Cohesion funds alone won't fix EU 'brain drain'

Under current conditions, dramatic population reductions await Romania (-30 percent), Croatia (-30 percent), and Lithuania (-38 percent) among others.

That decline unfolds over only the next few decades. If internal flows reach an equilibrium, the changes are much less severe: Romania (-14 percent), Croatia (-18 percent), and Lithuania (-20 percent), mostly due to natural decreases from having small families.

Austria receives the largest proportional gains from intra-EU mobility, and Germany's population would be about stable if not for receiving newcomers from the east and south (+7 percent with vs. -1 percent without).

The scale of these movements, over time, carry important implications.

While cohesion funds and remittances support development to varying degrees, they are not a substitute for the human capital – economic and social potential – of a country's people.

Population ageing

There may be no 'ideal' population size for a given country, but the younger-than-average age of emigrants accelerates population ageing as they leave.

In 2015, the proportion aged 65+ stood at 19 percent for both the EU's west and east. By 2060, that percentage will likely inflate at different speeds to 30 percent and 35 percent respectively.

Contrary to popular belief, neither migration nor fertility have the power to stop population ageing or its consequences for the EU, as the report tests with scenarios of unrealistically high surges to both.

Specifically, the research team looked at doubling third country migration (flows of 20 million into the EU every five years), or a 50 percent increase in European fertility to 2.6 children per woman.

The strongest result came from increasing fertility, which still permits the EU's proportion 65+ to climb to 27 percent by 2060.

Migration significantly drives up the total number of people living in the EU, but it does not meaningfully impact the age structure since migrants inevitably get older just as the native population does – adding to both the non-working and working populations in the long-run.

Momentum towards ageing is clear. But unlike population ageing itself, the anticipated negative consequences are avoidable.

Reasons for optimism

Greater labour force participation and a better educated labour force are trends already in motion.

By intensifying these, the EU will have a robust answer to its ageing-related worries.

For example, if EU member states would gradually converge to the level of labour force participation that men and women in Sweden have already achieved, the predicted climb in the ratio of non-workers to workers can be completely halted at 1-to-1.

Even if participation of women moves closer to their male country-counterparts (especially in southern Europe), possible increases in dependency would be significantly subdued.

Second, as younger cohorts enter working-ages and older ones leave, the process of 'demographic metabolism' will keep improving the overall education of the labour force.

Upcoming declines in the labour force size come exclusively from fewer workers with a secondary degree or lower.

Post-secondary groups on the other hand are expected to almost double over the next 40 years.

As the report explains, a smaller and better educated labour force may be best suited for adapting to disruptions from artificial intelligence (AI), productivity gains, and more broadly the changing needs of society.

Aside for these EU-wide prescriptions though, the internal dynamic needs attention.

Simply lacking work isn't the problem in many of the emigrant-sending member states, evidenced by new labour shortages and an uptick in migration from non-EU eastern European countries.

Eastern and southern EU member states are among the world's countries least able to retain their talent, according to the Global Competitiveness Index.

No wonder, they have to compete for their labour in the same system as economies that are the inheritors of historical hubs of commerce and industry.

Especially for member states with modest budgets, education should be made more directly relevant and integrated with local job markets. The goal being to maximise the chance of getting a return from tax payers' investments in the human capital of their population.

Reciprocally, the receiving Western member states could support stabilisation mechanisms such as paying associated education costs incurred by the sending countries (in effect ending a subsidy for richer economies' labour markets) or promoting circular migration for the return of top talent like scientists and doctors.

If EU principles of solidarity and cohesion are taken seriously, the loss of workers among southern and eastern member states deserves recognition and a vision for moderation.