Grey Economy

The terms "shadow economy" and "grey economy" are often used interchangeably int the Czech discourse. The English term "shadow economy" is probably to blame. But "shadow" is not really "gray". In this text, the shadow economy will not mean illegal or semi-legal economic activity, but an ageing economy.

In 2000, the average age of the Czech population was 37.5 years. This year it has been more than 43 years and in 2050 it will exceed 47 years. On the one hand, there is improving health care, lifestyle, diet and other factors that prolong human life.

On the other hand, there are fewer and fewer children born. Last year, only 84 thousand children were born, which is the lowest since 1806, when the time series of this indicator began. This year it could even be less than 80 thousand, according to an estimate by Hospodářské noviny. Modest population growth is provided only by immigration, and natural growth has been negative for six years in a row. 

The index of dependency of seniors (the number of persons aged 65 and over in relation to the number of persons aged 20-64 times 100) reached 22.0 at the beginning of the millennium. It is now at 35.6, and will be 54.4 by the middle of the century. This means that in 2020, there were five people of working age per pensioner, while 50 years later it will be less than 2.

The economic consequences are obvious. Population ageing reduces the number of available labour. In 2020, the number of persons aged 20-64 reached 6.5 million persons. This year it is 6.3 million people and there will be only 5.7 million people this year.

At the same time, the costs of three key systems in society are rising: the pension system, the long-term care system for the elderly and the health care system. Expenditure on old-age pensions will exceed CZK 600 billion for the first time this year. and already accounts for more than a quarter of the total expenditure from the state budget. Expenditure on long-term health care amounts to CZK 76 billion. And as the population continues to age, they will grow rapidly. Not having children is simply expensive.