Strengthening resilience in the face of demographic change
Europe is undergoing one of the most profound demographic transformations in its history. “Pension systems, health systems, labour market institutions, and social protection frameworks were all designed for a demographic reality that no longer exists,” explains FutuRes(opens in new window) project coordinator Arnstein Aassve from Bocconi University(opens in new window) in Italy. “The ratio of working-age adults to retirees is deteriorating sharply, long-term care needs are expanding, and younger generations face a challenging economic environment.” On top of all this, age-based discrimination systematically pushes older workers out of employment before they are ready to leave. This wastes human capital at precisely the moment ageing societies can least afford to do so.
From family formation to pension sustainability
The EU-funded FutuRes project sought to understand both the structural and cultural dimensions of this challenge, and to think seriously about what a welfare state fit for the 21st century would actually look like. A key concept that ran through the project was ‘adaptive resilience’. This involved asking not only whether welfare states are adequately funded, but whether they are designed to build capability, absorb shocks and learn. “FutuRes was deliberately oriented towards institutional design principles rather than single policy prescriptions,” says Aassve. This ‘adaptive resilience’ framework was applied across domains shaped by demographic change, such as fertility and family formation, labour markets and pension sustainability to name but a few. Demographic analysis was combined with advanced macroeconomic modelling and scenario building.
Health, education and labour markets
This work generated concrete and actionable directions across several dimensions. On pension sustainability for example, modelling showed that no single lever – whether higher migration, delayed retirement or fertility recovery – is sufficient on its own to restore balance. Gender equality in labour market participation, however, emerged as among the most powerful policy levers available: closing employment gaps between men and women would improve fiscal sustainability significantly while also advancing other social goals. “On labour markets, the project identified ageism, not just ageing, as a major source of labour market inefficiency,” notes Aassve. “Age-inclusive workplaces, lifelong learning systems, and enforcement of anti-discrimination frameworks are essential components of a resilient labour market response.” On welfare state design, FutuRes argued for a move towards an enabling rather than a purely providing state, one in which health, education and labour market institutions are designed to build capacity at every stage of the life course.
Redesigning welfare state institutions
Overall, the project argues for more integration across policy domains in order to achieve resilience. “The three pillars of health, education and labour market must be designed as a coherent, mutually reinforcing system,” adds Aassve. Effective responses also require institutional mechanisms that can sustain policy commitment across electoral cycles, and fairness between and within generations must be at the centre of the policy agenda. “Demographic ageing is not simply a fiscal challenge,” remarks Aassve. “It is producing structural inequalities that, if left unaddressed, will undermine social cohesion and democratic legitimacy.” A key legacy of the project is the establishment of the Population Europe Policy Lab(opens in new window). Moving forward, this platform will help to translate demographic and social science evidence into policy-relevant insights. The project’s findings have also fed into the European Commission’s intergenerational fairness strategy(opens in new window). “Another next step will be the building of what might be called a Resilience Toolbox for Europe,” says Aassve. “This will be a practical, evidence-based framework that national governments and European institutions can use to assess, design and reform welfare state institutions against the criterion of adaptive resilience.”