Population and human capital development

Th e new economic, social and political conditions in the CECs increased uncer-tainty on one hand but, on the other they opened unprecedented new possibili-ties for social and professional mobility, especially for young people. One of the most visible side eff ect of these processes were signifi cant population changes (Figure 4.1a, 4.1b, Table 4.5). Total fertility rates¹³ in Poland and the CECs were declining until 2003 (Figure 4.1a). At the outset of market transformation only Poland and Slovak Republic used to have the fertility rate higher than 2. In con-sequence, in 1990–2005, all CECs, except Poland and the Slovak Republic, had a negative population growth (Table 4.5). Also SECs (Figure 4.1b), except Turkey,

13 Th e total fertility rate in a specifi c year in the number of children that would be born to each woman if she were to live to the end of her childbearing years (…) OECD Family Database.

Figure 4.1a. Total fertility rate in CECs in 1990–2011 Source: WDI Database

1.0 1.5 2.0 2.5

1990 1994 1998 2002 2006 2010

Poland Czech Republic Hungary Slovak Republic Ukraine

had low total fertility rates. In the course of time even Turkey recorded declining fertility. However it maintained its position as the only country under investiga-tion having a fertility rate higher than the replacement rate.

Ukraine showed the strongest negative dynamics of population growth. Th ese population trends, resulting from the decline in the birth rate and emigration, are a major challenge to economic policy.¹⁴ Th ey also had an eff ect on the age struc-ture of the CECs and the development of GDP per capita (see Section 4.4). Th e direction of changes in the dynamics of population growth in CECs are contin-ued (Table 4.5), and Poland and the Slovak Republic will also experience a nega-tive population growth in 2005–2015.

14 Poland during 2004–2006 had an emigration rate (the number of emigrants per 1000 in-habitants), ranging from 0.1 in the group 55–64 years to 0.7 in the group 15–24 [see: Schreiner 2008, p. 95].

Figure 4.1b. Total fertility rate in Poland and SECs in 1990–2011 Source: as in Figure 4.1a

1.0 1.5 2.0 2.5 3.0

1990 1994 1998 2002 2006 2010

Poland Greece Portugal Spain Turkey Turkey; 1990=3,049

Negative average annual rate of population growth had been recorded in all countries of the region with no exceptions. However, at the same time, in all ex-amined CECs except Ukraine, the average life expectancy (Figure 4.2a) increased signifi cantly when compared to 1990. As shown in Figure 4.2a, the biggest im-provements in this measure of the quality of life, and of public health operations, were reported in 2010 in the Czech Republic (77.4 years) and Poland (76.2 years).

It is also interesting that, during the transformation process, the diversifi cation of the measure increased. In 1990, the lowest value was 69.3 (Hungary) and the highest was 71.4 (Czech Republic); thus, the diff erence between the fi ve analyzed Table 4.5. Annual average population growth rate in CECs in 1990–2005 and

forecast for growth in 2005–2015

Country 1990–2005 2005–2015

Poland 0.0 –0.2

Hungary –0.2 –0.3

Czech Republic –0.1 –0.2

Slovak Republic 0.1 –0.1

Ukraine –0.6 –1.1

Source: [World Bank 2007].

Figure 4.2a. Average life expectancy at birth in CECs in 1990–2010 Source: WDI Database

60 65 70 75 80

1990 1994 1998 2002 2006 2010

Poland Czech Republic Hungary Slovak Republic Ukraine

CECs was 2.1 years (Figure 4.2a). Aft er twenty years of transformation, in 2010, the lowest average life expectancy was 70.2 in Ukraine and the highest 77.4 (the Czech Republic), so the diff erence increased to 7.2 years. Th erefore, in this spe-cifi c social rivalry, the Czech Republic (increase in life expectancy by 6.0 years) and Poland (increase in life expectancy by 5.3 years) experienced the greatest improvement amongst the CECs. Figure 4.2b shows average life expectancy at birth in Poland and SECs in 1990–2010. All SECs and Poland experienced a ris-ing tendency, but the most signifi cant improvement was recorded by Turkey; it increased average life expectancy by 10.6 years reaching the level of 73.7 years in 2010 (Figure 4.2b). Greece, Portugal and Spain continued to have visibly higher life expectancy than Poland and Turkey. In 1990–2010 Portugal and Spain gained 5.0 and 4.8 years respectively.

