Worst in the EU again: Bulgaria's workforce set to shrink by a third by 2050

The working-age population in Bulgaria (between 20 and 64 years) will shrink by a third by 2050. This is another indicator where Bulgaria performs worst in the European Union, according to the latest report of the commercial credit insurer Allianz Trade.

The main reasons for the gloomy forecast are the country's demographic crisis and migration, as Bulgaria is one of the main "donors" of labour to other countries in the European Union.

The problem is big and was even touched upon in the World Bank's special report on Bulgaria. The ongoing demographic crisis will leave an increasingly smaller working population to support the pension system.

According to the Allianz report, around 50% of migrants to the labour market in the European Union since the beginning of the 21st century have come from Bulgaria, Romania and Poland. In the other two countries, however, the shrinkage of the working-age population is more modest than in Bulgaria - 26% and 22% for Poland and Romania respectively. The labour force is also expected to shrink significantly in Lithuania and Latvia.

The demographic problems apply to the whole continent. Allianz Trade expects the skills shortage to worsen in almost all countries in the European Union, with the average population aged between 20 and 64 expected to decline by 20% by 2050.

What are the solutions?

Analysts predictably point to improved working conditions and rising wages, which would reduce the outward flow of migrants, as among the main options for improving the prospects of Bulgaria and other countries at risk.

For the bloc's four largest economies - Germany, France, Italy and Spain - countermeasure scenarios include using different combinations of instruments, such as changes to labour market policies, productivity gains and attracting migrants.

The analysis shows that none of the four countries can find a sustainable solution if it relies only on labour inflows from outside. In such a scenario, they would need between 100 000 and 500 000 migrants per year. Specifically, around 482 000 would be needed in Germany, 414 000 in Italy, 338 000 in Spain and 115 000 in France.

The situation appears to be most complex in Germany, where even with an increase in the retirement age to 68 and a concerted effort to broaden the participation of women and pensioners in the labour market, estimates suggest that 200 000 migrants would be needed per year. Spain and Italy have a larger pool of population not currently in the labour market. If successfully attracted and activated, an additional 89 000 and 131 000 migrants would be needed per year respectively. The prospects are most favourable in France, where such measures would be sufficient to address the problem even without the need for additional labour from outside.

In this unfavourable context, possible measures and solutions identified in the report include increasing real working hours in some European countries and improving the integration and skills of migrants, including achieving a higher rate of female participation among them. A good example of this is Sweden, where the prospects for maintaining the workforce, and hence the stability of the economy, currently look most optimistic.

This article was translated by Kompreno with the support of DeepL.