Spanish Bank warns of consequences of sharp rise in the older population

by Lorraine Williamson
older population

MADRID – Spain will face further demographic changes in the coming decades. The Banco de España warns of the negative consequences on the economic balance. This is partly due to the increasing number of the older population group. 

The ratio between pensioners and the employed labour force is changing in such a way that the percentage of residents dependent on benefits is increasing. According to director Óscar Arce of the Economics and Statistics Department of the Banco de España, Spain will have two over 65s for every three active employees in thirty years’ time. Arce states that the share of benefit recipients in Spain has never increased so quickly. 

The older population

The aging population is the result of rising life expectancy and the low birth rate in Spain. The “baby boomers” (the generation of people born just after the Second World War) will also reach retirement age soon. According to the Banco de España, this demographic development will have a direct impact on consumption, investment, employment, productivity, salaries, prices and financial and fiscal policies. 

Life-long learning 

The aging population also has a negative impact on cognitive skills that are necessary for the implementation of new technologies, according to Arce. According to him, more attention should be paid to further training of older employees in the near future. Nowadays, education and digital skills are still declining with the age of the employees. Relatively little money is spent in Spain on further training, and even more so on the training of the elderly. Arce therefore advocates the introduction of the concept of ‘lifelong learning’. This will keep the growing group of older employees active in the labour process for as long as possible. 

ASSSA - health insurance in Spain

Rising costs for care and social services 

The cost of old-age pensions will increase significantly if current government policies are not adapted to demographic changes. In 2050, this cost item will have increased by between 4.7 and 12.2 percentage points of gross domestic product (GDP). Healthcare costs will also increase by almost 2 percentage points of GDP until 2050. 

Historically low birth rate 

The low birth rate in Spain also has a direct impact on the aging population. According to the Spanish Statistical Office INE, in December last year there was a historic decline in the number of births. This equated to more than 20%. Life expectancy also fell by almost a year in 2020 compared to the pre-pandemic period. 

According to demographer Julio Pérez, the government’s incentive policy (direct financial compensation for families) has no influence on the number of births. However, this help mainly benefits the level of well-being of Spanish families. An increase in the birth rate is therefore desirable. Because now about 20% of Spanish society consists of people over 65 (a larger percentage than the percentage of children), which will increase to 30% in the coming years. 

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