A presentation of the main findings of a recently published IMF study entitled “Risks of demographic change in Central and Eastern Europe” on the socio-economic implications of current negative demographic trends in Serbia and Central and Eastern European countries, focusing on the labour market, flat consumption, aggregate productivity and economic growth, was presented to FEFA in Belgrade in cooperation with CEVES.
According to the results of this study, as explained by Ruifeng Zhang of the IMF and one of the authors of the research, half of the CESEE countries will see a 15% population decline by 2050, and the population of these countries is ageing faster than the population of Western Europe.
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The study found that a declining population would lead to a drastic reduction in labour supply by 2050 (from 10 to 30% in Serbia), and policies to increase the birth rate and participation rates may not be able to compensate for this loss.
An ageing population may increase pressure on public spending, in particular in the area of health spending and pensions, to as much as 4% of GDP.
Aggregate productivity may decrease if the average age of the population reaches a threshold above 50 or 55. Given all these potential changes, demographic trends, concludes this research, could have a profound negative impact on growth, economic convergence and macroeconomic balance.
Two possible solutions to this problem are moderate or ambitious reforms, depending on the specific situation in a given country, which involve greater participation of women in the workforce, raising the retirement age, but also more workers in the age group over 55.
The study’s author, Ruifeng Zhang also underlined that the older workforce has its positive aspects, since older workers are generally more experienced, but also negative aspects, such as difficulties of adaptation.
After the presentation, a round table was held, attended by Nikola Altiparmakov (RS Fiscal Council), Kori Udovicki (CEVES), Francine Pickup (UNDP) and Milojko Arsić (UB Faculty of Economics).
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