (Dupuis, (1935), No. 18, p. 17). This culture is a continuous and renewed creation of values and traditions. The more the person is free of life needs, the more practicable is the assumption of risks; therefore the measures of a minimum social guarantee, are essential and preliminary conditions for assuring the dignity of persons. They assume institutional dimensions as occurs in an exemplary and overriding manner in the European Constitution project. The very nature of pension measures implies, by definition, institutional acknowledgement of the need to guarantee the life requirements of people way beyond citizens’ income plans (or grants) and other systems of institutional redistribution of the minimum life guarantee.
These, therefore are an expression, practically unquestioned in Europe, of a guarantee of the person; in this case beyond a certain age threshold or other specific conditions (disability, effects of war, repairs to social damages or others). They express therefore, the necessary conditions for guaranteeing the people concerned their constitutional dignity, and hence, to follow the hypothesis of the personalist philosophers, for allowing the same people “a growing freedom of the creative personality” (citing p. 15 of Gilda M. F.) with the assumption of risks proportionate to their activities, i.e. their businesses.
The institutions which succeed in basing themselves on the persons recognise their supremacy, they recognise the concrete nature of man and accept his permanent conflict which is dichotomously individual and social like the person himself. The conflict the person has with himself, individual and collective conflicts, within couples, within groups, between nations, between peoples, between religions, between ethnic groups, require and produce an incessant dialectic for the setting of borders and for overcoming them.
On the other hand, without borders there would be no causes for conflict, traditions of conflict, presence of and necessity for conflicts, there would be no migrations nor prevention and regulation of conflict. The personalist dialectic and ‘englobante’ which follows from it, unlike the Hegelian ‘dechirante’, includes the poles of conflict as well as the relevant tensions, and it seeks to overcome them through successive balancing which produces new conflicts and new contradictions and research into new creative balancing.
The ‘englobante’ dialectic is applied to the person, society, work, economy, culture and institutions, and represents the methodological essence of personalist culture which at political and institutional level leads to global federalism. Federalism, particularly European federalism does not acknowledge, and cannot acknowledge, even technically, war as a means of resolving conflicts, though it is predictable and frequently used (sometimes surreptitiously) as a means of resolving conflicts in international and intergovernmental relations. Federal relations, subsidiary and ancillary to the various levels of personal conflicts are the historical and doctrinarian alternative to negotiated and international diplomatic ones.
Europe represents the modern workshop for these doctrines. Their expressions have always been, and still are, present in the recent history of the building of the European Union. The plan for the European Constitution Treaty expresses the most recent of these passages. In it the dignity of the person forms Title 1 of the preamble, in the part devoted to the fundamental rights of the Union.
It is possible that the link between person (not individual), his dignity and the risk generator of existential tensions, a fundamental link in personalist federalism, was not explicitly conscious; however it appears in the constitution text that is deeply influenced by the philosophical roots which created the cultural and political climate in which, with its founding fathers, the plan for the European Union was born. And it is not displeasing to remember it among the many celebratory aspects of the fiftieth anniversary of the Treaties of Rome.

References
Chevalle, C.Y. (1935): “Sur l’idèe de responsabilité”, in Ordre Nouveau n° 17, pp. 5-7, Imp. E. Aubin et Fils, Ligugé (Vienne).

Dupuis, R. (1935): “Qu’ est-ce que la culture?”, in Ordre Nouveau n° 18, p. 17, Imp. E. Aubin et Fils, Ligugé (Vienne).

Dupuis, R. (1936): “Election et souveraineté”, in Ordre Nouveau n° 39, p. 33, Imp. Graphique, Paris.

Heim, M. (2004): “Introduction au fédéralisme global”, Aracne ed., Roma,

Manganaro Favaretto, G. (2006): “federalismo personalista di Alexandre Marc”, in Antologia di A. Marc, p. 15, Franco Angeli (a cura di), Milano.

Marc, A. (1934): “Ton destin”, in Ordre Nouveau, n° ll, p. 31, Imp. E. Aubin et Fils, Ligugé (Vienne).

Marc, A. (1937): “L’être qui dit non”, in Ordre Nouveau, n° 38, p.47, Imp. Graphique, Paris.

Rops, A. (1933): “Spirituel d’abord”, in Ordre Nouveau, n° 3, p. 14, Imp. E. Aubin et Fils, Ligugé (Vienne).

de Rougemont, D. (1934): “Communauté révolutionnaire”, in Ordre Nouveau, n° 8, p. 17-18, Imp. E. Aubin et Fils, Ligugé (Vienne).

Raimondo Cagiano de Azevedo: Faculty of Economics, University of Rome ‘La Sapienza’.

