Jobs Wanted: Youth in Southeast Europe

25 October 2013

On 21 October, a high-level Policy Dialogue, co-organised by wiiw, took place in Vienna.

Policy-makers, international organizations, academics and youth representatives

The event was co-organised by the World Bank (WB), the Austrian Ministry of Finance (BMF), the Global Development Network (GDN) and the wiiw.

The four organising institutions mobilised Ministers of Labour, senior officials, and youth representatives from Southeast Europe who gathered with experts from international organisations (EBRD, OECD, EC, IFC, ILO) and academic researchers to discuss policies that impact the strikingly high youth unemployment in the region. Youth unemployment rates range from 28% in Albania to over 60% in Bosnia and Herzegovina and Kosovo. There is also evidence of a shrinking working-age population in most of the region which aggravates the policy challenges ahead.

get together to discuss ways out of the unemployment trap

Erion Veliaj, Minister of Social Welfare and Youth, Albania and Pierre Jacquet, GDN President

Policy makers and other stakeholders from Southeast Europe presented the state of affairs from their particular standpoints and discussed some of the challenges that they are facing and the measures that they are taking with the instruments at their disposal. The clear message was that employment is the key issue on the policy agenda, which is a significant turn-around compared to the past. Strong voices were heard from youth representatives that big changes are needed for the young to start looking at a future in their own countries rather than emigrating.

Macro-economic polices,

The first session dealt with the question how, in a situation of limited fiscal space, macroeconomic policy can contribute to an increase in labour demand. Vladimir Gligorov, wiiw Senior Economist and Balkan expert, put forward a policy of fiscal devaluation, consisting of shifts in public spending towards growth enhancing policies, together with cuts in taxes. Alessandro Goglio, Counsellor in the OECD Directorate for Employment, Labour and Social Affairs (DELSA), called for a review of employment protection legislation, unemployment insurance systems, minimum wages, and active labour market policies in order to tackle the very high share of informal employment in the region.

country-specific reforms of labour market institutions and legislation,

In the second session Professor Mihail Arandarenko, Director of the Foundation for the Advancement of Economics (FREN) in Belgrade, stressed that economic growth is the best remedy for youth unemployment, as youth unemployment is strongly pro-cyclical. He also emphasized the need to consider the very specific conditions in each of the countries in the region and discussed the necessary reforms of labour market institutions and the need for more flexible labour legislation.

focus on skills and formal education,

The final session focused on skills and other enablers. Indhira Santos, Senior Economist at the World Bank, stressed that younger generations today have higher educational attainment levels than the previous ones. She furthermore presented evidence from Albania and Macedonia for the positive impact of higher education on labour participation rates, in particularly of women, and attested that well educated young people have clearly better chances to find a job and to earn a wage premium. Nonetheless, there is also evidence for education-skills-jobs mismatches.

industrial and enterprise policies

Michael Landesmann, Scientific Director of wiiw, emphasized the importance of a sustained effort to build up export capacity in the region and discussed the role of industrial policies in reviving growth in the region. Ellen Goldstein, Country Director for Southeast Europe at the World Bank, identified young firms as the engines of job creation, accounting for 90% of all new jobs across the world. This supports the expectation that policies enabling business creation and expansion will have strong employment effects.

…turn out to be the ingredients for a well-balanced policy mix

In conclusion, Pierre Jacquet, President of the Global Development Network (GDN), summarised the discussion with the observation that high unemployment is a long-standing problem in this region, which should be tackled in a holistic way by fiscal policies, labour market reforms, and education policies, along with a clear support for entrepreneurship.