In the midst of continuing gloom throughout the Eurozone, there is more bad news from one of the most recent additions to the EU, Bulgaria. According to the Sofia News Agency, the demographic and economic slump that is gripping the country may affect the retirement prospects of many working age Bulgarians. We reported last year on the publication of the most recent Bulgarian census showed that the country’s population had declined by 7% over the past decade. A more detailed breakdown of the demographic figures by the United Nations shows that the average annual rate of population change is -0.6%, that the crude death rate (deaths per 1,000 population) is 15 and is higher than the crude birth rate of 10 per 1,000 population and finally that the total fertility rate is well below replacement level at 1.5 children per woman. Compounding this bleak picture is that one-third of all pregnancies in Bulgaria are aborted.
What this means is that when the current crop of working age Bulgarians retire, there won’t be a similar number of younger workers coming through to replace them. According to the UN, the share of the Bulgarian population under the age of 15 is 14%, while a quarter of the population is over the age of 60. The result of this can be seen in that:
“[t]he retirement contributions of the currently actively working Bulgarians are funnelled into paying pensions and health services, rather than being stashed away to be used when today’s middle-aged Bulgarians grow old. According to Neykov [Ivan Neykov, former Social Minister (1996-2001)] the fallout of the demographic slump in the 90s will be felt most acutely about 2035.
‘When today’s 30-40-year-olds become grandparents they will account for more than half the population and the pension system will be able to function only if the retirement age rises dramatically,’ he added.”
Already the situation is worrying as the number of working Bulgarians is currently one-third below the number of pensioners. But this worrying situation will only get worse –the current 30-40 year old cohort outnumbers the number of teenagers by 2-1. There seems to be little light at the end of the tunnel either according to the Sofia News Agency:
“The state has forced people to retire a few years later, but this will hardly make up for the shortage of young workers. The social security system, in its turn, is already failing to take good care of the increasing numbers of pensioners, dooming the majority of them to miserable living and the mercy of their children.
The dynamics in Bulgaria’s demography has been the same for quite some time already, but the figures are hardly debated as the average employee is just scrambling to earn a living amid the debris of a free falling economy.”
Thus, we can add Bulgaria to the list of countries that are teetering on the edge of a demographic precipice. Not because their population is booming, but because it is deflating and greying.