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, 24/09/2014

Low birth rate and youth migration are destroying Serbian economy and pension system

Projections of Business Support Network show that the reduced number of births and economic migrations will, in less then two decades, cause irreperable damage to Serbian economy and society as a whole.

On average, 38,000 more die than they are born in Serbia every year. In the period of four last censuses (1981-2011) the total population was reduced from 9,313,686 to 7,186,682. The total population reduced for 2.2 million despite the fact that during the 90s close to a million refugees migrated to Serbia from war-affected Croatia and Bosnia and Hercegovina. Data indicates that the total population in our countries reduced for a total of 2,127,004 during the past 30 years and that in less than two decades will fall down to a level of approximately 5 million.

Reduced population growth rates and inability to reproduce own workforce has been a major problem for industrial countries for decades. The demographics are worrisome for all those preparing to go into retirement, as there is a concern that their countries will be unable to secure their retirement pensions due to a triple problem: besides the effects of the so-called “white plague” (declining birth rates), the world is faced with global economic crisis and increased level of government debts. Simultaneously, due to the aging of the population in Europe in Serbia, there are more and more pensioners.

In Serbia the condition is especially alarming due to the fact that only 991,000 of employees in the business sector is filling the central budget and compulsory social security funds (Pension and Disability Insurance Fund, Health Fund and Unemployment Fund), and is financing pensions for 1.75 million pensioners and 780,000 public sector employees, employed in administration or mostly unprofitable government- and public-owned companies. In addition to grossly unfavorable current ratio of value-adders and budgetary obligations, the number of pensioners is in constant increase, as those who were employed during the 70s and 80s, the time when the employment in Serbia was at its highest, are coming into the retirement age.

By 2020, Serbia’s total population will consist of approximately 34% pensioners. If the economic development continues growing with the same average growth rates as it has in the 2003-2013 period (past ten years), this will cause a ratio of two pensioners per employed worker.

Youth migration is a disaster for the economy and pension system in the future

Developed European states are trying to secure quality labour force by accepting migrant workers. Several years ago, Germany and the EU have introduced the “Blue Card” enabling migration of highly-educated workers from non-EU countries, fulfilling the labour market demands in certain supply-deficient professions. Serbia has a different problem, as the highly-qualified young people are emigrating due to bad economic situation.

The number of Serbian citizens living abroad and choosing to change their nationalities is becoming a more and more alarming loss for Serbia. In Germany and Austria alone, during the past ten years, about 150,000 of young Serbian citizens have taken the citizenships of country where they live in and denounced Serbian citizenship. Experience shows us that third generation of migrants becomes almost completely assimilated, often changing their surnames to have better opportunities for education and later entry into the labour market. This also poses a great threat to the pension system of Serbia, since there will be less beneficiaries of foreign pensions, which do not burden the national pension fund. Currently, almost 40,000 pensions come from Germany alone. However, in the nearby future that foreign currency income will start declining.

From the year 2000 to the present, no Serbian government has ever presented a clear long-term strategy and agenda for solving the problem of declining birth rates and economic migration. Without far-reaching reform of tax, pension, health and education systems, Serbia will slowly fade away. We cannot afford to waste any more time in waiting and avoiding resolving the numerous issues we face.


Business Support Network Team