“The demographic reversal at work is not yet being given its due in the category of today’s major revolutions,” economist Maxime Sbaihi warned us at the first edition of the Chamber of Commerce’s back-to-school economic forum, dubbed “It’s the economy, stupid!” on 16 September^[1]. And he’s right: like climate change or the digital revolution, ageing societies are an irreversible global megatrend. But if it is often ignored or discredited, it is because it acts like a rising tide: we watch it progress without worrying too much, until the day we discover that we already have our feet in the water.

Today, when Europe and Japan are already up to their necks in water, we seem stunned to discover that human resources are not infinite on our planet. It has to be said that the demographic turnaround has been faster than expected. The world’s population has doubled in fifty years, from 4 billion in 1975 to 8 billion today. This growth has been so rapid that just a few years ago, some radical ecologists were calling for fewer children to limit the environmental impact of human activity on the planet. In reality, even before these calls, the movement towards lower birth rates was already irreversibly underway.

On the one hand, it can be explained by economic development in the countries of the South, which is helping to emancipate women from certain constraints (the fertility rate in sub-Saharan Africa has fallen from 6,8 children per woman in 1975 to 4.3 in 2023^[2]), and on the other hand by multi-factorial societal causes in industrialised countries (housing, professional choices, cost of living....). According to the various demographic projections, the world’s population will peak at around 10.3 billion around 2085^[3] before beginning a gradual decline. According to some scenarios, this population peak could even occur earlier.

After peak oil, our economies will therefore have to face peak humanity. This movement has two major characteristics: it varies greatly in intensity from one continent to another, and it is preceded everywhere by rapid ageing.

Japan on the brink of demographic collapse

Japan already epitomises the extreme example. With a fertility rate of just 1.3 children per woman^[4] and a median age of over 49, the country is experiencing accelerated ageing. Its population, which peaked at 128 million in 2010, fell to 123 million in 2024 and could fall below 100 million before 2060^[5]. The most imaginative - and sometimes zany - birth campaigns have followed one another. The city of Tokyo even considered reducing working hours to four days a week, in the hope that an extended weekend would be enough to boost births. Nothing has been done: the age pyramid is inexorably inverting, robots are populating care homes and Japanese society is already living in that future that the rest of the world dreads: there are 50 people over 65 for every 100 individuals aged between 15 and 64.

Europe: the shrinking old continent

Europe, for its part, is slowly haemorrhaging. In the 1970s, it dreamt itself prosperous, buoyed by the baby boom. In 2025, it finds itself in the midst of a “baby bust”, to use Maxime Sbaihi’s expression. Retirement homes are overflowing and maternity wards are emptying. Italy is in the front line: with a fertility rate of around 1.2 children per woman, its population could fall dramatically from 60 million today to 35 million in 2100^[6]. Germany, despite its efforts to attract immigration, has fallen below the 83 million mark and, according to the UN’s median scenario, could lose 13 million people by the end of the century. France, long hailed for its demographic dynamism, has fallen back into line: fertility has dropped to 1.62 children per woman in 2024, far from the 2.1 needed to renew generations.

The consequences are already visible: in 2024, the European Union will have 9 million fewer people of working age^[7] than in 2010. According to UN median projections, the European continent as a whole could lose 150 million working people by the end of the century. Without immigration, this loss would even be 241 million workers. Imagine the economic upheaval that awaits us. Ageing is already happening very fast. Since 2010, the number of people aged over 60 has already exceeded the number of young people under 20. Now, an ageing continent means less innovation, less investment and less economic dynamism.

The Luxembourg paradox

In the midst of this gloomy picture, Luxembourg would almost seem the exception. The raw figures seem reassuring: a growing population, a median age of 39.7 that remains one of the lowest in Europe, and positive net migration. The country has a population of 682,000, and projections point to more than 870,000 by 2050^[8]. This is where what I would call “the Luxembourg paradox” comes in: while our country today has a demographic dynamic that is far less unfavourable than most other European countries, it is the one for which the ageing of the population will be the most costly.

