In the Veliko Tarnovo district of central Bulgaria, the National Statistical Institute counted 66 villages with not a single inhabitant at the end of 2024. Across the country there are now 199 such settlements. Just 6.5 million people now live in Bulgaria, some 27.5 per cent fewer than its 1987 peak of 8.97 million.
Bulgaria’s plight is the sort of thing that fronts every demographic-collapse report. The pension conundrum is genuinely awkward, and the maths of staffing the hospital wards that look after the elderly worse still. The Organisation of Economic Con-operation and Development’s July 2025 Employment Outlook, subtitled Can We Get Through the Demographic Crunch?, warned that Bulgaria’s working-age population would lose around 650,000 people between 2022 and 2040. Eurostat’s projections to 2100 are bleaker: a 33.9 per cent population decline for Latvia, 33.4 per cent for Lithuania, 31.6 per cent for Poland, 28 per cent for Bulgaria itself. The doom is real, but it is also overcooked.
Take Japan, which has been at this longer than anyone. Its working-age population peaked at 87.3 million in 1995 and has fallen 16 per cent since. Productivity stayed moribund for two of those decades, and many predicted catastrophe. Catastrophe has not turned up. Pay packets started rising in 2023; nominal GDP and tax revenues followed. In a paper published in August 2025, the Bank of Japan credited the shift to labour reallocation from low-productivity small firms (some merged out of existence, others closed) to higher-productivity ones, alongside a surge of software investment in labour-intensive sectors like accommodation and retail. Scarcity has done what decades of policy nudging could not.
Not cheap anymore
A similar process is now visible in the Baltics. Average gross monthly pay in Vilnius rose nine per cent in 2024, outpacing a heated housing market. Latvia’s minimum wage was raised to 780 euros, up from 740 euros. The Baltic problem after EU accession in 2004 was being parked at the cheap end of the European wage scale while a fifth of working-age citizens decamped to the United Kingdom and Ireland. That arbitrage began to close from 2022 onwards. Workers who stayed are bargaining harder. Employers who once survived on cut-rate labour have been forced to invest in machines or shut up shop.
Reach for a historical analogue and the Black Death looms. Late-medieval European peasants, the surviving 60 per cent of them, did wring better wages and looser servitude from their landlords. Real wages roughly doubled in England between 1350 and 1450, on Stephen Broadberry’s reconstruction. Serfdom withered across most of Western Europe. A century of relative peasant prosperity followed.
The story is not quite as clean as that. A 2020 working paper from George Washington University by Remi Jedwab, Noel Johnson and Mark Koyama finds the real-wage gains were both slower and more regionally lopsided than the Malthusian textbook implies. Some economic historians, including Ben Landau-Taylor, argue the rise of towns and burghers was already underway by 1200 and would have unfolded plague or no plague. The pestilence-as-prosperity case wants handling with tongs.
Set the medieval scaffolding aside. Japan rediscovered wage growth from 2023. The Baltics are rediscovering it now. Bulgaria, Romania and the Mezzogiorno will rediscover it next. Same story, different decade.
A second chance
Other dividends often go uncounted. South Korea’s collapsing fertility (0.75, the lowest in the OECD) means each surviving child can be invested in more heavily, an under-discussed offset to the headline crisis. Smaller cohorts mean less competition for university places, shorter queues at A&E, less pressure on housing per surviving resident. Carbon footprints fall in lockstep with bodies. Bulgarian villages reverting to woodland is bad news for the people who used to live in them and good news for the wildlife that has been recolonising the Stara Planina range. A smaller next generation inherits a larger share of the existing housing stock and capital base.
None of this disposes of the genuine bill. Japan’s old-age dependency ratio has more than doubled since 1995, from 21 per cent to 49 per cent, and the OECD expects 74 per cent by 2060. Romania is on track to spend 10.6 per cent of GDP on pensions by 2046. Hungary devotes around five per cent of national income to pro-natalist subsidies, with depressingly little to show for the outlay; the fertility rate, after climbing from 1.23 in 2011 to 1.59 in 2021, has slid back. Bribing women to procreate appears, on the evidence, to be largely a way of comforting the politicians who do the bribing.
A colder response works better. Raise productivity. Accept selective migration (Bulgaria has stepped up admissions of third-country workers, mostly from Uzbekistan and Nepal). Stop treating the demographic curve as a national emergency.
Smaller populations are coming. So, on the evidence to date, are higher wages, better jobs, and a second chance for parts of Europe that lost out the first time round.
Photo: Dreamstime.
