EU says six member states at high ageing risk
EUROPE - The European Commission says the public finances of at least six EU member states are at "high risk" due to population ageing.
They are: the Czech Republic, Cyprus, Greece, Hungary, Portugal and Slovenia.
Medium risk countries are: Belgium, France, Germany, Ireland, Italy, Luxembourg, Malta, Slovakia, Spain and the UK.
Low-risk countries include Austria, Denmark, Estonia, Finland, Latvia, Lithuania, Netherlands, Poland and Sweden.
The Commission said: "The first group is characterised by a very significant rise in age-related expenditure over the long-term, which requires reforms."
The second, medium-risk, group has significant costs of ageing and need for structural reforms and consolidation of public finances.
"The third group have in general come furthest in coping with ageing," a statement said. "However, low risk does not mean ‘no' risk regarding fiscal sustainability."
The Commission suggests a three-pronged strategy to cope with the budgetary impact of ageing.
1. Sound budgetary positions and to run down public debts faster. "Sound finances also create a virtuous circle of low interest rates and high and stable economic growth."
2. Higher employment rates, especially amongst women and older workers. Higher productivity.
3. Reform of pension, health-care and long-term care systems to ensure they are viable and adequate.
"Unless most member states do something serious about defusing the pension timebomb, it will go off in the hands of our children and grandchildren, presenting them with a burden that is simply not sustainable," said Economic and Monetary Affairs Commissioner Joaquín Almunia.
"This is a problem that needs to be tackled through both a reduction of public deficits and debt and further reforms of the pension, health care and long-term care systems.
"Some progress has been made, but it is clearly not enough, and the window of opportunity during which the working-age population and overall employment levels will continue to rise is closing fast."
The Commission has officially adopted a 190-page communication - ‘The Long-term Sustainability of Public Finances in the European Union'.
It is organising its "First Forum on Europe's Demographic Future" in Brussels on October 30 and 31.