Skopje, 27 May 2023
Twenty percents of the persons born in the region of the Western Balkans live abroad, which reduces the potential for growth of the economies in the region. “Human capital is a prerequisite for achieving sustainable and inclusive economic growth, while migration is one of the factors that affect the human capital. The reduction of both the quantity and the quality of the active population, having in mind that one third of the immigration in the region is with university education, decreases the potential for growth of the economies and slows down the already low income convergence - the income in the region is only 40% of the European income. Policy makers cannot prevent immigration completely, but they can mitigate the negative consequences”, said the Governor of the National Bank, Anita Angelovska Bezhoska, who spoke at the panel discussion Migration, Refugees and Societies, within the IMF/WB Constituency Meeting, headed by the Netherlands and Belgium, which is being held in Montenegro this year. The panel discussion, which was attended by the Governor of the National Bank, was also addressed by the Minister of Finance of Georgia, the Minister of Finance of Ukraine, the Deputy Minister of Finance of the Netherlands and the Director at the World Bank, Xavier Devictor, while the Minister of Finance of Moldova was the chairperson.
The Constituency was attended by our delegation, headed by the Governor and the Minister of Finance, Fatmir Besimi, including the Vice Governor Ana Mitreska.
In her presentation, the Governor highlighted the slow convergence of the region of the Western Balkans toward the EU, which can mainly be attributed to the structural issues, whereby the potential for growth of the region in the past two decades decreased from 5% to 2.5%, which is a sharper decline relative to the EU. This is due to the unfavorable trends in all generators of the economic growth, including the human capital. The quantity of human capital is decreasing, as a result of demographic factors, but also immigration. Hence, the percentage of the active population in the region in the past decade decreased from 70% to 65%, while the World Bank expectations are that in the next two and a half decades it will decrease to 60%. Currently, every fifth citizen born in the region lives abroad, while every third one is considering emigrating.
In terms of the quality of human capital, one third of the workers who emigrate are highly professional staff, which affects adversely both the current situation and the future labor market developments and emphasizes even more the existing challenges. This is also shown by the human capital index of the World Bank, according to which there is a large gap between the countries of the region and the advanced economies in the EU in this area. Overall, immigration slows down the growth and development of the region, as shown by some analyses according to which if the effect of immigration did not exist, the gap of the potential for growth in the region would be smaller by 2 percentage points compared to the EU.
In order to reduce immigration, there is a need for structural and institutional policies to increase income and quality of life in the region, as it is one of the key factors for migration. At the same time, one should increase the utilization of human potential, by increasing the life expectancy of the population which lags behind the European average, by increasing the activity rate, especially of women and young people, and by improving the quality of labor through policies to improve the educational process. On the other hand, the improvement of institutions, the conduct of appropriate economic policies and the strengthening of the connections with the diaspora, can have positive effects and contribute to the return of part of the emigrants, and to the attraction of new workers from other regions.
Despite the mainly negative context of immigration, it also brings some benefits, mainly financial, taking into account the inflows of funds from remittances from abroad, which are 10% in the region, while in our country as much as 15% of GDP.
Otherwise, on the margins of the Constituency Meeting, our delegation held bilateral meetings with the Vice President of the World Bank, Antonella Bassani, the IFC’s Regional Vice President, Alfonso Garcia Mora, as well as with the Director of the European Department at the IMF, Alfred Kammer.