Strong decrease in labour force expected for large parts of Europe

These are the results from scenarios developed by the PBL Netherlands Environmental Assessment Agency together with the University of Leeds (UK). The research has looked at how the population and labour force (those who are employed or actively seeking employment) is likely to develop on the basis of four scenarios that differ in economic and demographic development and policies.

Large regional differences within Europe

In a situation of strong economic and demographic growth, the labour force in half of Europe is expected to rise, while it will decrease in the other half. This scenario assumes a large number of children per woman, relatively many immigrants and a large labour participation. Under unfavourable economic and demographic circumstances, nearly all countries will experience a certain decline in labour force, and for half of Europe this decline could increase to 40%.

Regional differences are great. In a situation of strong growth, most regions in western and northern Europe will have a growing labour force, while in most eastern European regions it is expected to decline. Under the low-growth scenario, 80% of regions are expected to experience a decline in labour force. In regions of eastern and southern Europe, Germany, and Austria, this decline could be 30% or more.

Decline in labour force larger in Germany than in the Netherlands

The development of the Dutch labour force is in line with that in Europe as a whole. In a situation of strong economic and demographic growth, the labour force is expected to increase by 5%; under limited growth the labour force will decrease by nearly 20%. In Germany, the decrease will be more severe, with between 20% and 35%. This country is already experiencing a declining population; fertility (average number of children per woman) has been low for many years, at around 1.4 children per woman, compared with the Dutch level of 1.8. For the United Kingdom, however, a growth is expected of between 5% and 50%. Furthermore, for Belgium, the low-growth scenario shows an expected 10% decline in labour force, whereas the high-growth scenario predicts a 25% growth.

Clear regional differences within the Netherlands

In the Netherlands, the pressure of the non-working population on the labour force is lower than in Europe, in general. For every working person there are 0.9 people who are not employed. By 2050, these figures are expected to have risen to 1.2 under the strong growth scenario en to 1.4 under limited growth.

Clear regional differences exist within the Netherlands. Under a scenario of strong growth, the labour force of Flevoland, North Holland and Utrecht is expected to increase by 20% or more. For Limburg, however, a decline by 30% is expected. Under a low-growth scenario, the labour force in all provinces except Flevoland is expected to decline. In North Holland and Utrecht this decline will be limited to around 10%, while in Limburg this will be 40%. The growing labour force in Flevoland, under all scenarios, is caused by the province’s current, relative young population that includes many young families.

Impressive regional disparities are also visible within European countries. In the United Kingdom, France, Norway, Spain and Sweden, their southern parts experience considerably higher labour force growth rates. In Italy, this is the case in the northern part of the country.

Technical elaboration

The labour force scenarios were developed by the PBL Netherlands Environmental Assessment Agency and the University of Leeds, within the framework of the ESPON project DEMIFER (Demographic and Migratory flows affecting European regions and cities).

Of the four labour force scenarios, two assume strong demographic and economic growth, involving increases in labour participation. The other two scenarios assume low demographic and economic growth, which involves a decline in labour force. Each scenario includes a set of policy measures that influence, to a lesser or greater extent, future patterns of births, deaths, and migration. Also included are possible developments in labour participation.