World Bank: Bulgaria must boost labour force to counter deteriorating demographics

Bulgaria must expand its labour force and increase productivity in the face of negative demographic trends that will put a strain on economic growth in the coming decades, the World Bank has said in a report.

“Contrary to most countries in the world with an aging population, Bulgaria has become old before becoming rich,” the report says, underscoring the need for urgent reforms that would minimise the negative impact of an aging population on the economy.

Bulgaria’s work force is expected to shrink by 40 per cent until 2050, when one in three Bulgarians is projected to be older than 65 and only one in two Bulgarians will be of working age, according to UN forecasts. In addition to the expected increased demand for long-term care and health care services, the higher median-wage (already the third-highest in the EU) will put more strain on Bulgaria’s underfunded pension system, the report says.

The report recommends increasing the size of the work force by increasing the labour force participation of women, elderly and young workers, but that alone would not be sufficient to stem the decline, which is why Bulgaria must focus on “reducing emigration, motivating Bulgarians to return from abroad and attracting immigrants”.

The World Bank has a slew of policy recommendations – many of them generic ones such as improving the business climate, enhancing innovation policies, encouraging household savings and improving long-term fiscal planning of the pension system.

But the report also offers several specific policy changes for Bulgaria to consider – most notably equalising the retirement for men and women at age 65 and increasing the retirement age further, refraining from “further ad-hoc pension increases”, increasing pay-as-you-go pension contributions by two per cent, as well as reducing mandatory maternity leave from 410 days to a level closer to the International Labour Organisation’s recommended minimum of 98 days.

Download the full report here.

(Photo: Alexander De Luca/



The Sofia Globe staff

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