Following the collapse of communism life expectancy in the CEE countries rose substantially in some places while at the same time the number of children fell sharply. Fertility rates are among the lowest in Europe and, accordingly, in the world. Without significant immigration – which is nowhere in sight – the low fertility rates will lead to a drop in the population, while the rise in life expectancy will push up the median age. The over-65s are the only age group which is set to grow in the years ahead. All told the population in the 11 countries under review will fall by around 15 % by 2050, corresponding to some 16 million people. Bulgaria, for example, will lose around one-third of its population over the next 40 years or so, according to Eurostat forecasts.
Central and eastern European demographics - that shrinking feeling!
The pressure weighing on pay-as-you-go pension systems is captured by the old-age dependency ratio (for 100 people of working age [15 – 64 years] the ratio indicates the number of people aged 65 and more, i.e. pensioners, who have to be supported). At present the old-age dependency ratio in the countries under review ranges from 16 to 26. In 2050, these ratios will be much higher still. In Bulgaria, there will be 60 pensioners for every 100 people of working age. The figure will be lowest in Croatia and the Baltics, with about 42 to 45 pensioners, while the EU-15 average will be around 53.
According to the latest Eurostat population projections, the working-age population is set to fall dramatically in some places. The potential workforce will almost halve in Bulgaria. But even Slovenia, which shows the lowest decline among the countries considered here, will lose almost a quarter and thus 10 percentage points more than the EU-15 average.
Demographic change impacts first and foremost pension coffers. The CEE countries reviewed in this study have already reacted. The pension reforms enacted over the past 15 years were also taken with an eye on demographic trends. As a result, the pay-as-you-go element of the pension system has been trimmed and the funded element boosted. Thanks to these reforms underlying pension expenditure will be below the 2004 level up to 2030. However, the increase from 2030 to 2050 will then be steeper than in the EU-15.
Ageing societies not only push up pension spending but also the cost of long-term care and health. At the same time, less is spent on educating the young. On the other hand, the high growth potential in the CEE countries over the next 25 years will probably more than offset the adverse effects due to demographic change. The coming years are likely to see above all rising incomes and higher employment. Rising prosperity could ultimately influence family planning and lead to higher birth rates again. In this event some of the demographic forecasts used here would have to be recalculated.