“For the first time in the history of the country, there are more grandparents than grandchildren. And this is not a trend, but a statistical reality, existing, measurable, irreversible in the short term,” writes HotNews.ro in this regard.
The publication quotes a comment by Beata Javorczyk, chief economist of the European Bank for Reconstruction and Development (EBRD): “Romania and Bulgaria were getting old before they got rich. The average age of the population in the 1950s in both countries was less than 20 years. It is now over 40. These two countries were aging as fast as developed economies, but they were aging at one-third of GDP per capita. In other words, demography is lowering living standards. I estimate that over the next 25 years, this will reduce the growth rate of GDP per capita by 0.4 percentage points each year.”
As a result, today Romania’s demographic dependency ratio – the number of children and elderly people supported by every 100 working adults – has risen to 56 from 47 a decade ago. Each working person bears a heavier demographic burden than his or her parent at the same age.
Painful decisions
The EBRD representative sees three possible solutions to the problem.
The first option is migration. In theory it is possible to import labor, but in practice it requires almost a percentage of the existing population every year. Beata Jaworczyk recognizes that this is politically impractical.
The second option is artificial intelligence. A real productivity boost, admits the EBRD’s chief economist. AI can help a worker produce more, but it cannot make a non-existent worker produce nothing at all. Therefore, it is also unlikely that this is the way to fundamentally change the situation.
There remains a third option, the most politically difficult: raising the retirement age. In Romania, the legal retirement age is already below the average for developed countries, and the actual retirement age is even lower than the legal retirement age due to occupational benefits, which have increased significantly in recent decades.
The EBRD representative avoided specific proposals in her interview with HotNews. Beata Jaworczyk believes that it would be counterproductive. But she suggests starting a communication strategy now: “Talk today about the changes that will happen in a decade. People will be more willing to accept them”. Reforming the pension system is easier when the consequences are far away. Every year they are getting closer, and the number of voters who vote against reforms is growing.”
