The Balkan region, including EU members like Croatia, Romania, and Bulgaria, has been grappling with a significant demographic challenge for decades, marked by low birth rates and a notable trend of emigration. What are the primary factors contributing to this phenomenon, and which countries are and will be more severely impacted?

A combination of socioeconomic and political factors contributes to the demographic challenges, marked by low birth rates and higher emigration, that face Western Balkans (WB) countries.

On the economic spectrum, the region’s economies are still in the transitioning and developing stages, with lower living standards compared to their Western European counterparts. These conditions make Balkan countries vulnerable to brain drain and outward migration as working-age populations seek employment opportunities and higher wages abroad. The emigrants in return contribute to their native countries’ economies through remittances, which comprise a significant portion of the region’s economies. In year 2021, WB countries received over $20 billion in remittances from migrants and diaspora members living abroad.

Along socio-cultural lines, reduced fertility rates across Europe and the Balkans, largely due to shifting attitudes toward marriage, childrearing, and gender roles have also posed demographic challenges across the region. Total fertility rates (children per woman) in 2020 were 1,5 in Croatia, 1,8 in Romania and 1,6 in Bulgaria, all below the replacement rate of 2.,1. The high costs of childcare and raising children coupled with a lack of social support have discouraged larger family sizes across a number of countries in the region.

Politically, countries like Croatia, Romania, and Bulgaria that have been EU members since 2013 and 2007, respectively, have been able to offer their citizens freedom of mobility within the bloc for longer periods of time, making emigration easier. Other landlocked nations like Serbia and Bosnia and Herzegovina have fewer natural barriers to outward migration. Eurostat data project that these countries will see the largest working-age population declines between the years 2022-2050 at -21,4% and -27,7%, further endangering their labour forces and economic prospects. Their economies remain weaker, making them more reliant on remittances from citizens working abroad – a dependency that inhibits domestic growth and development.

Every month, thousands of persons of all ages, but particularly young, are leaving the region to seek opportunities in wealthier EU countries, notably Germany. What factors make these EU countries attractive, and do the Balkan nations have the capability to address and counteract these pull factors?

The proportions of youth leaving the WB region towards Western Europe, and particularly Germany, are significant. Approximately 15-20% of students, aged 20 to 29 years, have emigrated from Albania, Bosnia and Herzegovina, North Macedonia and Serbia since 2010. Giving a context, the total net migration out of Bosnia and Herzegovina between 2010 and 2020 was more than 10% of its current population. If these trends continue, the populations of Bosnia and Herzegovina and Serbia risk declining by over 25% by year 2050, accounting for high emigration and low birth rates.

Economic factors constitute key pull factors that make wealthier EU nations attractive destinations for WB emigrants. Contrary to Balkan countries, Germany and other Western European states have higher GDP per capita and offer significantly higher wages to potential immigrants. Moreover, Germany’s secure and growing labour markets offer employment and career opportunities for WB youth that are not readily available in the region. The strong pull of higher wages and better employment opportunities abroad are particularly appealing for the region’s youth who face a labour market characterized by unemployment rates 2-3 times higher than the EU average. As a consequence, while youth unemployment rates across WB countries exceed 20%, the number of employed Balkan residents under 30 in Germany grew over 150% between 2010 and 2020, with Albanian, Bosnian, and Serbian youth comprising significant shares.

Social factors also play a key role in pulling emigrants into the EU countries. When compared to WB countries, Western European states offer social welfare systems and public services, including healthcare, childcare, education, and eldercare that provide immediate financial and socioeconomic relief to new immigrants.

In the short-to-medium term, the WB countries face critical challenges in their efforts to curb the impact of migration pull factors. Given that the WB countries began at a much lower development baseline point compared to their Western counterparts, standards of living and wages across the regions will take generations to converge, despite economic reforms across the region. Social welfare systems also require critical long-term investments. The loss of human capital and the “brain drain” of skilled, educated youth poses serious long-term challenges if not tackled with urgency.

What is to be noted, however, is that a few WB countries are seeing success improving education and job training to increase competitiveness abroad or priming a virtual circular migration process. From a capabilities perspective, targeted measures to improve vocational training, develop targeted industry clusters and strengthen professional networks may help provide alternatives to emigration over time. Focussed reforms to targeted industries will also help offset pull factors over the long run, if sustained. Overall, the capacity to counteract pull factors in a generation or less appears limited, not accounting for unexpected economic transformation.

Is the EU indirectly benefiting from the demographic decline in the Balkans, by attracting workers and young people to address its own labour market challenges?

Evidence suggests that the EU is indirectly benefiting from the Balkan countries’ demographic shifts. It does so by attracting young workers to address its own labour market shortages. Data show that since year 2000, the WB countries of Albania, Bosnia and Herzegovina, Kosovo, and Serbia have lost as much as 1-2% of their populations per year due to low birth rates and emigration. At the same time, the EU countries faces the challenge of aging societies and labour force losses. This demographic mismatch has formed migration opportunities that benefit both the EU and the Balkan countries.

From a political perspective, the benefits are not minor for incumbents in migrant-sending countries. While hundreds of thousands of WB citizens, predominantly young and well-educated, who live and work in Western Europe, send remittances back home, political incentives to curb emigration, decline, as emigration eases unemployment and political opposition at home. 

