Remember the days when economic news coverage of Europe wasn’t about its impending collapse? After years of doom and gloom about the eurozone’s economy, figures released this week from Eurostat suggest that the dark stormy recession cloud may soon be lifted. This may be a relief to New Zealanders, many of whom view Europe as the wise older sibling we can learn much from.

But before the balloons and party poppers come out, let’s take a step back and consider Europe’s challenges. While the headlines about Europe’s economy are encouraging, it might only serve to hide its demographic challenges, specifically the problems faced by an ageing population.

Most countries’ populations are ageing; but they are not ageing at the same rate. With the notable exception of Japan, Europe is greying faster than the rest of the world. While the projected median age for Finland in 2050 is 45.8, for Germany it is 46.8 and for France it is 45.1. Compare this with the East where China’s median age is projected to be 43.8, and for India only 37.9. New Zealand sits in the middle, with a projected median age of 43.7.

So what does this mean? It means fewer people in the labour force to support a larger proportion of state-funded retirees.

This shows up clearly in the old age dependency ratio: the ratio of workers to retirees. Finland’s ratio is projected to be 37% by 2020, meaning 37% of the population will be dependent on 63%, or there will be approximately two workers for every retiree. For Germany and France it is projected to be around 35% (3:1). For China and India the future for workers is not so demanding, with China’s age dependency ratio projected to be 17% (6:1) and India 9.5% (10:1). Again, New Zealand sits in the middle at around 25% (4:1).

Looking at these figures it is obvious that Europe faces big challenges that can only be mitigated by drastic policy changes or large scale inward migration.

But how worried should we be?

Like Europe, New Zealand is also facing an ageing population. However, that doesn’t mean New Zealand must automatically follow Europe’s trajectory. While Europeans may have shattered the illusion of the older sibling that could do no wrong, it has alerted New Zealand to what mistakes to avoid. New Zealand’s fate will be sealed by the policies put in place today, particularly policies on welfare, immigration, healthcare and pensions. As the middle child between East and West, perhaps it is about time New Zealand policy-makers started asserting a clear identity, standing apart from the old West.