The Ageing Population

Abstract

The process of population ageing that has been occurring in Sweden can be expected to continue during the coming decades, the population pyramid will become increasingly rectangular, and possibly even demonstrate a shrinking base. This will lead to increasing challenges in terms of financing pensions, elderly care and healthcare. These problems will continue for at least the next 30 years with no demographic solution available. Immigration is not likely to offset population ageing to any larger degree, and even dramatic increases in fertility rates would take 25–30 years to have any positive effect. Since increasing tax rates seems unlikely, the most viable solution lies in an expansion of the workforce and the resulting increase of the tax base. If we rely solely on increasing the retirement age to provide the increased hours worked, we would need to raise the minimum retirement age by roughly 5 years until 2050. While this might be possible, it is more likely that the solution lies not in this or any other single measure but in a combination thereof. However, expanding hours worked not only requires incentives but also job opportunities. Thus the policy should aim not only at expanding labour supply side but also labour demand.