Is the labor force being canceled?
Eurogroup Chairman Kyriakos Pierrakakis delivered this message at a conference organized by the European Investment Bank, saying that the European model of economic growth is coming to an end.
“Europe’s decades-long economic model, which has relied heavily on the expansion of the labor force, is coming to an end,” the chairman of the eurozone’s committee of finance ministers said, pointing to the need to mobilize savings to finance investment and innovation.
Europe’s economy is facing serious demographic challenges and its labor force, which currently stands at around 200 million, could shrink by almost two million a year by 2040, reports Investing.com.
“The economic growth model that has kept Europe prosperous for decades is reaching its limits. This is important because it is a game changer. Growth can no longer be based on expanding labor supply. It must come from increasing labor productivity. And productivity gains come from innovation, investment and efficient allocation of capital,” Kyriakos Pierrakakis said.
The 27-nation bloc aims to integrate its various capital markets into a single market where capital will flow more freely so that about 10-11 trillion euros ($12.8 trillion) of Europeans’ savings in bank deposits can be used more productively to finance the growth of innovative companies.
Integration has been slow because of entrenched national interests and political differences, but geopolitical changes over the past 12 months have given this work new urgency.