In fact, according to the projections of the 2024 Ageing report^[9], under the effect of the demographic transition and without reform, the cost of pensions should rise from 9.2% of GDP in 2022 to 17.5% in 2070, which would be the highest ratio in the whole of the European Union by that date (ahead of Spain, for which the cost is estimated at 16.7% of GDP in 2070). If we add to this expenditure linked to health and dependency, and remove the savings made in education due to the reduction in the number of pupils, the demographic transition would increase the social expenditure bill by an additional 10.7 points of GDP in Luxembourg, compared with an average increase of 1.2 points in the European Union. The cause, in particular, is a very generous pension system and very early retirements.

This bill could become even heavier if Luxembourg’s demographic dynamic slows down, a trend that is already well underway. This is only weakly linked to the natural balance, with national fertility, at around 1.25 children per woman, a long way from the generation renewal threshold (2.1 children per woman). The truth is that without immigration, the country would already be experiencing demographic stagnation. Every year, between 15,000 and 25,000 new residents join the workforce (for around 15,000 who leave, giving an annual net migration of between 7,600 and 14,200 over the last ten years^[10]). Then, of course, there are the 220,000 cross-border commuters who come to work every day from neighbouring regions. In other words, Luxembourg does not renew itself: it feeds off its ability to attract.

Historically, Luxembourg’s success has been built on a subtle balance. The boom in cross-border work was made possible by the high availability of labour in neighbouring regions weakened by the industrial crisis. The waves of Italian and Portuguese migrants found their place in a society where integration often took the form of mutual respect rather than assimilation. This model worked as long as everyone could benefit from the redistribution fuelled by vigorous growth. But today, the foundations of our edifice are shaking. Economic growth has stalled, the cost of housing has become a deterrent to foreign talent, the lack of housing is a growing threat to our social cohesion and transport infrastructure is saturated, despite the huge investments made in recent years. And tomorrow, it will be the carers from the Greater Region, who are already essential to meet the needs of an ageing population, who are likely to be in short supply in their turn, as their own countries are already facing a shortage.

Time to choose

The demographic transition confronts Luxembourg with a simple but brutal truth: there is no miracle cure. In theory, there are three possible solutions: boosting the birth rate, betting on immigration or relying on robotisation. The first seems illusory. Luxembourg already devotes 3.2% of its GDP^[11] to family benefits, compared with an OECD average of 2.3%. This support has enabled many families to reconcile work and private life, but without succeeding in reversing the underlying trend of a falling birth rate. The second is necessary, but fragile: it requires ambitious integration policies and a social acceptance that is already crumbling in Europe. The third - automation and digitalisation - is essential to sustain productivity, but will remain powerless to meet the most human needs, such as support for elderly people requiring care.

For Luxembourg, the answer will necessarily involve a subtle mix of these three levers. But priority will have to be given to what determines everything else: strengthening attractiveness and improving productivity. This means investing massively in housing and transport infrastructure, simplifying an administrative framework that still puts too many obstacles in the way of private initiative, and using new levers to stimulate private investment. Whatever the results of the policies that will be put in place along these lines, we will above all have to adapt to this new demographic reality by reforming our intergenerational solidarity mechanisms: pensions, health and dependency. They are simply not designed to balance in an economy where the number of working people is stagnating while the number of beneficiaries is exploding. There will be no second chance: either we reform in time, or we watch our solidarity dissolve like a sandcastle swept away by the demographic tide.

^[1] His speech is available on video here:

^[2] Source: World Bank

^[3] Source: 2024 Revision of World Population Prospects, UN.

^[4] Source: World Bank

^[5] Source: 2024 Revision of World Population Prospects, UN.

^[6] Source: 2024 Revision of World Population Prospects, UN.

^[7] 15-64 years old

^[8] Europop2023 projection

^[9]

^[10] Source: STATEC

^[11] Source: OECD, 2021

* is Director General of the and we publish his post, available on with his permission.