these worrying economic consequences of the aging of the population

2023-09-01 18:49:11

By applying the age pyramid expected for 2040 to the year 2019, social protection expenditure would have been 100 billion euros higher, estimates a report by the Institut Montaigne.

Falling birth rate and aging of the population. On the horizon, a worrying demographic deficit. And the French economy pales. Because these conjunctures would represent real threats for the coffers of the State, according to a note of the very liberal Institut Montaigne. It is clear that this “dual dynamics will have a direct impact on the national wealth produced, the social accounts, employment and salaries of our country», Estimates its author, political scientist Bruno Tertrais. This is why public policies and societal choices will be “necessarily” influenced by this aging of the population and its economic consequences, such as the reduction in productivity and the fall in interest rates.

Aging is almost certain since the weak growth of the population ofonly0.3% in 2022 would reflect France’s entry into a phase of demographic slowdown, the study judges. A relatively good rate compared to that of other European countries such as Germany where the population is decreasing. But “the total fertility rate (TFR) was only 1.8 in 2022, whereas it was still at the “renewal threshold” a decade ago (2 in 2013)“, points the finger at the report. Hence the mechanical aging of the French population. For the Institut Montaigne, “pioneer of the demographic transitionFrance has thus becomeaging pioneer in Europe».

Read alsoImmigration: France is at a “demographic turning point”

Nearly one in three people will be over 60 in 2040

While immigration could slow this trend, it will apparently not be enough to halt the aging of the population. INSEE’s projections expect a proportion of over 60s to reach 32% in 2040. As for those over 65, it would drop from 21% today to 29% in 2070. the number of assets by 2070, «of 30.1 million in 2021 to 30.5 million in 2040 (end of the ramp-up of the 2014 reform) […] to settle at 29.2 million in 2070”. The Department of Research, Studies and Statistics (Dares) of the Ministry of Labor even shows that, by 2030, nearly 100,000 positions will remain vacant each year, due to the shortage of young people entering the labor market. the job market.

This aging demography would result in several harmful phenomena for the national economy. “Generally speaking, the older a country gets, the smaller the working-age population, the slower potential growth”, notes the Montaigne Institute. Added to this is the potential deflationary effect caused by excess savings and a drop in demand for consumer goods. Public health expenditure would also increase, increasing by 2.5 points of GDP between 2010 and 2060. There are also consequences for the pension system. “The mechanical impact of aging will thus lead to an increase in pension expenditure of +2.2 points of GDP by 2030 and +3.5 points of GDP by 2040”, believes Bruno Tertrais. For example, by applying the expected age pyramid for 2040 to the year 2019, social protection expenditure would have been 100 billion euros higher, rising from 703 to 803 billion euros.

So many holes that the current immigration would not be enough to fill according to the report of the Institute. “New arrivals also end up getting older, and the improvement in the dependency ratio (ratio of population of working age to population over 65 years) is therefore temporary. The mechanistic reasoning that wants to make up for a lack of labor force through immigration is thus short-sighted.», Comments the author. Before noting that “to stabilize this ratio and therefore have an impact on the financing of pensions, massive immigration would be essential“, advancing the astronomical figure of two million immigrants per year between 2025 and 2050, or 50 million in total.

Although the aging of the population entails many risks for the economy, some nevertheless underline the opportunities of this profound change. A study by the Xerfi research institute thus estimated that the aging economy could weigh some 109 billion euros in 2026. A juicy market, for those who know how to take advantage of it.