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Nov 26, 2007 14:14 EEST
November 26 (SeeNews) - Slovenia, the most recent member of the eurozone, should take urgent measures for its ageing population and emerging labour shortage to prevent a future slowdown in its economic growth, a World Bank senior official said.
“There is one area in which Slovenia stands out. It is certainly ageing very fast as other countries are, but it is going to have one of the oldest average age, of about 47.4 years, in the year 2025,” said Arup Banerji, sector manager for human development economics in the Europe and Central Asia Region of the World Bank.
Labour shortage in Slovenia, an ex-Yugoslav country of two million people, has two dimensions, Banerji said. “One is that the overall population is going to shrink in Slovenia, but the other is that the population is going to be increasingly old,” Banerji told SeeNews on the sidelines of the 10th CEI Summit Economic Forum jointly organised by Central European Initiative, a regional organisation for political, economic and cultural cooperation and Bulgaria Economic Forum, an organisation aiming to promote the business environment of southeast Europe to potential foreign investors.
In the next 15 to 20 years there will be more retirees in the country than younger workers, he added.
The solutions to the problem are quite simple, according to Banerji. “As the labour shortages rise, as they are right now, firms will have to change the method of production, to make sure that every single worker is more productive,” he said, pointing to company restructuring and a change in the technology employed as possible steps.
“The other side and this is probably the most important side, is actually investing in the existing population of Slovenia so that the skills that are needed by the companies are actually there,” Banerji said, adding that this involves adult training.
Slovenia, like all the other countries in the region, has to pay attention to how workers can acquire new skills to respond to the changing needs of the market.
“Certainly, the skills that will be demanded ten years from now in Slovenia will be very different from the skills [required] now,” Banerji said.
In recent years Slovenia has been attracting many foreign workers, mainly from the other ex-Yugoslav countries. It has been offering a large number of jobs due to its solid economic growth. The country, a member of the European Union since 2004, reported a real 5.7% rise in its gross domestic product (GDP) last year. Its economy grew by a real 6.5% year-on-year in the first half of 2007. Slovenia's jobless rate in September fell to 7.2% from 8.8% a year earlier.
“As a short-term solution [the import of labour force] is fine and many countries have done it,” Banerji said, but added that “the problem is where do you import the labour force from”.
“One of the biggest challenges, I think, that every country in the region is facing is that the neighbouring countries also have labour shortages [...] One of the challenges, therefore, is to what extent Slovenia can politically afford to import labour [force] from further off, from Turkey, North Africa, the Soviet countries,” Banerji said. Slovenians will also have to make sure that these immigrants have language skills and cultural acclimatisation in order to be able to fully contribute. “It is a political question that the Slovenian authorities have to solve.”
Banerji said that in the short run, the solution to the emerging labour shortage could be importing the workers necessary, but in the medium run, the firms have to adjust their business model and even maybe change the sector in which they operate.
The labour shortage will not stop Slovenia’s economic growth but can slow it down and, therefore, solutions to the problem have to be sought now, the World Bank official said.
“I don’t think that it [labour shortage] is going to be a brake on Slovenian growth in terms of that it is going to stop, but certainly it could slow down growth.” To collect the fruits of this investment five years from now, decisions have to be made right away. If the decisions are postponed then this sort of slowdown is going to be longer, he added.
Banerji said that the effects of the ageing population are going to be felt more strongly in the Western Balkan countries as these countries have to fulfill also economic reforms.
An essential difference between the two sides of the Balkans, especially the Western Balkans and the EU member states, is that the underlying reforms in the enterprise sector have not happened in the Western Balkans in the way they have happened in the EU countries, Banerji said. The Black Sea neighbours Bulgaria and Romania joined the EU on January 1.
“Therefore, the challenges that are going to be [faced] are to simultaneously take two sets of reforms. One will be to address the ageing challenge and the other addressing the economic reform challenge. That, I think, is going to be the biggest problem.”
Each country in southeastern Europe should take an individual approach to the problems stemming from its ageing population, Banerji said. “There is no one set of solutions that actually go across these countries.”
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