EBRD report warns government transparency not improving

LONDON – Reuters

A report from the European Bank for Reconstruction and Development on Nov. 13 warned that perceived transparency in government policymaking in its 38 economy bloc had not improved since the start of the decade.

The development bank's annual 'transition" report which scores the progress of countries in six key areas from competitiveness and resilience to the way they are governed, made for mixed reading.

"Although the perceived regulatory burden declined in many of the economies where the EBRD invests (between 2010-17), the perceived transparency of government policymaking did not generally improve," the report said.

There were some exceptions such as Kazakhstan, Romania and Ukraine, but there were concerns about the ability of some countries' courts and firms to be able to legally challenge domestic regulations having an impact on their businesses.

The EBRD was set up in 1991 to help former Soviet bloc countries convert to capitalism, but growing eurosceptism in parts of Eastern Europe has raised questions about reversals in the process.

Poland, where the ruling PIS government has been criticised by the European Commission for forcing top judges to retire, saw its annual policymaking score cut as did others including Egypt and Jordan as well as Latvia and Estonia.

In the longer-term picture, youth unemployment has declined, particularly in South Eastern Europe, but it remains a key challenge for many countries.

Flexibility in hiring and firing practices appears to be declining in various countries and significant challenges also remain with critical infrastructure such as heating and telecoms in poorer regions.

Immigration and populism

The rest of the report looked at huge changes taking place in employment, demographics and migration in the EBRD's region, which stretches from Morocco to Mongolia in one direction and Estonia to Egypt in the other.

By 2040, labour force growth is expected to exceed population growth in only 20 percent of the world’s emerging markets and EBRD countries such as Turkey could see their old-age dependency ratio rise from around 12 percent now to about 25 percent in 2040 in that time.

On top of that, in nearly all EBRD economies, the probability of jobs being automated is higher than the OECD average of 48 percent.

In Slovakia, the median probability of automation is as high as 62 percent and the report estimated that 13 percent of a drop in employment in 11 central and South Eastern Europe between 2010 and 2016 was due to "robotisation".

There was also analysis of immigration's role in the rise of populist politics in the EBRD's bloc.

Looking at 510 elections in 19 countries since 2001, it found that a 1 percentage point rise in immigrants’ share of the population since the previous election was associated with a 6 percentage point weakening of support for left-wing populist parties.

There was an even starker 7 percentage point decline in the combined vote share for non-anti-immigrant populist parties at given elections. "The magnitude of that impact is substantial," the report said.