An important objective for social welfare policy has always been to provide safeguards against reductions in income and living standards that result from unemployment, disability, separation, widowhood and other such life course events. This paper examines the effect of such life course disruptions — unemployment, disability, separation and widowhood — on the income and living conditions of those living in EU Member States.
The risk of experiencing such a disruption is first outlined and the effects on income is then analysed, followed by consideration of the role of public policy in alleviating these effects. Empirical evidence shows that unemployment is closely linked to low income and high risk of poverty. In terms of policy, the widespread shift from passive to active labour market measures has contributed to reducing unemployment in the EU. This includes increasing incentives to return to work and training programmes for the young unemployed and retraining for the long-term unemployed, which have been developed in almost all Member States. The Nordic countries provide the major example of how State involvement and an extensive social security system can facilitate re-entry into the labour market and maintain living standards of those experiencing unemployment.
Review of existing studies indicates that labour market events are critical to an individual’s risk of entering into poverty and the chances of escaping it. There is a clear gender differential in the effect of the labour market events, with women’s loss of employment often buffered by the employment of their partner. Among family related events, widowhood seems to double the chances of women’s income falling to poverty levels as compared with men, while separation appears to have an adverse effect on the income of women alone. By contrast, the effects of having children and cohabitation on the risk of poverty do not show much variation between men and women. These findings suggest a need for greater gender mainstreaming of social policies and the provision of a safety net which takes into account the often different situations of men and women.
In the case of separation, the evidence suggests — not surprisingly — that women with better education and those who work full-time before separation tend to have higher income afterwards, while income declines with the number of children. The effect of different types of social welfare systems seems to be relatively weak, though post-separation income in the more ‘liberal’ countries (such as the UK and Ireland) seems to be higher than in more ‘corporatist’ countries (such as Austria, Germany and France). This, however, could reflect the greater participation of women in the labour force in the former or a different composition of women becoming separated — i.e. those with higher education levels in full-time work.

1. Introduction

Social security systems were developed in European countries to provide support for people whose life is disrupted because of unforeseen events, such as falling ill or losing their jobs. The concern here is to examine the effect of such life course disruptions — unemployment, disability, separation and widowhood — on the income and living conditions of those living in EU Member States. The risk of experiencing such a disruption is first outlined and the effects on income is then analysed, followed by consideration of the role of public policy in alleviating these effects. The focus is primarily on unemployment, which for most people represents the most important risk of disruption to their working lives and of income falling to poverty levels. Other life course disruptions, however, are also considered. Details of the different institutional arrangements, which are in place across the EU for providing a protection against unemployment, are outlined in an Appendix, focussing in particular on the differences in generosity, eligibility and coverage of different national systems.

2. Unemployment

The three main questions addressed here in respect of unemployment are:
1. What is the risk of becoming unemployed in different EU Member States?
2. What kinds of arrangements exist across EU countries for replacing income lost by those becoming unemployed?
3. What is the risk of poverty faced by those who are unemployed in different parts of the Union, in the sense of their income falling below what is considered to be the poverty level in relative terms?

1.1 The Unemployment Risk in the EU25 Member States

Unemployment in Europe rose steadily during the 1980s and the first half of the 1990s. This rise spurred a range of research not only on the underlying causes and the means of reducing unemployment but also on how best to protect those who face involuntary unemployment. The main causes identified in the literature are a combination of labour demand and labour supply factors, the former being linked to differences in labour market institutions (union membership, employment protection legislations, regulation of part-time and temporary employment contracts) as well as to macroeconomic factors (such as oil price shocks and changes in international competitiveness leading to industrial restructuring and job displacement. Supply side factors, on the other hand, are linked to decisions of individuals to stay in employment (when already employed) or return to work by actively searching for jobs. These decisions are influenced by widely diverse factors such as the statutory maternity leave, the availability of affordable childcare services, and training programmes to improve employability.
In the second half of the 1990s, unemployment rate in EU15 countries declined, though it has risen slightly in recent years (see Figure 1 below). In addition to economic growth, a progressive shift of national policies from passive to active labour market measures to promote employment (in-work benefits, employment subsidies, subsidized job training programs) in a number of countries contributed to this decline.

Figure 1: Unemployment rate (1963-2004)

Source: EUROSTAT, Labour Market Statistics, and OECD, Labour Market Indicators.

The enlargement of the EU to include the 10 new Member States from May 2004 has posed new challenges for policymakers, as there had been a large rise in unemployment in these countries at the beginning of the 1990s. Although there were some success stories since the mid-1990s, (e.g. the so called ‘Czech miracle’), unemployment in the new Member States taken together increased by nearly 5% in the late 1990s and remained in excess of 10%.
The question then arises as to who the unemployed are. The most salient features of the “old” European unemployment phenomenon still persist: the section of the population at most risk of unemployment are young people under 25, especially the low skilled and low educated. Moreover, unemployment still has a strong regional dimension in many countries, particularly in Southern Europe and in many new Member States. In many countries (Italy, Spain, Portugal) half of those unemployed have been out of work for longer than a year. (Figure 2 shows unemployment rates across the EU in 2005 together with long-term unemployment rates calculated in relation to the total active population. Figure 3 shows the proportion of the unemployed who are long term unemployed.)

