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Measures to solve demographic problems
Dr. Lubomir Ivanov, IMI-BAS
Adviser to the Deputy Prime Minister for
Economic and Demographic Policies
The demographic situation in Bulgaria is characterized by a continuing
population decline and ageing. Natural growth – the difference between
birth rate and mortality – is negative, minus 6 per mille for 2016. By this
indicator, the country ranks almost twice as bad as some EU member states
and much worse than others. As a matter of fact, EU's overall natural growth
for the past year was not negative, but zero, and even positive for half of the
member states – including former Eastern bloc countries such as the Czech
Republic, Slovenia and Slovakia.
Furthermore, there is no apparent correlation between natural growth and
standard of living in particular countries. For instance, countries with high
living standards such as Germany and Italy are plagued by negative natural
growth and severe population ageing. It might be conjectured that this
heterogeneous picture of demographic states in individual country is due to
some extent to differences in the demographic policies followed. In other
words, a successful demographic policy might be possible both in poorer and
richer countries – but of course not employing the same measures.
In recent years Bulgaria's demographics has also been characterized by a
model of regional development with 5-6 larger cities (especially one of them,
the capital Sofia) increasingly attracting the country's dwindling workforce.
These regional imbalances further diminish the local development capacities,
and forcibly detach peripheral regions from the main body of Bulgarian
society.
For this reason, the present government has placed demography among the
priorities of its governance program for the period 2017 – 2021. The stated
intention is that, quote, “the state will take action in order to overturn the
trend of Bulgaria’s population decline.” The principal means of achieving this
goal are identified as “increasing the birth rates, reducing youth emigration,
and a balanced immigration policy tailored to the needs of the Bulgarian
economy.”
In what context do these new government intentions come about? While
negative demographic developments have been observed for a long time in
Bulgaria, it was since 1989 that they have acquired dimensions that require
some sort of management measures to counteract. Such measures have been
2
taken by a number of previous governments. However, none of these aimed
at overturning the trend i.e. solving the problem. The demographic disease
was taken for granted as inevitable and progressively getting worse, with
measures limited to mitigating the impact as far as feasible. Treated were the
symptoms, not the illness itself.
For sure, there is still more to be done in the area of mitigation. There are
certain reserves, such as developing the potential of the elderly, of the
uneducated, and of Roma people – if we could undertake a national
commitment to eliminate the existing ghettos.
However, the room for such measures is limited and diminishing with the
deepening of the demographic crisis. To understand this, it suffices to trace
the decline in foreign investment over the last decade, a period of time during
which those measures have been applied. Foreign direct investment in
Bulgaria peaked at €8 billion in 2007, after which it remained at the level of
€1.5-2 billion until last year, when it dropped below €700 million. Why this
linkage between demographics with investments? Because the investors
openly and unequivocally identify the shortage in labour – any labour, both
qualified and unskilled – as the number one reason for their refraining from
investing in Bulgaria. This year the foreign direct investment is once again
getting reduced by half compared to last year, and even Bulgarian companies
are increasingly redirecting their investments abroad.
The current government is the first to contemplate measures for solving
demographic problems, i.e. ones that would help, first, to establish a positive
growth trend for the Bulgarian population and, second, to moderate
population ageing.
As already mentioned above, the government has identified three priority
areas for such active measures – raising birth rates with a view to achieving
at least zero natural growth, reducing youth emigration, and developing and
implementing a proactive immigration policy. It is important to emphasize
that in each of these three directions there is a successful foreign experience
of interest.
Within these areas, the measure of providing improved access to assisted
reproduction services is already in force, and the following six measures are
due to be submitted for approval by the National Council on Demographic
Policy at the Council of Ministers.
Measure One: Granting a special one-off financial aid at the birth of a third
child. The assistance is granted to responsible parents who have no record of
failing their obligations towards their first two children under the relevant
laws and other legal regulations. In comparison, Hungary is starting the
provision of €32,000 grants for a third child. The Hungarian pronatalist
3
scheme envisages the number of children born annually to increase by
30,000 in 2030, with 93,000 born in 2016. A similar one-time incentive
(about four times smaller amount) has enabled Russia to achieve a zero
natural growth and a birth rate increased in 8 years by 31% or 400,000
newborn annually. If Bulgaria were to achieve the Russian fertility growth,
then 20,000 children more than the present 65,000 ones would be born in
Bulgaria annually.
Measure Two: Granting a special monthly financial allowance to a third child
– based on the child's life support expenses – until reaching a certain age. As
in the case of Measure One, it would be given to responsible parents. About
5000 children per year are born in the country currently.
Measure Three: Providing low-interest/interest-free housing loans to young
families. By way of comparison, Hungary offers to families with three or
more children (in addition to the aforementioned one-time grant) 25-year
housing loans of €32,000 at a 3% interest rate.
Measure Four: Providing low-interest/interest-free housing loans to young
specialists with higher education.
Measure Five: Providing scholarship grants to young people for study in
Bulgaria or abroad in exchange for the obligation to work in the country for a
certain period of time. The scholarships would be granted for study at
Bulgarian higher education institutions for specialties where the largest
emigration of the graduates is observed, as well as for study at the highest
ranking foreign universities in specialties strategic for Bulgaria.
Measure Six: Introducing a modern immigration policy with conditions and
criteria for the selection of potential immigrants tailored to the needs of the
country. Immigration in Bulgaria has the potential to become a significant
factor in achieving the goal of increasing the number and improving the age
structure of the Bulgarian population. As a rule, immigrants are younger
people, economically active, who contribute more to the social and health
insurance system and use less.
We are talking about an immigration process that is planned and managed,
with no spontaneous illegal immigration. This implies building regulatory
and institutional capacity to deal with more significant immigration flows
(which capacity we currently do not have), with immigration procedures
geared to two candidate selection criteria – first, with what qualities the
would-be migrant could be useful to the host country (specialty, education,
children, age, languages, etc.), and secondly, how well he would be able to
integrate with the Bulgarian nation.
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Bulgarians from our historical diaspora have the advantage with respect to
the last criterion, and constitute a natural demographic reserve of ours. In
this regard, a special approach could be envisaged for the Bulgarians in
Moldova, Ukraine and other countries of the former Soviet Union – namely,
their large scale immigration in Bulgaria. (Following the example of the
Greeks and Jews there, who moved en masse to Greece and Israel
respectively.)
A natural question arises: Why have no such game-changing measures been
taken so far? The responsibility, in my opinion, lies with the expert
community in the first place, second with the politicians, and third with the
civil society – in this order. Unfortunately, the expert community is in debt
to society, as they have not yet produced any substantial action plan with a
set of measures to address the country’s demographic problems.
We are finding ourselves in a downwards demographic spiral. Unless it gets
interrupted soon, the point of no return could be passed.
Results from the proposed government measures – if implemented in a
timely manner, and if implemented in a package rather than piece by piece,
could be expected in the medium-term perspective of a decade.
* * *
Abstract: An analysis of the demographic policy priorities of the Bulgarian
government for the period 2017–2021 in the context of demographic
developments in Bulgaria and relevant experience of other countries.
Presented at the round table on improving the demographic situation in
Bulgaria held in Vratsa on 14 November 2017.
* * *
Citation: Ivanov, L. Measures to solve demographic problems. Business
Club Magazine. Issue 11, 2017. ISSN 2367-623X
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