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The demographic issue in Greece: Challenges and policy proposals
 
Category: Structural Changes
SubCategory: -
Date: 08/06/2022
 
The scope of the study is to highlight the demographic issue and its overall socio-economic effects in Greece. In particular, the study examines trends, prospects, challenges and impacts on the economy resulting from the ageing of the population. In addition, the study puts forward policy proposals aimed at addressing, mitigating, reversing and adapting to the demographic trends. The population of Greece is shrinking — between 2011 and 2021 the country’s population decreased by about 441k people (-4.0%). The decline and ageing of the country’s population is projected to continue in the coming decades. In the base scenario of demographic projections, Greece’s population is projected to decline to 8.1 million by 2100 — a population decline of 2.5 million people, or 24% compared to 2021. In terms of age structure, the old-age dependency ratio is projected to exceed 0.60 points after 2050, from 0.35 points in 2020 and 0.29 points in 2010. The demographic issue has a significant impact on the country’s economic development. The decline in the economically active population has a negative impact on labour supply and growth potential, the increasing dependency ratio puts pressure on fiscal sustainability, while an ageing population is slowing down labour productivity. Through macroeconomic simulations, we estimate that in a baseline scenario, where the demographic trends in Greece converge only slightly with the rest of Europe, but the population’s ageing and decline persist, by 2100, real GDP is expected to fall by €58 billion (or 31%) compared to 2019, employment to decline by 2.1 million people (or 48%), fiscal revenues to contract by €14 billion (or 19%) and real GDP per capita to decline by around €1.740 (or 10%). The demographic trends pose very serious challenges for several social policy areas such as health, pensions, education and the labour market. Targeted policies are needed to correct chronic weaknesses in these areas and to shield them from upcoming demographic developments. At the same time, family and migration policies, which affect the country’s population structure and structural demographic indicators such as the fertility rate, have a very important role in mitigating the demographic trends. Society should be prepared at multiple levels (such as mentality and infrastructure) to cope with the emerging needs and challenges of the demographic ageing.
 

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