Figure 2: Unemployment and long term unemployment in the EU25 (2005)

Source: EUROSTAT, Labour Market Statistics.

In the majority of countries, overall and long-term unemployment rates are in general positively correlated, with the exception of Sweden, Finland, and Spain. The incidence of long-term unemployment is particularly high in the new Member States (in particular in Slovakia and Poland), Southern European countries (with the exception of Spain), and among some of the EU15 block of countries (in Germany, Greece, Belgium, Italy and Portugal). In all new Member States except Cyprus, nearly half of the unemployed are long-term unemployed, which suggests underlying structural problems, and the limited capacity of labour markets to absorb long-term job seekers. A different picture emerges for the Nordic countries (Denmark, Finland, Sweden) and Anglo-Saxon countries (UK and Ireland), where there is a low rate of long-term unemployment, reflecting a higher degree of flexibility in both entry into and exit from the labour market. The Danish model of ‘flexicurity’ – balancing flexibility to hire and fire with extensive social security and training for employees – in particular, provide a potential example for other EU countries. In Spain the low incidence of long term unemployment can be related to the rise in net job creation after the labour market reforms of the early 1990s, many of the jobs being fixed-term or part-time.

Figure 3: Long term unemployed as percentage of the total unemployed in the EU25 (2005)

Source: EUROSTAT, Labour Market Statistics.

The population of the European countries is rapidly ageing, and this process has many social and economic consequences, especially on the labour market of the nations concerned¹. One of the ways which could be followed in order to address the consequences of the decline in numbers and the ageing of the population is to act directly on the undesired demographic conditions to try and modify them. There are many factors which could drive the attempt to reverse, or at least to restrain, this process, obviously to the extent that it is effectively possible. The demographic means to catch up with the goal of a younger age structure and a higher growth rate than zero are basically two²: to increase the fertility or to increase the net migration.
Some authors support the idea that only through an increase of the fertility (also obtained thanks to the institutional commitment of governments) it could be possible to reverse the existing trends, while some others state that immigration can also play a fundamental role in such a sense. Recently in the scientific and academic debate (but also among the politicians) the idea has emerged that migrations can act like a rebalance mechanism of the world-wide population, and that immigrants can validly replace the portions of population missing as a result of the demographic ageing process under way in all the industrialised countries. From an anthropological point of view, the rebalance function of the migrations appears completely natural: migration, in fact, is not a recent phenomenon, but it has constantly accompanied the evolution of the human populations (Chiarelli, 1992).
In the present essay I shall briefly examine the factors in favour and against the view that immigration can be a suitable remedy to the decline of the western populations. I shall start by presenting and analysing the UN Report of 2000 Replacement Migration: Is it A Solution to Declining and Ageing Populations?, in which some projections about the future consistency of immigration flows were presented. These inflows are needed by some countries in order to cope with some consequences of the demographic ageing process.
Moreover, jointly analysed data on the demographic ageing and the migratory flows in the European countries, will be provided in an attempt to understand which will be the effects of the increased foreign presence on structure of the receiving, ageing populations. Through a few figures and a short bibliographical review, it will be possible to conclude that immigration, though it could be useful — together with an increase of fertility — it is not sufficient in itself to avert population decline.

2. Demographic Trends in the European Union

With the purpose of understanding the specific situation of each country, it can be useful to take a look at data in table 1, which show some of the most important indicators about the total, natural, and migratory growth and some ageing indicators (composition of each population by age class, ageing index and total fertility rate). Since all data refer to the year 2005, we should have considered only the 25 countries which composed the European Union, while, at that time, leaving out the two new countries (Romania and Bulgaria). To provide a more complete picture I have also shown the values for the two new countries, so that their demographic situation can be compared with that of the other countries.

Table 1: Main demographic indicators of the European countries EU25, plus Romania and Bulgaria, 2005)

Source: Author’s calculations based on data from Eurostat, 2006.
Notes: (a) For Italy: Istat, 2006; (b) Estimated value; (c) Provisional value; (d) 2003 values; (e) 2002 values.

