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Europeans, with better nutrition and health services, live longer.
Many women choose to marry later and most couples plan smaller families.
Consequently, the number of older citizens has increased substantially
whilst there has been a decline in the number of young people. The UN
projection for Europe in 2030 shows a fall in working-age population by 9%
and a fall in total population by 8%. In Italy and Germany, working-age
population is expected to plunge by 41% and 29% respectively by 2050.
Over the next 25 years, the ratio of taxpayers to non-working
pensioners in Europe is projected to fall from today’s ratio of 3.1 to
1.5 (by 2030) and in countries like Germany and Italy, to 1 to 1, or even
lower. Every worker’s payroll would have to be taxed at 25 to 40% rate
in order to sustain current pension promises. In most countries, pension
liabilities are about six times greater than official government debt.
What are the solutions?
Several strategies have been suggested:-
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Later
retirement, longer working lives.
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Encouraging
more non-working women to take up employment.
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Encouraging
families to have more children, if necessary with tax incentives.
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Reducing
fiscal cost of elderly dependence by targeting benefits on the basis
of need and encouraging private provision of the elderly.
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Immigration.
Final salary pension schemes provide a disincentive for individuals
to work longer as they encourage retirement at peak earnings, rather than
continuing to work in perhaps a less demanding role on a lower salary.
Therefore, it would be appropriate to offer a new contract for persons on
early retirement to work full time on pay that is taxed at a much lower
rate.
Clearly, Europe with a declining number of working-age people will
need immigration. How will
immigration impact on EU Member States, especially in those countries
without a history of immigration? Where will these immigrants come from?
What skills will they bring? How will their ethnic background, religion
and social customs impact on the social and political life of their host
countries? What impact will such a flow of young skilled labour force from
poor to rich nations have on the already impoverished developing
countries?
How can immigration benefit the EU? Immigrants of working age with
specific skills and linguistic ability will make a positive contribution.
Whilst family reunions contribute to social stability of immigrant
communities, dependents of immigrants arriving in the host country do
incur a cost in health and welfare benefits. Illegal immigrants undermine
good race relations and impose an unnecessary financial burden. Of the
1.16 million net immigration to the EU in 2001, about half was legal and
the rest either illegal or made up of asylum seekers. EU immigration
policy should be based on merit, not ethnicity. It should encourage
immigrants to integrate with the host community. It should offer, on a
voluntary basis, financial incentives to immigrants to support their
dependents in their own countries – an option preferred by many older
dependents.
Europe would require massive immigration – 14 million a year for
about 50 years – to stabilise its support ratios. This is not
acceptable. It would create social and political chaos. The EU must
encourage its own indigenous women to have more children. It must offer
more women the opportunity to work, especially after childbirth. Tax
incentives, child-care at work places and prospect of affordable housing
will help. Too many young people, especially in southern European
countries, continue to postpone marriage and family as they are forced to
stay with their parents until they are 30 years old. This is one of the
reasons for the very low birth rates in Spain and Italy.
The EU sucked in immigrants and continues to need immigrants for
the foreseeable future to sustain its economy. Europe today is
multicultural and ethnically diverse. Europe, like the USA, will be a
global economic power when it offers equal opportunity to all its citizens
irrespective of ethnicity.
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