If productivity gains do not increase in the euro zone, it will be necessary to choose between maintaining the purchasing power of pensioners and the purchasing power of the working population

The recent trend in productivity gains in the euro zone is stagnation; the trend in changes in the working-age population is, over the period 2023-2040, a decline of 0.5% per year. We can therefore see that productivity gains are not offsetting the decline in the working-age population. We can count on an increase in the employment rate, but the very low level of unemployment in the euro zone means that we can expect a slower rise than in recent years, at around percentage 0.7 points per year. When we take into account growth in productivity, the working-age population and the employment rate, we arrive at potential growth of 0.3% per year in the future. This growth will have to be shared between the working population (the population aged 15 to 64, adjusted for the rise in the employment rate), whose number will increase by 0.3% per year in the absence of productivity gains, and pensioners, whose number will increase by 1.6% per year. We see that, due to low potential growth, it will be necessary to choose between maintaining the per capita purchasing power of the working-age population and the per capita purchasing power of pensioners.