That there is a consistent population decline it's in the numbers. which, having seen thelife extension, there is a need for more resources to cover pension expenses is also an established fact. The two factors together indicate a blanket that has become too short to be able to cover the new needs of the population. And new remedies are needed, on top of those pension reforms already in place.
The recipe of the Prime Minister Giorgia Meloni it would seem very simple to compensate for the increase in pension expenditure compared to GDP: to incentivize thefemale occupation , birth rate.
The other way, which Meloni would not like to take, would be to draw resources from the work contribution of new immigrants.
THECPI Observatory on the Italian public accounts of the Catholic University, data in hand, he made two calculations to see if Meloni's road is really feasible.
The conclusion is condensed into a number: 2,1 children per woman, which represents the fertility rate to which it should rise by 2070 (from the current 1,24) in order to be able to reformulate the ratio between pension expenditure and GDP, without increasing immigration. "An increase that seems unlikely even with very intense policies in favor of the birth rate," said the report. But let's see in detail how the Observatory arrived at this conclusion.
The baseline scenario: increase in the birth rate and immigrants to contain spending
The starting point of the analysis is the "base scenario" (the so-called baseline) for Italy in the 2021 Aging Report published by the European Commission and produced by the Aging Working Group (AWG) of the Economic Policy Committee (a committee that includes all representatives of the member countries of the European Union). A scenario substantially similar to that presented in the Def, the public finance document which contains the economic and financial policies decided by the Government.
Based on current trends, the baseline assumes a increase in life expectancy which arrives on average between males and females a 89 years in 2070. To compensate for this increase, in addition to the pension reforms already approved, the AWG assumes relatively favorable demographic and macroeconomic assumptions.
Between demographic assumptions they report a fertility rate constantly increasing (from 1,24 in 2022 to 1,39 in 2035 and 1,52 in 2070) and a net flow of immigrants which in the entire forecast period averages around 213.000 units per year.
The main macroeconomic assumptions Instead, they expect a general improvement in participation rates job market, employment and unemployment. The first two show an increase of about 2,6 and 4 percentage points over the next fifty years, above all due to a greater participation of women in the labor market, while unemployment is expected to fall by 2,3%.
The AWG baseline results show a prediction of pension expenditure on GDP growing until 2035 (from 16,2% in 2025 to 17,3% in 2045) and a subsequent decline until 2070, when it will settle at 13,6% of GDP, also due to the decline in pension benefits.
What if instead we wanted to stop immigration?
What would happen if the government decided to contain the flow of immigrants with the aim, for example, of keeping the ratio between immigrants and the total population unchanged (at the current level)?
La pension expenditure on GDP it would increase due to the lower number of employed, due to the reduced presence of immigrants, and therefore to the lower level of GDP. Maintaining the ratio between immigrants and the Italian population at the levels of 2022 (8,5%), would imply a practically nil net flow of immigrants (6.000 average units per year). Other things being equal, pension spending as a percentage of GDP would show the first signs of worsening as early as 2025, reaching in 2045 the peak of almost 20%. Even in the declining phase of pension expenditure as a percentage of GDP, the results of the new scenario remain well above those of the baseline, settling at 16,2% in 2070 against 13,6% of the other hypothesis.
By how much would the fertility rate have to increase to compensate for fewer immigrants?
Given the delayed effects of the increase in the fertility rate, and therefore in the number of people of working age, for several years however, it would not be possible to compensate for the lower flow of immigrants (the first positive effects would only be observed around 2040).
But in the long run? To return to baseline levels in 2070, it would be necessary to increase the fertility rate of 0,54 to 2070 compared to the baseline, considering that an increase of 1,24 compared to current levels (0,28) is already expected in the baseline. The overall increase to recover the losses from a lower net flow of immigrants would therefore be from 1,24 in 2022 to 2,1 in 2070 (0,86). To find a fertility rate at this level, it is necessary to go back to the early seventies. The Italy of 2070 should therefore return to being very similar to that of a century earlier, a rather difficult task.
With the increase in birth rates, more resources are needed
It should also be considered that increasing the fertility rate requires the expenditure of considerable public resources to which should be added the higher expenses, above all for nurseries and parental leave which make it possible to reconcile work with childcare and for the education of newborns.
In fact, already looking at the projections of the AWG report, a hypothesis of high enrollment in the baseline scenario with a fertility rate of 1,52 in 2070 would lead to an increase in education expenditure as a percentage of GDP of 0,6 per cent in 2070.
Finally the Observatory does it again 3 considerations.
1-IN no advanced country (excluding former transition countries that experienced a temporary drop in fertility rates in the early 2,1s) the fertility rate is now above 2,1. The lowest income countries that currently have a fertility rate just above XNUMX include Indonesia, Peru, Venezuela, Panama and Morocco, while slightly below that are Tunisia, Georgia , India and Nepal;
2-on maximum increase recorded among advanced countries excluding economies in transition occurred in Sweden: +0,5 between 1999 and 2010, about 0,4 points lower than what would be required in the Italian case;
3-the necessary increase in the fertility rate to compensate for the fewer immigrants would be less if there was also an increase in the female employment rate, as suggested by Meloni. However, as noted, the AWG baseline already includes a substantial increase in the female participation rate (from 63,5% in 2025 to 77,3% in 2070 for the 20-64 age group) for which a further increase seems difficult to achieve.
