New Europe is growing old

A new World Bank study warns about severe economic consequences of aging in countries in Eastern Europe and the former Soviet Union. According to the co-author Arup Banerji:

No aging country anywhere is as poor as Georgia. With a per capital gross national income of just over $1000, it is set to lose almost a fifth of its population over the next two decades. […] It is this interaction of the three transitions – demographic, economic, and political – that makes the region, and its challenges, unique.

With a poignant title "From Red to Grey," the report paints a dark picture. Between 2000 and 2025 Ukraine’s population will shrink by a quarter; in the same period the number of people aged over 65 will double in Bosnia and, except in Tajikistan, the number of school-age population will decline.

There is hope, but the prescription is unequivocal: more flexible labor laws, lower rates of labor taxation, and an increase of labor participation rates.