(Reuters is running a series of stories this week on Europe’s
demographic time bomb, which countries are most at risk and
which are poised to flourish over the next generation.)

* European ageing faster than any other world region

* Studies forecast labour supply constraints, which

* In turn spell slower economic growth

* EU needs to attract big numbers of skilled migrants

* That means overcoming fervent anti-immigration rhetoric

By Paul Taylor

PARIS, Dec 1 (Reuters) – Europe is ageing faster than any
other region of the world. It badly needs immigrants. But many
Europeans don’t want them.

The “old continent” may be able to offset the impact of a
greying workforce until around 2020 by bringing more women and
elderly people into work, encouraging mobility within Europe and
making better use of existing migrants, EU and OECD experts say.

But in the medium to long term, the European Union will need
to attract significant numbers of skilled workers from beyond
its borders – and overcome growing public opposition highlighted
by the rise of populist anti-immigration parties.

“If you close the door (to immigration), you will pay an
economic price,” says Jean-Christophe Dumont, an expert on
migration at the Organisation for Economic Cooperation and
Development, a Paris-based intergovernmental think-tank.

“For now, we can make better use of migrants who are already
here, matching their skills better to labour market needs. In
the longer term, it will not only be about matching skills, it
will also be about numbers,” he said.

Going by current trends, Europe’s industrial powerhouse
Germany, along with Spain and Poland, will see its population
shrink from now on, slowing potential economic growth.

Germany’s 82 million residents will dwindle to 74.7 million
by 2050 and their average age will rise to nearly 50, assuming
unchanged levels of migration, according to EU statistics agency
Eurostat. Some projections are even more dire, putting the
German population as low as 65 million by 2060.

That will mean “serious labour supply constraints” in some
of the strongest EU economies – Austria, the Netherlands and
Finland as well as Germany – according to a European Commission
study by Joerg Peschner and Constantinos Fotakis that took a
baseline economic recovery of just 1 percent.

By contrast, Britain, France, Ireland and to a lesser extent
Italy can expect healthy expansion. Britain will have overtaken
the Germans by 2050 as the EU’s most populous nation with 77.2
million – if it stays in the bloc – while France will have
caught up with Germany on 74.3 million.

Regardless of their place on the scale, many European
countries still recovering from six years of economic crisis are
being tugged in the opposite direction from demographic
realities by a tide of anti-immigration political rhetoric.

Marine Le Pen in France, Nigel Farage in Britain and Geert
Wilders in the Netherlands are attracting working-class voters
by raging against freedom of movement of workers within the EU,
from the poorer east and south to the wealthier north.

They accuse the EU of opening the flood gates to “job
stealing” migrants, driving down wages and living standards and
raising crime rates.

For a series of graphics on Europe’s ageing problem, click
here:

here

DEMOGRAPHICS DRIVE DEMAND

The backlash against immigration prompted Pope Francis to
appeal in the European Parliament for an “elderly and haggard”
continent to show a more welcoming face to those who cross the
Mediterranean Sea in search of a better life.

Another pressing argument for rational debate is the growing
impact of the demographic reversal on the funding of pensions
and healthcare, especially in countries such as Germany and
Spain which will have the oldest populations.

As the post-World War Two baby boom generation retires, the
ratio of over-65-year-olds to the working age population is set
to rise dramatically, while the number of under-15s declines by
nearly 15 percent by 2060, according to projections by Eurostat.

At present, the age dependence rate is 27.5 on average in
the 28-nation EU, but Germany and Italy are well above that
level. The rate is projected to jump to 49.4 in 2050, when there
will be only two people of working age for every retiree.

Most EU countries have raised their retirement age to 65 or
beyond and are making citizens contribute longer for a full
pension – but further increases lie ahead.

Meanwhile there’s the impact on Europe’s economy of having a
big chunk of the population focused on “needs, rather than
wants,” to consider, as Paul Hodges, co-author of the e-book
“Boom, Gloom and The New Normal”, explains.

“Demographics drive demand,” he said. “Older people have
less need for houses, cars and consumer goods and have to make
do on lower incomes as they move on to pension age, slowing the
wheels of the economy.”

Before the financial crisis erupted in 2008, economic growth
in the euro zone averaged 2 percent a year, roughly made up of a
1 percent gain in employment and 1 percent in productivity.

That growth potential, regarded as necessary to maintain the
current level of European welfare provision, collapsed during
the crisis and has yet to return in most countries.

Without employment gains from migration, Europe will need an
improbably big boost in productivity to sustain its living
standards – or see them decline.

(Editing by Mike Peacock and Sophie Walker)