August 30, 2007


Eastern Europe faces generation crisis (Judy Dempsey, August 30, 2007, NY Times)

Just as the governments of Eastern Europe are grappling with the labor shortage caused by young, educated and skilled citizens moving West for higher wages, economists are warning of an even more serious crisis looming: The average age of those left behind is going up, and fewer are working.

The two trends are bumping up against each other in a way that will pose immense challenges, economists say. The labor shortage will make it hard to sustain the high economic growth levels of recent years, but without such growth, cash-strapped governments will be hard-pressed to pay for the demands of an aging population - especially with fewer and fewer people contributing to the pension and health systems.

"Eastern Europe, along with the former Soviet Union, will by 2025 have populations that are among the oldest in the world," said Arup Banerji, human development economics manager at the World Bank. "The heart of the matter is this combination of the skilled labor shortage and the demographic trends."

And folks wonder why Iraqis, Palestinians, etc. don't want to adopt the continental European model?

Posted by Orrin Judd at August 30, 2007 2:38 PM
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