Dealing with the ageing of the Old Continent to prevent a European Collapse

Article by Laura Governi | Illustration by Niccolò Cedeno

For decades now, Europe has been facing an alarmingly low birth rate and the concurrent aging of its population. Scholars have argued that these trends could provoke the collapse of the economy. Are we equipped to work on the necessary changes? Is society ready to face this challenge?

Starting from 2000, in Europe, the welcome increase in life expectancy has been matched by an equally impressive decline of the fertility rate. Currently, only two countries in the continent, Iceland and Albania, display birth rates above 2.0 children per woman. These nations are followed by France (1.9), Ireland, Sweden and the United Kingdom (1.8). At the other side of the chart, Italy, Spain, and Cyprus (1.3) followed by Portugal and Greece (1.4) display the lowest rates. Incidentally, those same nations are among the 10 countries with the lowest fertility rates in the entire world (The World Bank).

Researchers have attributed the decline in fertility rates affecting Western Europe to several possible causes. For example, the lack of labor market flexibility, the abandoning of traditional gender roles, a poor childcare offer, structural incentives to have children later on in life, and the absence of a proper socioeconomic approach to support fertility (L. Belsie, nber.org).

Undoubtedly, this trend will cause serious social and economic problems. Indeed, most European countries now have a birth rate that is below the replacement level, leading to a mismatch in the number of working citizens that can replace the increasing number of people entering retirement. Immigration helps in this matter but the influx of workers alone will not be enough to fix the situation. These circumstances will inevitably challenge the affected nations’ retirement plans and healthcare systems, as well as the overall productivity.

Several studies have argued that more economically developed countries are more affected by this trend of lower fertility rates. This is mainly due to a higher number of women in education and the workforce, the possibility to access to contraception and abortion, as well as the choice of many families to offer the best possible life to their children. As a consequence, family sizes are shrinking and couples often have only one child (J. Gallagher, BBC News).

European problem, national solutions

Many countries are trying to face the problem of aging population and low fertility rates by trying to support couples who want to have children. Even though it is clear that some approaches work better than others, the key solution to increase birth rates has not been found yet. National policies can contribute to slowing down the birth rate decline process, but it is important to keep in mind that what works in one country might not work in another one.

Some nations tried to encourage couples who want to build a family through financial incentives, cash policies, or by promising tax breaks. Russia and Italy are among the countries that implemented this approach. In Russia, this strategy initially boosted fertility rates, but it has since been followed by a second fall in birth rates. In the same way, Italy introduced a payment of €800 per birth, but the policy did not bring the desired results. As already mentioned, Italy remains one of the countries with the lowest birth rates. The so-called “cash policies” do not seem to have a great impact on a country’s fertility rate; indeed, although it may increase it in the short term, it almost never leads to a higher rate in the long term (BBC News).

Two European countries that succeeded in addressing declining birth rates are France and Sweden.

The French model

Since the 1970s, France has successfully adjusted its public policies, resulting in a noteworthy fertility rate ranging between 1.8 and 2.0 children per woman. For instance, since 2011, unmarried couples have the same rights as married couples, including beneficial tax breaks. Moreover, working parents are entitled to a three-year parental leave with a fixed allowance; after this period, they can go back to work in the same place with the same position or a similar one. Besides this, every family with at least two children receives an allowance, and public preschool is free for every child aged between 3 and 6. Finally, in 2013, as part of a package aimed at reducing social inequalities, France voted a law to reserve 10% of the places in childcare for families who live below the poverty line.

The success of France is the result of the variety of resources offered to families, which is a mix of money, time and services (un.org). At the same time, a very diversified range of families can benefit from these resources. Finally, the French result can also be attributed to the widespread societal support for family policies, which explains the continuous evolution and adaptation of the country’s welfare model.

The Swedish model

If France’s perspective centered on families, Sweden’s, on the other hand, focused more on individual choice. Indeed, Swedish policies mainly aimed at the achievement of gender equality, women empowerment and their involvement in the labor market. Data shows that this choice paid off, while also indirectly improving the fertility rate of the country.

As for parental leave, in Sweden, parents are given 480 days, with a 180 extra days if you have twins, paid at a rate of 80% of the salary. The government strongly encourages the new parents to equally share these days between them. Currently, fathers take about 30% of the paid parental leave, but the Swedish administration is aiming to improve the balance.  Besides this, both parents can be at home together during the first month of life of the newborn. Moreover, the majority of Swedish couples make use of preschools, that have a fixed monthly rate which normally corresponds to the child allowance. Education from primary school onward is instead entirely free (sweden.se).

Europe is undoubtedly getting older. If a change of direction will not occur in the coming decades, by 2050, only 23% of European citizens will be under 25, while one third of the population will be over 60. According to the European Commission, this challenge must be taken up immediately if we intend to save the future of our continent. As the French and Swedish examples demonstrate, addressing this problem is possible, and each country should strive to find effective approaches, suitable for the respective society, to improve their fertility rate.