SOFIA (Reuters) - Bulgaria is heading for the steepest drop in the working-age population in the European Union that will impose a heavy burden on the Balkan country’s economy, the World Bank said in a report on Friday.
The report said the labor supply in the state of 7.3 million people was projected to decline significantly 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.
Its median age increased from 30 in 1960 to 42 in 2012, the third-highest median age in the EU, surpassed only by Germany and Italy, it said.
Between 1950 and 1990, Bulgaria’s population grew from 7.3 million to 8.8 million before falling back and its age structure has changed radically, with emigration alone contributed to a 10 percent decline of the economically active population since the 1990s.
“Bulgaria’s age structure has changed radically,” World Bank economist Doerte Doemeland said during a presentation of a report on convergence with the EU.
The report said Bulgaria, the poorest EU nation, should increase productivity to manage the demographic challenge and sustain aggregate output growth.
It also said Bulgaria’s pension system was projected to remain in deficit as the country’s low contribution rates had led to declining revenues and increasing subsidies from the state budget.
The transfers from the general government budget to the pension funds are projected to decline from 6.1 percent of GDP in 2012 to 4.9 percent of GDP in the medium term before climbing to 5.6 percent by 2050, the report said.
Reporting by Angel Krasimirov; Editing by Alison Williams