For example, we have seen participation rates of older workers grow strongly during the crisis, due in part to pension reforms adopted in many euro area countries. [15] Still, despite this untapped reserve for accelerating employment growth, we cannot avoid the fact that, over time, the inherent speed limits resulting from the euro area’s unfavourable demographics will start to bite.
The euro area’s working age population is projected to start gradually decreasing in the next decade. In that context, employment growth is likely to start decelerating in the not-too-distant future, even with determined structural reforms, as a higher share of people in work will no longer be able to offset the fall in working age population.