Labour market: Structural problems in Western Balkans

The job creation rate in the Western Balkans is not enough to address the challenges of the labour market and inactivity in the region remains high, the Vienna Institute for International Economic Studies (WIIW) and the World Bank said in a report.

Unemployment in the Western Balkans declined by an estimated 200,000 people – from 23% to 21% of the labour force in the period between 2010 and 2016, with youth unemployment levels remaining critically high, for example, 57% in Kosovo, the WIIW and the World Bank said in their Western Balkans Labour Market Trends 2017 report released on Tuesday.

On the other hand, the Western Balkan countries have increased employment by roughly 300,000 jobs since 2010, from an estimated 5.5 million in 2010 to 5.8 million in 2016. The unexpected winners are adults who are close to retirement, but also the highly educated, which shows that higher education is a pathway into the labour markets, the WIIW and the World Bank said.

Activity rates in the Western Balkans are suppressed because of low female labour market participation. Male activity rates in Albania, Macedonia and Serbia compare well with those of the EU peer countries, while female participation in the labour market is significantly lower across the region.

Informal employment remains a significant challenge. In Serbia, where informal employment is measured comprehensively, roughly half of the new jobs created recently have been in the informal sector, suggesting a strong pro-cyclical relationship between growth and informal employment, the report showed.

Almost the entire region is facing either a demographic contraction or stagnation, driven by high outward migration and declining birth rates. Since 2010, the population of the Western Balkan countries has declined by about 246,000 persons, standing at 18.2 million in 2015. The only country to report a significant population increase was Kosovo, up 8.2%, while Serbia recorded the largest decline of 3.2%, the WIIW and the World Bank said. 

The shrinking of the working age population could imply lower GDP growth in the future if not compensated by higher corresponding productivity growth.

Overall, the evidence suggests that the jobs challenge in the Western Balkans is structural, and growth alone will not be sufficient to create the number and types of jobs needed in the labour market.
(SeeNews, 05.04.2017)

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