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BELGRADE (Serbia), July 15 (SeeNews) - The International Monetary Fund (IMF) expects the countries in Central, Eastern, and Southeastern Europe (CESEE) to lose 25% of their labour force by 2050 due to ageing and migration, IMF deputy managing director Tao Zhang said on Monday.
"The population of the region, excluding Turkey, will decline by 12% by 2050 due to aging and migration. The reduction in the labour force is likely to be even larger: down 25% over the next three decades," Zhang said, as quoted in a statement by the IMF.
Shrinking labour supply and lower productivity of older workers, together with greater pressure on public finances, could cost countries about 1% of gross domestic product (GDP) per year, Zhang said in a speech at the IMF/Croatian National Bank Conference in Croatia's Dubrovnik.
"In the absence of demographic pressures, per capita GDP in the region could have reached 74% of Western European levels in 2050, up from 52% in 2020. With the demographic headwinds, CESEE’s per capita GDP is projected to reach only 60% of Western European levels in the same time frame," Zhang said.
In order to mitigate the effects of the demographic transition, CESEE countries need to expand the size and effectiveness of the labour force by encouraging more women and older workers into work and raising the retirement age, Zhang said. "But, implementing these two set measures may still not be enough. Our research finds that, alone, they cannot compensate for the dramatic demographic transition to come."
CESEE countries also need to implement appropriate policies to use technology effectively by investing in human capital and enhancing welfare and governance, as well as upgrading infrastructure, and modernising regulation, Zhang noted.