The process of population ageing is clear when taking into account the ageing index, measured as the share of population aged 65 and over as against that aged 0-14. Among the EU15, Italy shows the highest value (137.7%), followed by Germany (128.3%), Greece (122.8%) and Spain (115.9%). The average value of the EU15 is 108.7%, higher than the value of the EU25 (104.9%), as a consequence of the lower values of the ten countries, among which only four (Latvia, Slovenia, Estonia and Hungary) exhibit a value higher than 100%. As to the two new countries, while Bulgaria shows a deeper degree of ageing (its ageing index is 123.9%), Romania still has an ageing index lower than 100% (92.5%). Ageing from the bottom (as defined by demographers) is represented by the values of total fertility rates, under the replacement level of 2.1 children in all the countries, even if some of them improved in the last few years. The highest values are those of Ireland (1.99 children per woman in fertile age), France (1.9) and Finland (1.8), while the lowest are those of Slovenia (1.22) and Poland and Czech Republic (1.23 each). Ageing from the top can be shown by means of life expectancy at birth, which has an average value of 76.5 years for males and 82.3 for females for the EU15 and of 75.4 and 81.7 years respectively for the EU25.
It is interesting to observe (table 1) the growth rate of the different countries, trying to evaluate the contribution of the two components — natural and migratory. Among the UE15 countries, only Germany shows a negative growth rate, caused by the negative value of the natural growth rate, while there are five for the 10 new countries whose growth rate is negative, all of which also have a negative natural dynamic. The Czech Republic and Slovenia also have a natural rate lower than zero, compensated for³ by a positive migration growth rate, that brings these two new countries to have a positive total growth rate (even if lower than 1‰). The two newest countries, Bulgaria and Romania, show negative rates for each type of growth, except for the migration rate of Bulgaria which is equal to 0. So it appears that there are some European countries where a positive migration dynamics offsets a negative natural one.
This situation can be easily understood by taking a look at figure 1, which shows every European country, including Romania and Bulgaria (and average values of EU15 and EU25 as well) for both values. On the graph it is possible to identify four areas:
1. an area of demographic growth (both components), where in 2005 most of the European countries lie, even if in different positions;
2. an area of natural growth and negative migratory growth, where only the Netherlands can be found, which has a slightly high natural population growth rate (3.5‰), but a negative, though little, migration growth rate (-0.6‰);
3. an area of natural decline not compensated for by migration, where we find four countries, all belonging to the ten new ones (Latvia, Lituania, Estonia, Poland), and Romania;
4. an area of natural decline compensated by migration, where we only find Germany from the EU15 and three countries from the ten new ones (Hungary, Czech Republic and Slovenia).
Bulgaria lies exactly on the X axis, having a migration net rate equal to 0, but a negative natural growth rate (-5.2‰).
From the observations of the simple figure proposed, it is possible to highlight that for most of the European countries both the natural and the migration growth rate are positive, even if the first component is actually very slightly positive. The real problem, therefore, is not the simple arithmetical contribution that net migration can give to the whole growth of the population if the natural growth is negative, but how immigration can redress the balance among the different age-groups within the single populations. The population ageing process is caused, in fact, by two factors: the low birth rate and the increase in the life expectancy. By definition, a population begins to decline when its net reproduction rate starts to go below 1, which is the level at which every generation exactly replaces itself⁴. The main problems caused by this process are the missed replacement among the working classes and the progressive reduction of the share of the working subgroup among the entire population. For these reasons, many authors are trying to reflect on the role that immigration can have by strengthening the labour force and trying to compensate for the unbalance among the productive and non-productive groups.
The ongoing ageing process in the European countries will change the demographic shape of the Union, as can be seen in figure 2, which shows the age and sex distribution of the total EU25 population, comparing the profile of 2000 with that of 2050. The profile of the pyramid was reductive in 2000, which means that the youngest portions of population were less than the central ages, while it will tend to be stationary in 2050, which means that the population has the same amount of people in every class (even if it is possible to notice that, as an effect of the low birth rate, the base of the pyramids still remain smaller than the rest). Furthermore, it is possible to appreciate that the strongest reduction will concern the working population (aged 15-64), as shown by the pyramid in a darker colour, while there will be a parallel increase of the share of population aged 65 and over, especially females due to their higher life expectancy.

Figure 1: European countries per values of natural and migratory growth rates (2005)

Source: Author’s calculations based on data from Eurostat, 2006.

Figure 2: Population pyramids for the EU25. Values in thousands. Comparison between2000 and 2050

Source: Author’s calculations based on OECD, 2007.

Manuela Stranges: Ph. D. in Demography, Department of Economics and Statistics, University of Calabria, m.stranges@unical.it.
1 For a brief discussion of the relationship between ageing and labour market, see Stranges 2007 where the focus was on Italy, but with some comparison with the other countries, especially with regard to the critical issues of the labour markets and the achievement of the European targets (Lisbon, Stockholm and Barcelon) by the various countries.
2 Population ageing is determined by the simultaneous action of two natural factors: low birth rates and longevity. Since to increase mortality at an older age is definitively out of the question, the only factor of the natural dynamic on which it is possible to act is fertility.
3 Compensation is here intended from a merely arithmetical point of view.
4 the net reproduction rate is the exact number of daughters for each mother at net of the probability of dying during the fertile interval (15-49 years).