Demography could be yet another force for divergence within the EU

FOR BULGARIAN bosses, recruitment is becoming a bit of a nightmare. Finding a lathe operator—competent or otherwise— takes more than six months, and may require forking out cash to a recruitment agency. Older, savvier machine operators are retiring, complains Julian Stephanov, who runs a manufacturing firm near Sofia, and too few young people have the right skills. One problem is a lack of training. Another is that Bulgaria’s workforce has shrunk by 6% since 2008. Continued high emigration and low birth rates mean it is expected to fall by another third by 2050.

All across Europe, people are living longer and having fewer children. The same trends are, of course, seen in other rich countries, and many developing ones—but coping with them will be harder in Europe, because of its half-formed union where workers can move freely and many countries share a currency, but where there is no common fiscal policy or strategy to deal with ageing.

Investors are well aware of some of Europe’s shortcomings. The sovereign-debt crisis showed that converging inflation and interest rates did not, by themselves, ensure a sustainable currency union or integrated banking system. Wage bargaining, regulation and so on need to converge to stop imbalances between countries building up. Less well understood is that demography could also tear the...

via The Economist: Finance and economics Business Feeds

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