KUALA LUMPUR - Europe and Central Asia are moving in different directions when it comes to population and employment.
The World Bank’s Fall 2025 Economic Update warns that while some countries are facing labour shortages, others are struggling to provide enough jobs for their expanding youth population.
The report projects that the region’s working-age population will decline by about 17 million by 2050, marking one of the steepest drops in the world.
This shift means that Central and Eastern Europe will have fewer workers to support their ageing economies, while Central Asia and Turkiye will see a surge of young people entering the labour market.
Analysts say this growing gap could reshape the region’s economic prospects, influence migration trends, and test social stability in the years ahead.
Why Is the Region Divided Between Ageing and Youthful Economies?
Europe’s demographic map is changing fast, as Central and Eastern Europe grow older while Central Asia and Turkiye grow younger.
The report projects that the region’s working-age population will experience one of the steepest declines globally.
Countries such as Poland, Romania and Bulgaria are already recording population decline, with fertility rates well below the replacement level of 2.1 births per woman.
In contrast, Central Asia’s population is still expanding, with countries such as Kazakhstan, Uzbekistan and the Kyrgyz Republic seeing steady growth in their working-age groups.
The World Bank says this demographic split will lead to two distinct challenges, labour shortages in the west and job creation pressures in the east.
While total employment across Europe and Central Asia increased by 12% between 2009 and 2024, population growth rose only 7%, showing that labour markets are tightening unevenly across subregions.
In Central and Eastern Europe, the shrinking workforce is already slowing productivity and putting pressure on pension and healthcare systems.
The report warns that countries with ageing populations could see their labour force participation rates fall below 60% by 2050, unless policies are put in place to encourage older and female workers to remain active.
Sectors such as manufacturing, construction and care services are already reporting chronic worker shortages, especially in the Western Balkans and Central Europe.
The World Bank notes that these economies need to upgrade job quality and attract skilled migrants to sustain growth and productivity.
In Central Asia and Turkey, the challenge is the opposite in finding enough decent and productive jobs for their growing youth populations.
The working-age population in Central Asia and Turkey is projected to expand by nearly 10 million by 2050, creating immense pressure on governments to generate jobs that can absorb new entrants.
Without stronger private sector growth, these countries risk higher underemployment and increased labour migration to Europe and Russia.
The World Bank calls job creation in Central Asia an urgent priority and warns that demographic growth could turn into a liability if economies fail to provide enough formal employment.
How Can the Region Build a Stronger Framework for Jobs and Growth?
The World Bank is calling for a coordinated policy shift to manage the region’s widening demographic and employment divide.
According to the economic update, it outlines three key pillars to help governments balance growth, productivity, and labour market inclusion.
The first pillar is building stronger infrastructure foundations for jobs, which includes investment in education, healthcare, transport, and digital access.
The report says that improving public services and connectivity is essential to make labour markets more inclusive and resilient.
In many countries across the region, public spending on education and health remains below the Organisation for Economic Co-operation and Development (OECD) average of 5% of GDP, limiting the ability of workers to reskill and adapt to change.
The World Bank stresses that these investments can help both ageing and youthful economies by reskilling older workers to remain active and preparing younger people for modern, technology-driven jobs.
The second pillar focuses on strengthening governance and market competition to encourage a more dynamic private sector.
In several economies, state-owned enterprises (SOEs) continue to dominate key sectors such as energy, transport, and heavy industry.
According to the report, regions with a high concentration of SOEs have 10% to 15% lower productivity growth compared to those with more open private markets.
The World Bank warns that the dominance of SOEs crowds out private investment and weakens innovation, especially among small and medium-sized enterprises (SMEs).
Encouraging private participation and giving smaller firms access to credit and markets can make job creation more sustainable and competitive.
The third pillar involves mobilizing private capital to finance large-scale investments that generate employment and raise productivity.
The report highlights the importance of public-private partnerships (PPPs), co-investment funds, and credit guarantees to attract financing for strategic sectors.
Sectors with the highest employment potential include renewable energy, digital services, health care, and infrastructure, which together could add millions of new jobs across the region by 2030.
In 2024 alone, investment in the green and digital economy accounted for over 20% of new private capital flows into emerging Europe and Central Asia.
The World Bank says expanding these investments is vital not only for job creation but also for helping economies adapt to the twin transitions such as green and digital.
Mobilizing private funds will also reduce fiscal pressure on governments that face rising costs from ageing populations and shrinking workforces.
Can Migration and Skills Partnership Bridge the Region’s Divide?
According to the report, enhanced regional labour mobility offers one of the most effective ways to reconcile demographic pressures and employment gaps across Europe and Central Asia.
It also highlights migration as one of the most practical ways to connect labour-deficit economies in Europe with labour-surplus economies in Central Asia.
The report notes that by 2050, the working-age population in Central and Eastern Europe could shrink by nearly 15%, while Central Asia’s will continue to expand, especially in Uzbekistan, Kyrgyz Republic, and Tajikistan.
This demographic gap presents an opportunity for mutually beneficial labour partnerships.
European countries facing labour shortages especially in sectors such as manufacturing, agriculture, and healthcare could attract workers from Central Asia to fill critical gaps.
For Central Asia, labour migration already serves as a major economic lifeline, with remittances accounting for more than 25% of GDP in Tajikistan and 20% in the Kyrgyz Republic in 2024.
The World Bank suggests that improving skills training systems and introducing mutual recognition of qualifications could make migration fairer and more productive for both sides.
Portable certification programmes and regional skills partnerships would allow workers to move across borders without losing access to professional recognition or rights.
At the same time, the report stresses that countries must also make better use of underrepresented groups within their own labour markets.
Across Europe and Central Asia, female labour force participation remains below 60%, compared to the OECD average of around 70%.
Bringing more women and young people into the workforce could partially offset population decline in ageing economies while supporting social inclusion and income growth.
The World Bank concludes that migration and skills cooperation are not short-term fixes but essential tools for balancing demographic change and sustaining growth across the region.
Can the Region Turn Its Divide Into Dynamism?
The World Bank says this demographic divide can become a strength if countries work together.
Aging economies need workers, while younger economies need opportunities.
Cooperation through migration, investment, and shared training could turn this imbalance into mutual growth.
The report concludes that success will depend on country ownership, tailored approaches, and leveraging assets such as human talent and natural resources.
In the end, the region’s future prosperity may depend less on how many people it has and more on how effectively it connects them to the right jobs.
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