engleski

Economic Effects Of The Adverse Population Trends: The Case Of Serbia And Croatia

This paper analyzes the current situation of the labour market in Croatia and Serbia and brings it into relation with the current income level in these two countries. Taking this situation as a starting point for further analysis, authors present a comparative analysis of the systemic risk with respect to the population trends. The first part of the survey discovers that population trends in both Serbia and Croatia are very similar: aging population, brain drain and inadequate educations system and high unemployment, especially long term unemployment. At the same time, traditionally strong trade unions keep the labour market rigid, leaving the countries with less foreign investments, hence resulting in the even worse salaries and disposable income. Consequently, it leads to the even higher brain drain and emigration, unfavourable population age trends and problems with the retirement funds based upon the “generation solidarity system”. Altogether it forms a vicious circle which will be very hard to overturn. The second part makes some growth accounting analysis. According to the neoclassical growth theory, production depends on the physical capital, human capital and labour. Majority of the studies take the number of workers as constant since it varies very little in the short run. However, in Serbia and Croatia there is a tendency of a rather hasty change in a population, since depopulation trends are supported by both emigration, very low fertility rate, higher mortality rate due to the old population and obstacles to immigrate. It brings to conclusion that the changes in labour are not to be ignored and, if the countries want to maintain some minimum growth rates, the decrease in labour will have to be compensated by other factors, such as education incentives, quality emigrant return programmes and higher levels of investments, in order to boost the levels of physical capital. Making several scenarios, authors show what is the amount by which Croatia and Serbia have to increase their investments in order to overcome the negative population trends. The final part investigates the pension funds and retirement policies in both countries. It is shown that it is not the matter of whether the existing retirement system in Croatia and Serbia would collapse, but the time when it could take place if some severe reforms are not made. Finally, authors make a brief comparison between Croatia and Serbia, showing many similarities and minor differences in the population trends, thus indicating the similar solutions for both countries. Important measures are recommended should be made in order to evade the unwilling population trends which lead into dark economic scenarios.

Depopulation; Brain Drain; Capital Formation; Inadequate Human Capital; Pension System

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