Population aging and the affluent society: the case of the Netherlands

Developed countries are currently in an unprecedented transition to a new era with ageing populations. Ageing will result in a smaller proportion of the population being employed in the decades after 2010/2020. Changing demography, fewer workers and more retirees give rise to much concern about the fiscal sustainability of public pension schemes, healthcare systems and other social services. As a result, pension reform is under discussion in all developed countries. Under the plausible assumption that 1.7 per cent yearly growth in per worker production can be realized in the coming two decades and 1 per cent in the years after 2025, it can be demonstrated that the per capita consumption of the working population increases from 2007 to 2025 by 27.4 per cent and that of the 65+-population by 41.6 per cent. Only with a zero growth rate of labour productivity average will welfare decrease by about 9 to 1 per cent, whereas a minor 0.5 per cent productivity growth with unchanged labour participation rate (0,735) suffices to maintain welfare at its present level.