Long-term demographic trends will transform policy-making (and politics) across CEE

Long-term demographic trends will transform policy-making (and politics) across CEE

06. 05. 2022 – Lomond

Political leaders across Europe are facing a huge array of challenges – from the war in Ukraine and energy security to the cost of living crisis and economic recovery from the pandemic – which are both very substantial and extremely urgent.

In that context, it’s harsh to criticise them for failing to prioritise issues which are much less imminent, but for Central & Eastern Europe in particular, there are demographic changes underway which will fundamentally alter the political and economic context.

Across the EU as a whole, the population is forecast to be 1.4% lower in 2050 than it was in 2020. However, that population decline will be very unevenly distributed, with every single one of the 11 member states in CEE expected to see its population drop by more than the EU average – some very significantly more. For example, five member states are forecast to lose more than 15% of their total population over the next 30 years, all of them in CEE: Latvia (26.9%), Lithuania (23.5%), Romania (19.6%), Bulgaria (18.6%) and Croatia (16.4%):

The influx of Ukrainian refugees into some CEE countries will have an impact in the short-term – in the Czech Republic, for example, the population has grown over the last two months to the point where it closing in on the all-time record set at the start of World War II – but no one knows whether that will have a longer-term impact on the population decline.

Why is this such a problem?

The issue is that population decline will be accompanied by an accelerated ageing of these societies. It’s not the only factor, of course, because populations are ageing everywhere in Europe. Across the EU, the ‘old-age dependency ratio’ (i.e. the ratio of the number of people aged over 65 versus the population of 15 to 64 year olds) currently stands at 32%. That figure is forecast to rise to 52% by 2050.

Mediterranean countries are facing the biggest challenge. By 2050, the four member states with the highest old-age dependency ratio are forecast to be Portugal (62.8%), Greece (62.6%), Italy (61.5%) and Spain (59.5%), but the seven other countries that are expected to sit above the average line are all in CEE – up from three right now – and there is a clear link between the ageing of these societies and population decline:

This will, of course, have a profound impact of policy-making in a range of areas – particularly healthcare, long-term care and pensions – but there is one other demographic factor which might affect politics across several CEE markets: the growing dominance of the capital cities.

In many countries across Europe, the capital cities (and, sometimes, other big towns) appear to live in a different universe politically to the rest of the country, and there are six EU member states where, since 2014, the growth rate in the region around the capital has been more than 5% higher than the country as a whole. Five of them are in CEE: Slovakia (the Slovak population is up 0.8% over the last seven years, but the Bratislava region has grown 9.5% in the same period), Lithuania (the gap is 8.0%), Croatia (6.5%), Estonia (6.1%), Finland (5.9%) and the Czech Republic (5.6%):

It seems inevitable that these demographic trends will have a major long-term impact across the region, both politically and economically. It also seems inevitable that the vast majority of political leaders will continue to focus on more urgent, shorter-term challenges – and so will ignore them.