Budgetary Challenges Posed by Ageing Populations - the Case of Italy

In the coming decades, the size and age-structure of Europe's population will undergo dramatic changes due to low fertility rates, to increasing life expectancy and the retirement of the baby-boom generation. Ageing populations present major economic, budgetary and social challenges and have a significant impact on growth. In terms of the economic and monetary union, the long-term sustainability of public finances is vital and Member States have to address pressures to increase public spending that inevitably result from population ageing.

The 2001 report by the by the Economic Policy Committee at the request of the Council of Economics and Finance Ministers, or ECOFIN Council is situated within the wider EU agenda to address the ensuing challenges and policy implications . While recognizing that full comparability across Member States is not possible, aiming to achieve broad consistency, the EPC report presents projections for public spending on pensions, health and long-term care and examines how these projections relate to assess the overall sustainability of public finances.

The case of Italy

In this context, Italy presents some special features. Italy expects the largest fall of 17% in the size of the total population. As the size of the EU population is expected to fall from 376 million in 2000 to 364 million in 2050, Spain and Germany with 11% and 8% respectively follow. Moreover one of the highest old–age dependency ratios of nearly 60% in 2050 is projected for Italy. Italy share of older workers in working age population is 17% in 2000 and projected to 23% in 2050.