EUROPEAN PAPERS ON THE NEW WELFARE

Ageing in Slovenia and Sustainability

Abstract

According to the Statistical Office of the Republic of Slovenia there were 2,019,406 people living in Slovenia at the end of June 2007. In the first half of 2007 the population of Slovenia grew by 0.4%. The population had been slowly increasing since the census of 1991 at an annual rate of about 0.2%. In 2005 this rate increased to close to 0.3% and in 2006 to close to 0.4%.
The rapid increase in population in 2007 is thus a continuation of the trend that started in 2005. While most of this increase is attributed to foreigners with temporary residence, the number of newborn babies has also been increasing steadily since 2003, when it reached its lowest number in its history since Slovenia’s independence — 17,160. The estimate for 2007 is about 19,900 newborn babies. Nevertheless the long term predictions are not so good, as the number of females between 25 and 35 is expected to decrease in about ten years, so the number of births is also expected to decrease in that time. These expectations are in agreement with a recent study on ageing population in Eastern Europe and the former Soviet Union, which anticipates Slovenia becoming the oldest country in this region, in the percentage of population above 65 and in the percentage of population below 14 and the average age. While in June 2007 the average age has grown to 41.0, it is expected to grow further to over 48 by 2025. Some predictions related to this demographic transition will be discussed.

1. Introduction

A recent World Bank study1 on the Third Transition of Ageing populations in Eastern Europe and the former Soviet Union showed that apart from Macedonia the population in all the countries without a majority Muslim population is expected to decrease, and in the countries with a Muslim majority the population will increase by 2025 (Figure 1). In most countries the increase in average age will be even more dramatic than the decrease in population (Figure 2). Since these countries were experiencing a communist government less than 20 years ago, the authors of the World Bank study call this demographic transition ‘from red to gray’1. Thus a comparatively short time after a relatively painful transition from a planned economy to a market economy the observed countries are expecting another potentially painful transition to an old society with a quarter of the population over 65 years old within about two decades. Ono and Maeda2 analyzed the effects of population ageing on economic growth and the environment in a two-period overlapping generations model of growth, ageing, and the environment. They showed that ageing may be beneficial to economic growth and the environment under perfect annuitisation, while possibly harmful under imperfect annuitisation2.
In the following chapters we analyze the consequences of this ageing red to gray transition in Slovenia on various aspects of sustainability.

2. Economic Consequences of the Red to Gray Transition

Since independence in 1991 and after the initial economic shock the GDP in Slovenia has been steadily increasing with rates moving between 2.5% and 5.5%. In 2007 the economic growth was the fastest in Slovenia’s history with 6.5% in the first nine months of 2007 (Figure 1).
While the population transition to gray started in the early 1980’s with about a 40% decrease in the annual number of births from about 30,000 to about 18,0003, the largest number of annual births was in 1902 with about one half of today’s population and about 45,000 annual births. The number of births fell to 17,321 in 2003 and has started to increase slowly since 2003, however it is expected to decrease again after 20153. This means that the number of births is well below the simple reproduction level, and immigration is needed to maintain the workforce necessary for economic development. Nevertheless in the long term the GDP growth is expected to decrease because of this population ageing until about 20304.

Figure 1: GDP growth in Slovenia between 1995 and 2007. The last point for 2007 is the estimate from period January — September 2007
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Aleksander Zidanšek: J. Stefan Institute, Ljubljana, Slovenia and Jožef Stefan International Postgraduate School, Ljubljana, Slovenia, e-mail: aleksander.zidansek@ijs.si
1 Chawla, M., Betcherman, G., Banerji, A., Bakilana, A.M., Feher, C., Mertaugh, M., Sanchez Puerta, M.L., Schwartz, A.M., Sondergaard, L. and Burns, A. (2007): From Red to Gray: Third Transition of Aging populations in Eastern Europe and the former Soviet Union, The World Bank.
2 T. Ono and Y. Maeda (2002): “Sustainable Development in an Aging Economy”, Environment and Development Economics, 7, p. 9-22.
3 Statistical Office of the Republic of Slovenia, accessed on January 13, 2008. See also: www.stat.si/.
4 Verbič, M., Majcen, B. and van Nieuwkoop, R. (2005): “Sustainability of the Slovenian Pension System”, Working Paper, No. 29, Institute of Economic Research, see also: www.ier.si/files/Working%20paper-29.pdf


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