Experts: Aging of Population Affects All of Europe

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Heaps of dumplings and schnitzels. Free drinks. A three-man band. It's party time at a Vienna retirement home — but two women in the silver-haired crowd just can't get into the mood.

"What's the world coming to? It's all about work and money nowadays," says 86-year-old Elfriede Kobsa. "Yes, whatever happened to having a family and children?" sighs Elisabeth Nagl.

Good question.

The statistics speak for themselves. By 2010 — just four years from now — there will be more 55- to 64-year-olds than 15- to 24-year-olds in the European Union, Austria's social affairs minister warns.

The growing number of older Europeans, coupled with low birth rates across the 25-nation bloc, is giving lawmakers a big headache. At issue is how to financially shoulder the burden of an aging society while staying competitive globally and finding workable incentives for people to have more babies.

"It's getting worse and worse. If things continue like this, no one is ever going to get to retire," said Roni Howath, 56, a former Vienna postal worker who retired early and now drives a cab from time to time to supplement his monthly pension.

In the past, European taxpayers relied on generous national pension plans fueled in part by those still working. But in recent years, many governments have made severe cutbacks amid fears that with fewer people paying into the system, there will be less money to dole out.

Experts say the impact of an ever-grayer Europe will be felt throughout society.

According to a recent EU report, the bloc's working age population is projected to fall by 48 million, or 16 percent, between 2010 and 2050, while the number of seniors is expected to rise sharply by 58 million, or 77 percent.

Europe will go from having four people of working age for every senior citizen to a ratio of two to one by 2050, predicts the report by the Economic Policy Committee and the European Commission.

"Without exaggeration, one could say that what is going to happen on average in the next 25 years is really something we have never seen before," said Bernd Marin, executive director of the Vienna-based European Centre for Social Welfare Policy and Research. "It has implications for everything."

Already, it's clear that people will have to work longer before retiring.

"If there is no increase in the labor market, if unemployment of older workers doesn't increase, then we will have dramatic changes in who pays contributions and who receives pensions," said Andreas Motel-Klingebiel of the German Centre of Gerontology in Berlin.

Most companies think older workers are "inflexible" and prefer hiring younger workers instead of retraining or retaining older ones, he added.

That trend could add pressure to younger people struggling to balance job responsibilities against the need to play a bigger role in caring for aging parents.

"Younger people are going to do a lot more in formal care. They will have to struggle hard with work and taking care of family. There's going to be a collision of pressures here," said Peter Taylor-Gooby, professor of social policy at the University of Kent in England.

Chances are they'll also be doing more for less.

Because general taxation is expected to come up short to pay for seniors' retirement benefits and health care, governments are looking into options such as mandatory retirement savings and insurance programs — or even spending less on the younger generation.

Grim prospects about re-entering the job market after taking time off, a lack of affordable childcare and a late start to motherhood are all putting a damper on birth rates, said Hubert Krieger, a demographics researcher at the European Foundation for the Improvement of Living and Working Conditions in Dublin, Ireland.

"Delaying the time you have your first child has serious implications on how many children you may have," said Krieger, author of a recent study on demographic changes in Europe and its implications on family policy.

The changing demographics could put Europe at a competitive disadvantage with the United States, where birth rates haven't taken a nosedive — in part because of the growing Hispanic population.

Hispanics accounted for almost one-half (1.3 million or 49 percent) of the U.S. nationwide population growth of 2.8 million between July 2004 and July 2005, according to U.S. Census Bureau figures.

Overall, women in the United States with lower incomes and education levels had higher fertility rates than those who had college degrees and were more secure financially.

The overall fertility rate for American women in 2005 was near 2.1 births per woman, compared to an estimated rate of 1.5 in Europe in 2004. A rate of about 2.1 is what it takes to replace a population in the developed world.

But America is also getting older, too, threatening both private pensions and Social Security, the government pension program. Experts say, however, that the U.S. is unlikely to age as significantly as Europe anytime soon.

The situation is quite different in Japan, which has an even lower fertility rate than most European countries.

The Japanese government announced in early June that more than one in five Japanese is now 65 or older, and that ratio could rise to one in four in the next decade. The country's fertility rate is 1.25.

But unlike Europe, Japan has found ways to keep seniors in the job market, said Wolfgang Lutz, director of the Vienna Institute of Demography. Upon retirement, seniors often return to their former companies as consultants and receive a government pension in addition to a reduced salary, Lutz said.

Some experts point to immigration in Europe as the key to solving the problems caused by an aging society and a dwindling work force. Immigrants long have been relied on to fill low-paying jobs in the service and health care sectors.

"Without migration, it won't be possible," said Guenther Leiner of the Austria-based European Health Forum.

"We will see them as helpers and saviors."