More over 65s need to stay in the workforce, Central Bank boss warns

""As demographic headwinds bite, finding ways to boost labour force participation and productivity becomes even more important as a driver of economic growth," he said. "Despite this, policy reforms to structurally raise participation rates in Europe have been slow in coming." The "headwinds" being referred to are falling birth rates, ageing populations and shrinking work forces in western Europe. Between 2024 and 2027 it is projected that the working-age population in the eurozone will fall by 1.5 million workers."

"Meanwhile the old-age dependency ratio - the number aged over 65 as a proportion of the population aged 15 to 64 population - is set to increase from 33.7 in 2022 to 51.2 in 2050. While the workforce in Ireland is also ageing, Mr Makhluof said, the trend is slower than in other European countries. This is because Ireland's fertility rate has not fallen as quickly, although it was down to 1.5 in 2023 and is converging on the EU average of 1.4."

"He believes the long-term growth rate of the Irish economy will slow by 2050 to below half what it was over the last half century. "With shrinking populations, increasing labour force participation is a necessary part of the solution," Mr Makhlouf said. "Shifting our perceptions of the working-age population can alleviate some unpleasant demographic arithmetic." If there was more participation in the labour force by the over 65s, the old-age dependency ratio figures would change dramatically."

Population ageing, low fertility and shrinking workforces are reducing labour supply across western Europe, with the eurozone's working-age population projected to fall by 1.5 million between 2024 and 2027. The old-age dependency ratio is forecast to rise from 33.7 in 2022 to 51.2 by 2050. Ireland's fertility declined to 1.5 in 2023 and is converging on the EU average, producing rapid ageing from the mid-2030s. Long-term Irish growth is projected to slow substantially by 2050. Raising labour force participation, especially among those over 65, and extending retirement age can materially alter dependency ratios and support growth.

Read at Irish Independent