EUROPE - The chief economist of the European Central Bank has warned that much more needs to be done to ensure that the European pensions systems are sustainable in the long term.
Speaking before the Committee on Economic and Monetary Affairs of the European Parliament, Otmar Issing (pictured) said: “The ageing of the population will place an increasing burden on the shoulders of those of working age unless corrective measures are undertaken in a timely manner.”
The member of the executive board of the ECB added that though several member states had initiated pension reforms in the right direction, in particular by reducing incentives for early retirement, much remains to be done.
Highlighting the eurozone’s major economic problems, Issing said: “First, the rate of structural unemployment is unacceptably high, and employment growth and labour participation are too low.
“Second, productivity growth has been modest, especially since the mid-1990s, resulting in moderate potential GDP growth rates for the euro area. Third, the ageing population has created a demographic situation that will place pension systems under severe strain if corrective action is not taken.”
Structural reforms, he stressed, were the key to future economic success in the euro area but there was “too little momentum” in its implementation currently.