Demographic decline, Upb: 700 thousand fewer workers in the next 5 years. Thus the elderly will exceed the employed

Increase in pension expenditure e . – but public accounts will hold – a decline in the workforce and potential growth: these are the effects of the population decline and population ageing, according to the president of theUpb, Lilia Cavallari, in a hearing at the Commission of Inquiry on Demographic Transition.

Upb: 700 thousand fewer workers in 5 years

Cavallari explained that “the population decline that began in 2014 will continue to accompany the progressive aging,” which will lead the share of young people to stabilize around 24% in the medium term. This will have an effect on the workforce: “If we were to maintain current employment rates, in the next 5 years we would have a loss of 700 thousand units“, he explained. As a consequence, productivity would also decrease, because the workforce is aging and already now the largest class of workers is the baby boomers, that is, between 50 and 64 years old. The forecasts for potential growth are therefore “modest due to low productivity and the unfavorable trend in demographics”.

For the public accounts the picture is one of “substantial stability, despite the prospect of a significant increase in age-related expenditure over the next decade”. The peak of the incidence of such expenses on the product would be reached around 2040., driven by the increase in pension spending, but after that spending would decrease both due to the full implementation of the contributory regime and the decline in population. We will just have to be careful about the debt: the Upb estimates that, without adequate interventions, demographic dynamics could slow its reduction. "To continue to ensure the reduction of debt in the medium term, periodic checks of demographic assumptions should be planned and it should be ensured that any interventions in the pension, healthcare and assistance sectors are not financed in deficit", explains the Budget Office.

Upb: This is how seniors will outnumber workers

To counteract demographic trends, Cavallari stressed the urgency of active policies to increase employment, especially young people and women, and combat the high rate of inactivity. Attracting qualified immigrants and retaining young Italians is also essential. “The migratory balance can provide significant support to contain the demographic decline and increase the active population,” writes the Upb in the memorandum submitted to the commission. On the pension front, the automatic adjustment to life expectancy of the minimum age and contribution requirements for access to retirement must be maintained, “in order to mitigate the increase in the dependency ratio of pensioners and prevent pensions from being too low, with consequent pressure on welfare institutions.” Critical issues also emerge in healthcare and long-term care, with the need to strengthen services and personnel.

“It is important that it is maintained the automatic adjustment to life expectancy of the minimum age and contribution requirements for access to retirement in order to mitigate the increase in the pensioner dependency ratio and avoid pensions being too low, with consequent pressure on welfare institutions": this is what the Upb states in the report presented to the commission of inquiry on the demographic transition.

“Between the 2022 and 2070 the ratio of gross pension expenditure to GDP would decrease by 1,9 percentage points. The analyses confirm that the regulatory changes introduced over the past decades, together with the linking of the retirement age to life expectancy, have been and will be essential for controlling the dynamics of expenditure”, explains the UPB. “Future benefits will be comparable with current ones if the labor market is able to ensure long, continuous and well-paid careers”, it adds.