Labor Market Trends in the Western Balkans

Tuesday, June 19

Presenter:
Ms. Hermine Vidovic, Senior Economist, The Vienna Institute for International Economic Studies


Summary

On June 19, the Joint Vienna Institute hosted a public lecture on Labor Market Trends in the Western Balkans by Ms. Hermine Vidovic, Senior Economist at the Vienna Institute for International Economic Studies (wiiw). She discussed the results of a report conducted jointly by the wiiw and the World Bank. This is the second report analyzing labor market developments for the six Western Balkan countries – Albania, Bosnia and Herzegovina, FYR Macedonia, Montenegro, Kosovo, and Serbia – based on the SEE Jobs Gateway database. A special topic in the report focused on data quality and knowledge of labor mobility in the Western Balkans.

Ms. Vidovic first pointed out that labor markets in the region are characterized by low employment and high unemployment if compared to other countries in Europe. Although unemployment has decreased, reaching historical lows in some countries in the region—a promising trend—at about 16 percent of the total labor force, it is still high. Other challenges are the persistence of long-term unemployment, low activity rates, particularly among women, and a high degree of informal employment.

Ms. Vidovic explained that gender differences in labor market outcomes might be due to traditional roles assigned to women, such as care-taking responsibilities; religious and cultural factors; and labor taxation and social benefit systems; another factor may be reliance on remittances. She continued that the young and those with low education attainment are more likely to work in the informal sector. Another worrying trend, she warned, was that the probability that young people in the region, both men and women, will be classified as NEET (neither in employment nor in education or training) is high, averaging 23.5 percent.

Today, close to one-third of Western Balkan citizens live outside the region. Among the main reasons for emigration Ms. Vidovic identified were the large gap in income levels relative to advanced economies as well as high youth unemployment. Remittances from labor emigrants are an important source of income that reduces poverty and can fund investment. In the long run, however, as emigration leads to loss of domestic human capital, it can reduce competitiveness, weaken growth, and delay the economic convergence of countries in the region.

Ms. Vidovic noted that data gaps are a serious impediment to understanding and analysis of labor migration in the Western Balkans. Ms. Vidovic emphasized the need for more active involvement of governments in analyzing migration dynamics to support formulation of policies. The policies should aim at helping maximize the benefits and minimize the negative effects of emigration. A bottom-up approach would help to build a bridge of communication with emigrants, and a top-down approach could help collect much-needed high-quality empirical data.

In conclusion, Ms. Vidovic demonstrated the SEE Jobs Gateway Database, which contains statistics on labor markets and related indicators for the six Western Balkan countries and four EU peer countries, Austria, Bulgaria, Croatia, and Hungary.  The mission of the SEE Jobs Gateway is to provide a solid and comparable labor market database for policy makers, academics, practitioners, but also to the general public to inspire more research on how the Western Balkan countries can overcome their many labor market challenges.

Asel Isakova,
Economist, JVI

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