Th e analyzed countries had achieved a relatively high level of primary school enrollment. Th is aspect of state activity and spending was not signifi cantly neg-atively aff ected, even during the transformational recession. In 1991 secondary Figure 4.2b. Average life expectancy at birth in Poland and SECs in 1990–2010 Source: as in Figure 4.2.a

60 65 70 75 80 85

1990 1994 1998 2002 2006 2010

Poland Greece Portugal Spain Turkey

school enrollment in Poland and Hungary continued at 87% and 86%, respec-tively.¹⁵ In 2009, the level of enrollment reached 97% (Poland) and 98% (Hun-gary). Also, in the Slovak Republic – 90% (2010), Czech Republic – 91% (2009) and Ukraine – 96% (2010), a high proportion of young people continued their education at the secondary level. Secondary school enrollment in Turkey in 1990 was well below 50% and in Portugal it was 60% . Both countries improved their enrollments rates dramatically; Turkey surpassed 88% in 2003 and Portu-gal reached the level of over 106%. Th e highest growth and its variability and also level of secondary school enrollment was recorded by Spain, where in 2010 this ratio was over 124.7%. At this background Poland’s situation was relatively good.

Th e situation in tertiary education was highly diff erentiated (see Figure 4.3a and 4.3b). Th e weakest initial conditions in CECs were in Hungary, the Slovak Republic, and the Czech Republic, where only 15%, 16% and 16%, respectively, of young people continued their education at the tertiary level. By the end of the analyzed period (Figure 4.3a) Hungary’s average tertiary school enrolment ratio reached a high level of 64% (a spectacular increase of 49 percentage points com-pared to 1990), and Poland’s average ratio reached a level of 69% (improvement also by 49 percentage points).

15 WDI 2012 Database.

Figure 4.3a. Tertiary enrollment rate in CECs in 1990–2010 Source: WDI Database

10 20 30 40 50 60 70 80

1990 1994 1998 2002 2006 2010

Poland Czech Republic Hungary Slovak Republic Ukraine

Th e situation also improved signifi cantly in the Czech Republic (about 57%) and in the Slovak Republic (ca. 54%). Th e highest school enrollment ratios (Fig-ure 4.3a) at the tertiary level of education were achieved by Ukraine (average level of 93%). Th e analyzed CECs, in particular Poland, considerably improved the availability of this level of education mainly through development of private education, focusing on the humanities and social sciences, rather than techni-cal education.

Th e tertiary school enrollment ratio achieved in Poland and the CECs under examination was higher than in countries with medium income levels. Moreo-ver, in the case of Hungary and Poland, the achieved level is similar to countries with the highest income per capita, and in Ukraine it was even higher. Quanti-tative data shows that the development of human capital achieved by the end of the examined period was good. However, rapid growth in the number of students and their concentration in the humanities and social sciences contributed to the mismatch between qualifi cation supply and the actual demand for workforce. It Figure 4.3b. Tertiary enrollment rate in Poland and SECs in 1990–2010

Source: WDI Database 10

20 30 40 50 60 70 80 90 100

1990 1994 1998 2002 2006 2010

Poland Greece Portugal Spain Turkey

also explains the frustration of the young generation and their readiness to emi-grate in order to seek jobs in better developed European economies.

Figure 4.3b shows tertiary enrollment rates in Poland and the SECs in recent years. In 1990 Poland and Portugal used to have similar and low enrollment rates.

Over the course of years the rates of tertiary enrollment in Poland, Portugal and Spain have converged. Since 1999, tertiary education in Greece had become al-most universal (Figure 4.3b) reaching over 90%. Against this background Turkish tertiary enrollment, although increasing from 12% (1990) to almost 46% (2010) is low (Figure 4.3b).

Despite human capital development, CECs and SECs had persistent high un-employment (Section 4.3.4.1). Th ese countries experienced modest increases in wages including minimum wage rates (Figure 4.4a, 4.4b).¹⁶ At the beginning of transformation Poland had the lowest statutory minimum real wage rate (Fig-ure 4.4a). In the course of time the Czech and Slovak Republics and Hungary experienced a clear convergence of real statutory minimum wage rates. Later, Poland achieved the highest minimum wage rate in the CECs.

In Greece, Spain and Portugal, real statutory minimum wage rates were higher than in CECs. Turkey used to have the lowest wage rates in comparison to all an-alysed countries. At the end of the period, Poland’s real statutory minimum wage rate achieved the level of the statutory rate in Portugal (Figure 4.4b).

16 A minimum wage rate is not a perfect measure of prevailing pay conditions. Th e OECD Database is the only source covering all the CECs and SECs, except Ukraine.

Figure 4.4a. Real hourly minimum wages in CECs (US$, at PPP) Source: OECD Database

0 1 2 3 4

1990 1994 1998 2002 2006 2010

Poland Czech Republic Hungary Slovak Republic

Real minimum wage rate developments in CECs and SECs refl ect the in-stitutional framework of particular countries and a number of structural and transitory factors. Th e minimum wage rates are also typically used for social security policy purposes. Wage rates in CECs, and to a certain degree also in SECs signal one of their most important comparative advantages. On the other hand they refl ect a relatively low level of social productivity and the stiff cost and price competition pressure prevailing in the current stage of globalization (comp. Chapter 1). Low wages and salaries and mismatch of supply and demand of qualifi cations and skills are the main causes of emigration from CECs and aft er 2009 from SECs.