At the same time, the EU has faced pressures to address its labour needs and has in recent years opened up its labour markets further to citizens from Balkan countries that are potential future members. In 2014, the European Commission adopted a proposal to allow citizens from Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Serbia, and Turkey to work in EU member states without needing a visa or work permit. This proposal was a proactive measure to curb anticipated labour shortages in the EU and allow workers from the surrounding region access to the EU’s labour markets. These types of policies enable the EU to indirectly tap into the Balkans’ thinning workforce while delaying full integration of the region for political and economic reasons.

In short, the demographic decline facing the Balkans and the labour market needs facing the aging EU have created a mutually beneficial migration-context where both regions’ challenges are partially offset through migration, even as the full political integration of WB countries into the EU remains distant. The open labour markets help the EU tackle its shortages while remittances sent back to Balkan states boost domestic economies and political payoffs.

What are the primary negative consequences of emigration for the region in both the present and the long term? And what risks does the demographic decline pose to the economic and political stability of the Balkans?

Higher emigration rates have both immediate and long-term negative consequences for Balkan countries. In the short term, significant population losses caused by emigration are straining these countries’ welfare systems and economies. While remittances do provide immediate economic relief by bolstering household incomes and Balkan states’ GDPs, overreliance on them places these countries’ economies at risk of exogenous shocks if remittance flows decline.

In the long-term, the demographic decline poses serious risks to the economic and political stability of Balkan countries. Populations in the region are expected to shrink by up to 50% by 2100, if current trends continue. This will exacerbate the impacts of aging societies as the workforce decreases dramatically and support ratios plummet. Such declines threaten to undermine economic growth and development in the Balkans for decades to come.

Politically, population losses reduce the tax bases of these countries and weaken their geopolitical and geoeconomic influence on the global stage. Studies show that democratic instability could be exploited by external actors if governments lack the capacity to provide economic opportunity or basic services for their citizens and domestic electorates.

Thus, while emigration currently fuels Balkan economies, the long-term demographic decline poses severe risks to the region’s stability through slowed growth, aging populations, and potential political fragility. In the absence of policy measures intended to curb losses and boost birth rates and return migration, these costs may simply be too high for Balkan countries to bear. 

Despite the challenges, there are also some benefits, particularly in the form of remittances, which are often higher than foreign direct investments. Do these positive aspects balance out the negatives associated with the problem?

With nearly 2,2 million people (roughly 10% of the region’s combined population), who have emigrated from the Balkans since the 1990s and another 1 million youth projected to leave the region over the next decade, the Balkan states face critical democratic and economic challenges in the long-term. These high emigration outflows pose significant brain-drain risks across the region. However, remittance inflows into the WBs have thus far provided offsetting economic benefits. In 2021, remittances to the Western Balkans reached over €15 billion, far exceeding foreign direct investment inflows, providing substantial economic relief for recipient countries. In countries like Albania and Kosovo, remittances make up over 10% of their GDP.

Despite the short-term economic relief, brain drain’s long-term consequences pose critical challenges for the region. As the Serbian President Vucic recognized in a 2021 speech, while remittances help families, Serbia is still losing its most educated and skilled citizens. These outflows of human capital provoke negative demographic shifts and result in skilled-labour shortages, that place the region at the verge of an impending demographic and economic crisis. These risks are higher in countries like Bosnia and Herzegovina, Montenegro, and North Macedonia, where emigration rates are higher.

Thus, while remittances have provided a high degree of economic relief for WB countries over the last three decades, the negative impacts of human capital flight through brain drain still outweigh these benefits for the region’s economies and their long-term development prospects. To balance these consequential scales, WB governments must implement policy measures that attract emigrants back and create jobs and opportunities that incentivize skilled workers to pursue employment opportunities at home.

In conclusion, what policies would you recommend for governments in the region to address and potentially resolve this issue?

Improve economic opportunities and job prospects within the region to incentivize skilled workers to stay or return. This requires targeted investment in sectors like technology, renewable energy, and infrastructure to spur job creation. Kosovo’s Youth Employment Project is one example to this end.

Narrowing income inequality is critical. Increase wages, especially for highly educated professionals like doctors and engineers, to make salaries more competitive with those provided by Western European states. Albania for instance, increased salaries for doctors and nurses by 15% in 2021 to make healthcare wages more competitive with Western Europe.

Invest heavily in education and training programs to develop human capital and empower the workforce. This will make domestic economies less reliant on importing skilled labour. Offer tax incentives and startup grants for new businesses, especially those founded by returning emigrants.  Streamline processes for certifying and recognizing foreign credentials and experiences so skilled emigrants have clear pathways to employment opportunities. Negotiate bilateral agreements with high-emigration countries for temporary work programs that allow circular migration patterns. Provide targeted social services, especially childcare in remote areas to disincentivize urban migration within countries to capital cities. Montenegro’s Centers of Excellence program, for instance, offers subsidized childcare in rural areas to disincentivize urban migration. And launch public campaigns promoting the benefits of staying in or returning to the Balkan countries for family purposes and quality of life.