According to the latest OECD forecast, Austria’s working-age population is expected to shrink by around 24 percent by 2060, and Germany’s by 23 percent. Across all 38 OECD countries, the average projected decline is just 8 percent. The Organisation for Economic Co-operation and Development (OECD) warns that aging populations in the coming decades will economically strain industrialized nations.
“Aging populations will likely lead to severe labor shortages and put pressure on public finances,” said OECD Secretary-General Mathias Cormann on Wednesday. Austria is among the countries most affected by the shrinking labor force.
Currently Strong Labor Markets in OECD Countries
The OECD described current labor market conditions in member states as robust. Last year, the average employment rate across OECD countries rose to 72.1 percent—”the highest level since at least 2005,” Cormann noted, citing the annual Employment Outlook report.
In most OECD countries, labor force participation can be stabilized by creating more job opportunities for older people and increasing women’s participation, the report stated. However, productivity must also be improved to counter slower per capita GDP growth.
Austria Must Tap Into Untapped Labor Potential
Specifically, Germany and Austria could boost growth by “mobilizing unused labor potential,” the OECD said. For instance, healthy older workers could stay employed longer, regular migration could be increased, and gender disparities in employment reduced. Along with productivity gains, these measures could help mitigate the negative growth effects of demographic change in both countries.
