Demographic change and pension systems in the EU‑case of Croatia

The paper relates the issues of general depopulation and population ageing within existing and new pension systems in a changing macroeconomic environment of the European Union. At the EU level, the paper analyses and presents demographic factors and the consequences of demographic and macroeconomic trends. The demographic and economic assumptions upon which most existing EU pension systems are based have changed significantly. The paper researches the case of Croatia: natural growth and migration balance as demographic potential, and changes in the working population as economic potential. Unlike official public policies, it is suggested here that low employment is not a problem of demographics or pensions, but mostly an economic one. Croatia's pension potential is studied on employment distribution, wages, and pensions. Using empirical data, levels of inequality in employment and wages were calculated. In addition to low salaries and pensions, Gini coefficients show that Croatia has no inequality in the distribution of wages and that it has moderate levels of inequality in the distribution of pension payments in Pillar II and Pillar I. It was also found that Croatia does not use the available demographic potential to fulfil its economic potential through higher productivity, employment, wages and pensions, and that a significant problem lies in the material deprivation of the population. According to the Croatian experience, demographic problems are declarative and cannot be solved separately and outside the context of the pension system. Negative demographic trends are most often directly related to the deficits of the pension system, while pension problems and reforms are justified only by negative demographic trends, which closes the circle, and the problems persist.