Aging dents competitiveness

Greece is the only country among 81 states that is expected to have reduced spending on its aging population by 2060, which shows that the social security reform during the fiscal streamlining decade will bear fruit in the long run. On its own, however, it is not enough.

This is because the evidence does not show that the reduction in spending on the aging population is associated with an increase in the population and therefore an increase in people who will be of working age.

In Greece, the population is expected to have decreased to 9 million people by 2060 from 10.43 million people in 2021, according to the Hellenic Statistical Authority’s (ELSTAT) official census, and the elderly dependency ratio will have shot up to 67.3, meaning that more than one adult (1.48 to be precise) of working age 20-64 will account for each retired person aged 65 and over in the country.

The above estimates are included in a study by S&P Global, which is titled “Global Aging 2023: The Clock Ticks” and includes estimates of the amount of spending related to the aging population by 2060 and of course the consequences on gross domestic product and public debt, which affect the country’s competitiveness.

It projects that by 2060 the costs of the aging population in Greece will decrease from 19.7% of GDP in 2022 to 19.5% of GDP by 2060. This stems from the reduction of pension expenditure from 15% of GDP to 12% of GDP, as at the same time an increase in health expenditure is projected from 4.6% to 6.1% of GDP by 2060, and for long-term care from 0.20% in 2022 to 1.3% of GDP in 2060.

Consequently, despite cutting spending on pensions, they will account for a very large percentage of the total spending on the aging population, namely 61.5%, with spending on health at around 32% and the rest on long-term care. Coupled with the bleak estimate of an aging population, this means poor quality of life for the elderly and an even weaker welfare state than today’s.