- The prospects on growth of the European labour force differ considerable depending on the policy scenario. The map shows that only one of the scenarios expects a growing labour force
- The overall picture is a territorially diversified situation is Europe in terms of labour force provision. This poses challenges for the European social model and Europe’s economy and indicates that disparities across European regions may increase
- According to the most optimistic scenario (i.e. EME), the majority of the regions in Scandinavia, the UK, France, north and central Italy, and south and east Spain will experience high growth in their labour force. On the contrary, most of the Eastern regions will lose working population apart from the capital city regions of Warsaw, Prague, Budapest and Bucharest where this lost would be less relevant
Observations for policy
The overall picture indicates that the Europe faces a territorially diversified but nevertheless serious decline in labour force. This raises a challenge for the European social model and economy. Disparities across European regions may increase. Policy considerations to change and accommodate this trend tend to take a three-pronged approach by increasing labour productivity, labour participation rates and/or by boosting the rate of external immigration to the EU.
The European policy debate does regularly address how demographic changes present serious challenges for (territorial) development. Demographic developments including migration and ageing will affect the future labour force, i.e. the number of people in the working age. The 2012 European Ageing Report of the European Commission shows that priority should be given to the demographic challenges, with a new sense of urgency in light of the financial crisis. Also in the Territorial Agenda 2020 and the Europe 2020 Strategy, demographic issues are addressed.
In 2005 the European labour force amounts nearly 240 million people. The prospects and regional patterns of growth of the labour force in Europe differ considerable between the four policy scenarios displayed in the map.
Only in the Expanded Market Europe (EME) scenario a growing labour force is expected (20% larger by 2050). According to this scenario, working population increases for a wide range of regions. It seems that most regions in Scandinavia, the UK, France, north and central Italy and south and east Spain will be in the top growth classes. On the other side, most of the Eastern regions will lose population, however in the capital city regions of Warsaw, Prague, Budapest and Bucharest, this loss is less relevant.
According to the EME scenario, the territorial pattern is quite different. A lot of regions located in the northern, western and southern part of Europe will still have a substantially growing labour force. However, within countries differences in growth figures are clearly visible. For example, in the UK, France, Norway, Spain and Sweden, the southern part of the country discloses the highest growth figures, while in Italy this is the case for the northern part. In general, these are regions where large cities are located, attracting labour migrants both from within the country as abroad due to their economic potential.
In two other policy scenarios (Challenge Market Europe and Limited Social Europe), the labour force in Europe is expected to shrink considerably. In the LSE scenario most regions located in the eastern part of Europe, a lot of regions in the southern part as well as a lot of regions located in Germany and Austria may suffer a loss of over 30 per cent. More or less the same pattern is depicted by the CME scenario, although the number of regions with a severe decline is lower.
This situation poses relevant challenges for Europe as the pressure on the labour force in relation to the non-working population (dependency ratio) will increase.
Concepts and methods
The four alternative scenarios DEMIFER has developed in order to explore the possible effects of policies on population growth and ageing are:
- Growing Social Europe shaped by growth enabled by technical and social innovation and increasing collectivism, with a moderate increase in inter-state migration and moderate levels of extra-European immigration and an increasing labour force participation rate
- Expanding Market Europe based on growth enabled by technical and social innovation and growing individualism, with a high increase in inter-state migration and also high levels of extra-European migration and increasing labour market participation
- Limited Social Europe focusing on growth limited by environmental constraints and growing collectivism, with a moderate decrease of inter-state migration, low extra-European integration and decreasing labour force participation
- Challenged Market Europe based on growth limited by environmental constraints and increasing individualism, with a low increase of inter-state migration, moderate extra-European immigration and decreasing labour force participation