Technology

Can AI save the European welfare model? How artificial intelligence could help solve the demographic crisis

Europe is aging fast — and the workforce is shrinking. But what if the solution to this looming crisis isn’t just more people, but smarter ways of working?

4 min read · 14 Sep 2025

Michalina Szpyrka ·

A shrinking workforce meets a rising tech tide

Two major issues dominate conversations about Europe’s future: the continent’s rapidly aging population and the impact of automation and artificial intelligence (AI) on jobs. Strangely, these challenges are usually discussed separately — as if they weren’t deeply connected.

But step back for a broader view, and you’ll see: AI and automation might be exactly what Europe needs to handle its demographic time bomb.

Let’s look at the facts. In the last 75 years, Europe’s fertility rate has dropped from 2.7 to just 1.4 children per woman. Meanwhile, life expectancy has risen from 62 to 79 years. That means fewer people are working to support more retirees.

Right now, there’s roughly one working-age adult for every non-working person. By 2050, that ratio could worsen by around 35%. And by 2100? The number of non-workers per worker could double. This threatens the very foundations of the European welfare state.

Boosting birth rates? Not so simple

Many governments have tried to encourage higher birth rates — with little lasting success. Poland’s flagship child benefit program “500+” is just one example. Even countries that invested heavily in family policies — like generous parental leave and child bonuses — haven’t managed to bring fertility back to replacement levels. And where results were seen, they were often short-lived and expensive, with serious side effects for the economy.

Another common idea is immigration. But migrants eventually adopt the fertility patterns of their host countries. Even in places where birth rates were traditionally high, like North Africa, the trend is slowing. Plus, with growing political tensions, immigration policy is becoming harder to manage long-term.

Raising the retirement age? A hard sell

Many EU countries have begun raising the retirement age or tying it to life expectancy. On paper, that makes sense: longer lives, longer careers. But in reality, it’s a political minefield. Aging societies are often resistant to the idea of working longer, and protests are common.

With social support for such reforms fading, Europe needs another way forward. One that doesn’t rely on more babies, more migrants, or more years in the office.

Productivity is the missing piece

Here’s the game-changer: increasing productivity. If one worker can produce the output of two, Europe can maintain its living standards with fewer people in the workforce.

That’s where AI and automation come in.

Back in the ’90s, Europe largely missed out on the digital boom that transformed other parts of the world. But AI gives it a second chance. Estimates suggest AI could boost productivity by up to 3.4% annually — five times the EU’s current average. Even capturing a third of that growth could be enough to sustain welfare systems despite shrinking labor forces.

Some countries are already catching on. Take South Korea: despite having the lowest fertility rate in the world, it’s investing heavily in robotics with subsidies and tax breaks. As a result, robots now make up 10% of the country’s total labor force. Europe can’t afford to wait any longer.

It’s not just about growth — it’s about fairness

But boosting productivity isn’t the whole story. Two other things are essential.

First, reskilling workers. If AI replaces a 30-year-old truck driver, that person needs to be retrained quickly — perhaps for jobs in sectors where labor shortages are worsening due to mass retirements.

Second, fair distribution of the wealth created by technology. If self-driving car companies save money by cutting labor costs, that added value needs to support society — through fairer wages, better taxes, and stronger social programs. That way, we can fund services for a growing population of retirees.

AI isn’t the threat — it’s the lifeline

The idea that “AI will steal our jobs” may sound scary, but it misses the point — especially in Europe. The real problem isn’t robots replacing people. It’s that there won’t be enough people to do the jobs in the first place.

In that light, AI becomes not a threat, but a powerful tool for stability. It can help keep public services and the economy running even as the population shrinks.

Instead of fearing AI, Europe should embrace it — not despite its job-reducing potential, but because of it. This shift in perspective could redefine how we think about growth, work, and prosperity in the 21st century.

Bottom line? The future of Europe’s welfare model might not rest in maternity wards or immigration offices — but in data centers and innovation labs.

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Michalina Szpyrka

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