Is conscription bad for the economy?

The Czech Republic, Slovakia, Slovenia and Hungary are all moving away from compulsory military service to a professional army. But NATO member Poland and neutral Austria both cling to conscription. And according to some economists, that has a negative impact on economic growth. One of those economists is Gudrun Biffl, a labour market expert at Austria's Institute for Economic Research. Kerry Skyring asked her - how does abolishing conscription help the economy?

"In a way, it is a tax on youth - a particular youth cohort, young men. If they didn't do that service, if they went into some other profession and started up their jobs at an earlier age, they would contribute to the economic growth of traded goods and services, the production of traded goods and services and non-tradable, and through that they would contribute directly to economic growth. They are forced, and that's the important thing, they are forced to do a service which they are not necessarily interested in."

On the surface though, surely a professional army of volunteers costs more than an army of conscripts of compulsory military service...

"That's a matter of calculation. If you just look at the direct cost to the institution military system, you may be right in a transition period, which means that you're organising the military system differently if you have a professional army. You are introducing much different technology because then labour is a scarce resource and currently, labour is not a scarce resource. Particularly, the more unskilled military labour is not a scarce resource due to that particular conscription. The moment you are introducing scarcity into the military labour market, you are getting a totally different behaviour pattern and a more efficient system and as such the productivity is high and that's the way you usually also calculate costs."

But can you say with any confidence that there is going to be that labour shortage of the young people of this military service age in the future?

"I would think that generally speaking one should see human resources as a scarce resource. But in addition, when we're talking about the transition period from the conscription system to a professional army, we have to consider that the timing is incredibly important. Currently, you've got relatively strong youth cohorts as a result of the children of the 'baby boom' generation being in that age. That is going to change drastically; it will be an abrupt change, when the children of the 'baby slump' generation enter that age. You mustn't forget that the difference in the numbers of youth cohorts, the highest cohorts in 1963 from the baby boom generation to the 'baby slump' generation from 1978, showed a fifty percent reduction of the birth cohort. Now, you are talking about a reduction in the fertility rate, which means that it's going to lead to a drastic decline in youth supply."

And we're looking at that over the next ten years or so?

"That decline is going to set in from about 2009-2010 onwards. So, there you're going to have an increase in scarcity of the youth in general."