The report by the Organisation for Economic Co-operation and Development titled “Preparing for Demographic Changes in the Azores” identifies demography as the greatest structural risk facing the archipelago, which could experience a drastic population decline in the coming decades.

“Projections indicate that the region may lose more than one-sixth of its population by 2060, with the working-age population decreasing by one-third and the elderly population increasing by three-quarters,” the document states, as reviewed by Diário Insular.

The study notes that, with 240,000 residents, the Azores have already recorded a population decline of 2.7% between 2010 and 2023, while the outmigration rate among young people (ages 15–39) reached 8.1%—three times higher than that of the general population.

“Thus, the Azores are among the regions identified by the European Commission as being at risk of falling into a ‘talent development trap,’ where demographic decline is compounded by the loss of skilled individuals,” the OECD warns.

The study was presented Monday in Ponta Delgada by OECD economist Jaebeum Cho, who outlined an even more severe scenario in terms of population trends. According to Agência Lusa, projections indicate a 50% decrease in the working-age population and a 60% increase in elderly residents by 2080.

According to the economist, one of the recommendations is the development of a “regional-level strategy” to address these challenges, combining both regional and municipal policies.

“As an outermost region of the European Union, the Azores face specific challenges arising from insularity, geographic fragmentation, and distance from mainland Europe,” the report recalls.

However, there are also opportunities. “The region possesses unique and valuable assets, including its geostrategic location, biosphere reserves and UNESCO-recognized world heritage, distinctive agri-food products, and significant potential in the blue economy and renewable energy. The recent tourism boom, following the partial liberalization of airspace in 2015, demonstrates the region’s natural attractiveness,” the report states.

It further notes that “strategically adapting to these challenges represents an opportunity to rethink what makes the Azores attractive.”

“More intentional land-use planning can create vibrant neighborhoods that attract residents; improved governance structures can optimize limited fiscal resources; and modernized, digitalized public services can enhance accessibility for current and future residents. These adaptations can improve quality of life and generate economic opportunities, strengthening the region’s attractiveness for younger generations,” it suggests.

Youth Outmigration

The study highlights that the outmigration of young people from the archipelago—both to other parts of the country and abroad—has been a “persistent challenge.” Most are of family-forming age, affecting not only the demographic structure but also the labor market, which is increasingly misaligned with a more highly educated younger generation.

“The proportion of young workers relative to those nearing retirement fell from 12 young workers per 10 senior workers in 2011 to 8 per 10 in 2022. Young workers tend to leave the region regardless of whether they are employed, unemployed, or outside the labor force. This shift likely reflects not only demographic pressures but also a mismatch between the skills of an increasingly qualified young population and the opportunities available in the regional economy,” the OECD report states.

“This also reflects constraints affecting quality of life, including transportation limitations within and between the islands and between the Azores and the mainland, as well as intermittent digital connectivity in some islands. The region continues to face difficulties retaining young talent, especially in rural areas, where opportunities for qualified individuals remain extremely limited,” it adds.

The authors of the study note that “although there is no comprehensive strategy to address demographic change, the Azores have implemented numerous policies to attract and retain residents,” including tax incentives, social support for vulnerable groups, and targeted investment in key economic sectors.

“In particular, different levels of government (regional and local) use a wide range of preferential tax rates, financial incentives for families with newborns, and programs to attract young talent. However, these policies come at a significant budgetary cost, estimated at around 15% of total regional government revenue in 2023. Maintaining these initiatives will require ensuring that they achieve the intended results, while avoiding competition between measures at municipal, regional, and national levels,” the report warns.

Land Use and Territorial Planning

The report argues that the region needs a new territorial model that concentrates development while safeguarding the landscape.

“The availability of land for development is limited in the Azores due to the archipelago’s volcanic topography and extensive natural reserves. However, current land-use patterns leave room for greater optimization. The outskirts of major urban centers—Ponta Delgada, Angra do Heroísmo, and Horta—continue to expand, even as populations decline in these cities, largely due to rising housing prices in central areas and a mismatch between demographic trends and development patterns. This occurs despite only 65% of land being occupied even in the most central areas of Ponta Delgada, the region’s largest city,” the report emphasizes.

One recommended measure is to complete the revision of the PROTA (Regional Land Use Plan of the Azores), alongside municipal master plans.

Aligning housing supply with demand is seen as essential to help retain young people and manage tourism pressures. The report suggests evaluating construction licensing requests based on demographic projections included in territorial plans and strengthening the supply of affordable and social housing through the creation of a dedicated regional fund, financed by value-capture instruments.

Among other areas, the document recommends improving connectivity and transportation, optimizing service networks, and strengthening workforce attraction and qualification, in order to prepare the region for the challenges ahead in the coming decades.

In Diário Insular-José Lourenço, diector

Translated into English as a community outreach program by the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Literatures Department (MCLL), in collaboration with Bruma Publication and ADMA (Azores-Diaspora Media Alliance) at California State University, Fresno. PBBI thanks Luso Financial for sponsoring NOVIDADES.