Population ageing is both a challenge and an opportunity: it is a challenge to the various welfare regimes, and an opportunity to move towards a more comprehensive, sustainable and integrated life course approach to active ageing. Radical changes in the age structure will have significant labour market impacts. The countries on the two shores of the Mediterranean Sea are at different stages of the ageing process, so the problems that they face and the policies to tackle them are correspondingly different. On the northern shore – covering the countries of Southern and Eastern Europe – under the present conditions, longer life expectancy has led to a sharp increase in the old-age dependency ratio. This has raised widespread concern about a labour supply deficit that may only be met by increasing immigration flows. Lengthening retirement age, increasing productivity, expanding the female workforce and, more generally, increasing the activity rate of mature people are other possible options. Conversely, on the southern shore – including North Africa and the Middle East – the ageing process is not yet looming, and only in a few cases has it already started. These countries are characterised by a low employment rate of both young and older people as well as an extremely low female employment rate outside agriculture. Since sooner or later they, too, will have to face an ageing process, they can profit from the experience of the northern shore countries and implement timely policies to reduce the negative effects of this demographic change.

A high employment rate is the only way to secure long-term sustainability for any welfare system. In the European Union (EU), the new Europe 2020 Strategy (COM, 2010) has set the target of an overall employment rate for the population aged 20–64 equal to or above 75 per cent. It no longer defines the two specific targets set by the Lisbon Strategy (European Council, 2000): that is, at least 50 per cent of the EU population aged 55–64 in employment, and a five-year rise in the effective average age at which people stop working.

If older workers are successful in increasing their labour supply and remaining in employment longer, the demand for these workers will need to be sustained. However, in many countries on the two shores of the Mediterranean, a lack of job opportunities rather than of workers is still the problem cutting across generations.