CEE Special | Challenge no.1 Demography
We are pleased to present the first CEE Special Report from the series titled "CEE - 10 challenges for the new decade". We begin with demography topic, comment on the outlook and define areas in which we see reserves that could mitigate shrinking working age population problem. Throughout the year we will keep releasing reports on other important topics that can improve the growth prospects and prosperity of the region. These include climate issues, deepening of integration and rule of law as well as health care and pension systems’ challenges. We will also address the education and labor market issues as well as region’s competitiveness and prospects for capital markets development.
To mitigate its shrinking working age population, CEE has a hidden reserves in low female labor participation, low effective retirement age, as well as more active migration and family policies.
There is no quick way to escape aging as the working age population is projected to shrink further. Two decades ago, share of people aged 65 or more was one third lower and it is going to continuously increase. As a consequence, the old-age dependency ratio is projected to double within thirty years, meaning there will be twice as many elderly people per working person as there are now.
Closing the female employment gap between CEE8 and Euro Area could bring almost 1 million female workers. Increasing the effective retirement age would additionally limit the costs for public finance. Migration policies should focus not only on attracting a high-skilled labor force from less developed countries, but also on limiting emigration from region. We believe that the improvement of the institutional environment in the country and higher income convergence could support a reversal of migration flows.