Responding to demographic shifts in the labour market in Europe and Central Asia

GENEVA (ILO News) –The International Labour Organization (ILO) has released a new working paper, “Demographic change in Europe and Central Asia: Addressing the issue of a shrinking and ageing labour force” which highlights how more inclusive labour markets could help the region respond to the challenges posed by rapid demographic transformation.

Across Europe and Central Asia, populations are ageing. While the pace and intensity of this shift vary between countries and subregions, all are expected to experience the effects of an ageing society in the near future. By 2050, the ratio of persons aged 65 and over to those of working age (15–64) is projected to rise from 28 to 43 per 100. The number of workers in the core 25–54 age group is expected to decline by 35 million, even as older age groups grow - resulting in a net labour force reduction of around 10 million. These changes are likely to place increasing strain on economies, social systems and labour markets.

“These changes have profound implications for labour markets and the future of employment,” said Beate Andrees, Regional Director for Europe and Central Asia. “The working paper highlights the fundamental need for social dialogue between governments, workers and employers, in order to ensure responsible and inclusive policy solutions.”

Yet despite the tightening labour market, much of the region’s labour potential remains untapped. A range of persistent barriers - linked to inequalities in access, opportunity, and recognition - continue to limit participation for many. Challenges such as care responsibilities, digital and physical accessibility gaps, and difficulties in gaining recognition for skills and qualifications affect individuals across different contexts, from urban centres to rural communities, and from long-time residents to recently arrived migrants.

While these obstacles take different forms, they have a shared effect: limiting the region’s ability to fully engage its working-age population. Economic participation remains uneven, as reflected in employment gaps and income disparities. In 2024, for instance, women earned on average just 61.9 per cent of what men earned, and still 13 per cent of young people were not in employment, education or training (NEET). Persons with disabilities continue to face particularly high barriers to entering and remaining in the labour market, often due to limited access to training and adapted work environments.

The demographic landscape itself is far from uniform. Central and Western Asia, with relatively younger populations, still have an opportunity to benefit from a demographic dividend - if employment opportunities are available. Eastern and Southern Europe, on the other hand, are already experiencing sharper population declines and outward migration. Migration across and within the region plays a dual role: while outward flows can compound labour shortages in some areas, inward migration offers an opportunity to help close workforce gaps - provided migrant and refugee workers are able to access employment that matches their skills and experience.

The working paper does not prescribe specific actions, but rather encourages a process of reflection and engagement. Through social dialogue processes, governments, employers, and workers in the region can identify pathways that are appropriate to each national context while addressing the shared pressures of demographic change.

Ultimately, the paper presents inclusion not only as a social goal but as a practical response to a shrinking labour force. Enabling broader participation in decent work can help Europe and Central Asia manage the demographic transition while supporting cohesion, resilience, and a more equitable future of work.