Central Europe gropes for ways to deal with bad demographics

Polish Prime Minister Beata Szydlo at Children’s Day picnic in Warsaw
June 5, 2016: Polish Prime Minister Beata Szydlo, here seen at a Children’s Day picnic in Warsaw, made cash grants the centerpiece of her government’s family policy (source: dpa)
  • Demographic downturn in next three decades will strain finances of CEE countries
  • Poland has launched most audacious program of pro-family cash grants
  • Fiscal transfers may actually worsen problem by shrinking labor pool

Central European societies are entering a demographic recession that promises to be among the most severe and longest lasting in the world. Governments in the region are trying to spur fertility by policy adjustments, but they risk making things worse if they concentrate mainly on cash transfers to parents.

It is difficult to find a society whose population is shrinking faster than those of East Central Europe. With very low fertility rates and almost nonexistent immigration, the region is bracing for a serious demographic shock. If we set a baseline of 100 for the current population of East Central Europe’s nine countries (Estonia, Latvia, Lithuania, Poland, Slovakia, Czech Republic, Hungary, Romania and Bulgaria), in three decades it will shrink to 84. The working-age population will drop to just 75.

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