The lack of qualified labour has become the main obstacle to growth in many countries, so it is necessary to create an environment which will motivate talented individuals to stay, and this includes raising salaries, Croatian National Bank (HNB) governor Boris Vujcic said in Dubrovnik on Monday.

He was speaking at the opening of the international conference “Demographics, Jobs and Growth: Navigating the Future in Central, Eastern and Southeastern Europe”, co-organised by the HNB and the International Monetary Fund.

The conference focuses on labour market and demographic challenges, the future of labour, and policies needed to sustain growth and reach Western European levels of income. Present are, alongside HNB and IMF representatives, Croatia’s Prime Minister Andrej Plenkovic and Finance Minister Zdravko Maric, 15 central bank governors and finance ministers from Central, Eastern and Southeastern Europe (CESEE), representatives of the World Bank, the European Commission, the Bank for International Settlements and other institutions, as well as experts from the universities of Oxford, London and Tartu.

Vujcic said understanding the ties between demography, jobs and growth was an increasingly important topic for CESEE countries as a rapidly decreasing labour reduced the potential of catching up with the rest of Europe.

The topic is also relevant for many other countries hit by ageing populations and economic migration, Vujcic added.

Owing to more efficient public health systems and lower fertility rates, the average European citizen is older than in the not so distant past, and the median age in the EU has risen by 4.5 years since 2000, he noted.

For less developed European countries, the challenge of ageing populations is tied to the challenge of emigration, which is the cause of big structural problems, jeopardising not only the viability of pension and health systems, but also affecting their growth potential, Vujcic said.

Major migrations occurred in Europe during the last recession, with workers moving from the hardest-hit countries to more developed ones. Today, with economic recovery across the continent, the lack of qualified labour has become the main obstacle to growth in many countries, Vujcic said.

According to a 2018 survey by the European Investment Bank, companies in the CESEE believe the limited availability of qualified labour is one of the biggest obstacles to investment, he added.

In that context, creating and keeping qualified labour has become a key goal for policy makers in those countries, Vujcic said. Achieving that goal calls for creating an environment in which talented individuals will be motivated to stay and work in their homeland, he added.

Raising salaries to a sufficiently high level in those countries is just part of the solution, given that job security is another important factor without which, despite a high pay, many emigrate, Vujcic said.

There are also many measures which go beyond labour market policies and can offer the right incentives to the workforce to stay, such as affordable housing, notably for younger families, and education, he added.

Reforms aimed at aligning education and corporate sector needs will contribute not only to the creation of skilled and motivated employees, but also reduce the likelihood of such labour staying unemployed, and consequently desperate and discouraged, for long, said Vujcic.