Only strong institutions can stop young people from leaving Serbia

The enormous emigration of the young and educated population to the developed countries of Western Europe will be, in the next decade, perhaps the biggest economic and fiscal problem of most Central and Eastern European countries (CEE), including Serbia.

Although migration from Serbia cannot be completely curbed in the coming years, it could be reduced from the current level if the government takes effective and comprehensive measures. The problem, however, is that instead of such measures, only partial, costly and untested solutions have so far been mentioned, which are also most likely ineffective.

Research shows that, by far, the most effective measures that can reverse the growing trend of emigration of young and skilled labour from Serbia to Western Europe include improving the quality of institutions (fighting corruption, improving the rule of law) and raising the quality of public services (reforms, health, education, etc.). Other measures, including even a hypothetical increase in average earnings to €900 by the end of 2025, will not reverse the growing trend of emigration from Serbia.

Emigration has quadrupled in two decades

There are currently about 11 million emigrants from CEE countries in Western Europe and their number has almost tripled since 2000. This means that up to 10% of the total CEE population currently resides in Western Europe. At the beginning of the 2000s, about 0.2% of CEE residents emigrated to Western Europe each year, but by 2017, this percentage had already increased to about 1%.

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The increase in emigration is economically very damaging for the CEE countries and the negative effect on their economic growth is estimated at 0.5 percentage points per year. First, these are mostly permanent migrants, with only about a half of the migrants returning to their countries of origin. Second, migrants from CEE, living in Western Europe, represent about 75% of the working-age population (ages 20-64), while the average participation of the working-age population in CEE is about 60%.

Thirdly, people who emigrate are almost twice as well educated as people who stay in their respective home countries. Fourth, the possibility to replace the workforce by recruiting unemployed people from the domestic labour market is barely possible, as the unemployment rate in CEE dropped to only 4.2% on average in 2019, which is lower than the average unemployment rate in Western countries (5.3%).

The main reason for leaving is the low standard?

The prevailing explanation for emigration is the difference in living standard, but in reality, the increase in the living standard in the CEE countries has not contributed to a decrease in emigration. While at the beginning of 2000, the GDP per capita in the CEE countries was on average only 38% of Western European GDP, the same GDP reached over 60% in 2018.

Thus, by reducing the difference in living standards, i.e. increasing wages in CEE compared to Western European countries, the CEE population should choose to migrate to Western Europe to a lesser extent. But, in fact, the opposite is true. Emigration is now many times higher than in 2000.

Therefore, the countries that have high levels of corruption, inadequate rule of law and do not provide high-quality public services (healthcare, education, public administration, etc.) to their citizens usually have high emigration rates.

This is, for all intents and purposes, the main reason why annual emigration from Latvia and Lithuania is half that from Croatia, although the average salary in Croatia (which is below €900) is slightly higher than in these two Baltic States (where it is between € 800 and € 850).

(Danas, 02.03.2020)

https://www.danas.rs/ekonomija/samo-jake-institucije-sprecavaju-odlazak-mladih/

This post is also available in: Italiano

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