Consequences of Demographic Decline

In the next decade, the country could lose a million people as part of the active workforce

Corina Cristea, 09.11.2023, 14:00

A study presented recently by the Romanian-American Chamber of Commerce analyzed the economic impact of the labor shortage in Romania, and the results show that, in the next decade, the country could lose a million people as part of the active workforce. By as soon as 2026, in the absence of immediate measures, the labor force deficit could reach over 220,000 people, and this given that, already, documents show that five million people are able to work, but do not appear as employees. With a population of around 20 million people, the number of employees is officially five million, so a simple calculation shows that only a quarter of Romanians work.

University professor Mircea Coşea, from the Academy of Economic Studies in Bucharest, explained this situation to Radio Romania:

There are two elements that must be taken into account. The first is the so-called Italian syndrome, namely, in Romania there is a certain tradition for young people to live together with their parents, in the same house, even if they get married, longer than they should. This lasts until the age of 35 to 40. That’s what happened in Italy, about 20 to 30 years ago. That is why it is called the Italian syndrome. And that means that, having something to live on, from their parents’ pensions or from what their parents help them with, they don’t work. This is a matter of education, after all. The second problem is, shall we say, political. Namely, for political reasons, in Romania, the category of those who receive money not to work, but to vote, is larger than in other countries. These are the so-called social wages, all kinds of assistance, all kinds of bonuses that are given to the population that can sit on the sidelines, not work, but which are subject to very careful treatment by the mayors or other local forces to go to the polls, to vote for those who, in the end, keep them alive by giving them money. It’s a serious matter, because this means that Romania is losing active labor force on the one hand, and, on the other hand, that the labor market is excessively politicized. So it’s a complicated thing.

The problem itself is much more serious, namely, says Mircea Coșea, Romania has a problem that will be extremely serious for the Romanian nation in the future – a large demographic deficit. Moreover, at the level of the entire Union, the demographic statistics are alarming, and show that the population of Europe is decreasing dramatically. The figures indicate that, if at the beginning of the 19th century the population of Europe represented 15% of the population of the planet, in 2050 it will represent only 5%. This comes as a consequence of population growth in other regions of the world and population decline in Europe. The specter of an aging population is beginning to haunt Europe mainly because the number of children is falling more and more, and it is estimated that in 2050 the average age in the Union will be 49 years. This endangers the workforce and health and pension systems. Demographic decline is perhaps the most important challenge for Romania’s future, experts say. The figures differ from year to year, but for several decades they clearly indicate that Romania has a shrinking population. Not enough children are born in the country to make up for the losses that Romania has due to the departure of millions of people from the country, professor Mircea Coșea points out:

4 to 5 million Romanians live abroad and have children who are born abroad, more than are born in Romania, which means that we will enter a complicated labor force deficit. The Romanian state has not taken and is not taking important measures on this topic, namely it should have a very active demographic policy, which encourages new and young families, births, raising children. Now we all know that here we are far behind, we don’t help young people, we don’t have enough nurseries, kindergartens, schools, we don’t have any incentives for the young population to have children and stay in Romania. This problem will cost us a lot, it will cost us a lot in the future, it will cost us the Romanian nation. And now a phenomenon is happening on the labor market that will also have negative consequences, namely we are importing labor, because we can no longer manage with our own labor force, which for the reasons I said before does not work, and then we have to import.

Forecasts show that, in 2050, Romania’s population could go as low as 15-16 million inhabitants. Demographic decline does not bode well for the economy and society, it would mean a smaller economy and an aging population. At the same time, economists say that the demographic decline will lead to changes in the structure of consumption and production. What could be done? We need social laws to stimulate the birth rate, facilities for young families, to ensure certain conditions for young mothers who have a career, because it is very difficult for them to deal with raising children and the household after work, we need many more nurseries and kindergartens.

Professor Mircea Coșea considers that: If you don’t provide an incentive, if you don’t do it in such a way that births are well financed, the raising of children is well organized, with well-trained teachers, with caregivers, with nurseries, with after-schools, there is no way the population will grow.