GR US

The Greying of Greece Threatens Economic Recovery

The National Herald

(File Photo by Eurokinissi/Panagopoulou Georgia)

ATHENS – Besides straining the country's social security system and ability to pay pensioners, Greece's aging population is jeopardizing long-term economic prospects and a recovery from a more than eight-year-long financial crisis, data and warnings from analysts has shown.

When the crisis began in 2010, Greece's active population, those from 20-64, was 7.045 million but has already shrunk to 6.8 people, expected to get worse with fewer having children, many saying they can't afford them now.

People aged 20-40 years account for 40 percent of the population now compared to 46 percent in 2010, said Kathimerini in a report on the phenomenon. The United Nations estimated that Greece's population will fall to 6.5 million, only 2.3 million in the 20-40 age group.

The number of people aged 65 and over is expected to soar to 2.535 million by 2025 from 2.1 million in 2010 and 2.237 million in 2015 with a critical indicator, the number of children up to the age of 4 years old, fell from 585,000 in 2015 to 503,000 in 2015 and is expected to plummet to 404,000 by 2025, the UN data showed.

The fertility rate – children per couple – stands at 1.26 compared to 1.49 in the European Union. According to the EU’s statistics agency Eurostat, Greece and Italy have the third lowest fertility rates in the EU, behind Germany and Portugal.

Zsolt Darvas, a senior economist at the Bruegel think tank, told the newspaper that said Greece’s demographic problem poses a threat to the country’s fragile economic recovery, foreseeing a shrinking of the Gross Domestic Product (GDP,) investments and growth, mirroring what former International Monetary Fund official Bob Traa told the paper.

The country’s protracted economic crisis has resulted in a faster demographic slowdown than previously expected, Traa wrote, warning that it could take a full generation for the Greek population to stabilize from the impact of the “economic shock.”

PENSION SHOCK

With a growing population of elderly, exodus of the young looking for work in other countries and companies ducking paying social security taxes, Greece’s sinking pension system is facing big trouble in sustaining itself and is expected to have a deficit reaching 37.3 billion euros ($43.17 billion) in the next few years.

Those were among the findings in August of a study by Panteion University Professor Savas Robolis and PhD student Vassilis Betsis that showed the combination of whammies hitting the system, with fewer people paying into it and more taking out of it, said Kathimerini.

The aging population will incur a cost of about 1.3 billion euros ($1.5 billion), starting in 2017 up to 2057, or the equivalent reduction in benefits to the insured and pensioners.

The researchers found that even increasing the retirement age, part of conditions demanded by international creditors in return for three bailouts of 326 billion euros ($377.33 billion) hasn’t been enough to offset other factors and while the standard will be 65 years old by 2022, the European Commission said it should be 71 by the year 2060.

The increase in the retirement age will increase the workforce, especially of women, and the aging of the labor market but lead to a reduction in the number of young workers due to reduced fertility and because they, too, will have to work more years, cutting into productivity it was said. the fact that people will be working longer.

The researchers point out while Greece aims for annual growth of 2 percent, the negative impact of aging will mean that growth of 4 percent will actually be necessary.