After the 6th YEF, the World Bank's “Jobs Gateway in South Eastern Europe” is publishing a Blog written by Ranko Markuš, Team leader of the Swiss-funded Youth Employment Project, as introduction into Global Debate Debate between Wolfgang Fengler and Omar Arias on “How to break the curse of unemployment in the Western Balkans-jobs first or skills first?”
Rules of the Game (Les regles du Jeu)
Mass unemployment is not a phenomenon of Bosnia and Herzegovina (BiH) or countries of the region, but rather a global challenge. According to a research conducted by Gallup, out of seven billion inhabitants of the planet, five are able to work. Out of these five, three wish to work. Most of them (90%) would like to work full time in the formal economy. However, there are only 1,2 billion jobs in the formal sector, that means that 1,8 billion jobs are missing in the world. A good job has thus become a global dream – the social value number one for the humanity. Having in mind global trends and recent history, it does not surprise that BiH is faced with this dream more intensively than some other countries.
Although it looks like that, the unemployment is not the greatest challenge in Bosnia and Herzegovina – according to the Labour Force Survey 2014 it is inactivity: people without a job who have not actively sought work in the last four weeks and are not available to start working in the next two weeks. It’s alarming that the number of inactive persons is higher than the number of active persons. Out of the working age population (2.56 million) 1/3 are employed, 2/3 are unemployed or inactive. Only 1,12 million are active at the labour market, i.e. representing labour force, out of which 0,8 million are employed and 0,3 unemployed. Gender disaggregation of this problem is particularly unfavourable – 1 out of 5 women is employed, while 75% of inactive women have elementary education or lower, with almost no chances of finding a decent employment.
The state needs to focus its priority on creating a business friendly environment fostering entrepreneurship and new firms. Higher employment hinges on an enabling environment for the private sector so that new firms can open quickly and grow rapidly in the effort to facilitate job creation. However, according to the World Bank Doing Business 2015 report, BiH is at 107th rank, or 2nd position below its’ 2014 score. That is the worst rank in the region, among which Macedonia has the best position 30th, Montenegro 36th, Bulgaria 38th, Romania 48th, Albania 68th, Serbia 91st etc. Unfortunately, this ranking is not surprising given that not much has been done to address the issue. Ten years ago an investor needed 48 days to register a business in Macedonia, while in BiH they needed 63 days. Today in Macedonia starting a business takes only 2 days, while in BiH it takes 37 days (3rd vs. 147th rank). Another important issue for investors is also alarming – getting construction permits. BiH ranks at 182 out of 189 countries. The process consists of 15 procedures, which in average lasts 179 days. These figures are not promising to say the least.
Transition entails the implementation of far-reaching reforms in different areas relevant for the functioning of the economy, which are progressing at different speeds. The first reform, which never takes place, is strengthening the entrepreneurial spirit and its importance through the educational system. It does not mean that everybody should open a company, but it means that solutions require responsibility and initiative. In today’s changing market condition, there are no more life-time jobs. Therefore, pupils who enrolled in elementary school this September, will probably enter the labour market in 2028, and will remain there until 2070. Nobody can estimate what will happen within the economy by that time, so the first skills that need to be acquired in school are flexibility and entrepreneurship.
Furthermore, there is another great paradox in the BiH economy– high unemployment, and the vacant of positions in companies which cannot be filled. This is attributable to the lack of the required skills, or the lack of motivation to for a job. Young generations are faced with poor quality of education, which provides competences and skills that employers do not need. The cause of the high youth unemployment rate is the poor quality of education, which is largely a consequence of weak ties between schools and companies. Thus, it is impossible to ensure high-quality practical classes for the students.
The subpar education system increases the need for non-formal education. A number of larger companies conduct in-house adult training on their own initiative. In this way companies are supplementing inadequate education and training conducted by educational institutions. Most companies, however, are not satisfied with this solution, as organizing trainings themselves implies significant investments in terms of time, personnel, and financial resources, while well trained employees are more attractive and have more opportunities in the labour market. Also, this illustrates how investments made by the state are not efficient, as it causes double costs – waste of formal education funds, and non-recognized non-formal education. Most of these vocational training programs could be financed through active labour market measures, but entity governments still lack the capacity to implement appropriate measures, while existing funds are spent on repetition of the same measures which are not efficient and do not generate long term results.
To conclude, there are two fundamental reasons for dominantly structural unemployment – unfavourable business environment (jobless economic growth) and poor quality of education. Both are equally important. Therefore, a more integrated approach to employment, encompassing all relevant sector policies would be needed to address the country’s considerable labour market challenges. Swiss Agency for Development and Cooperation (SDC) developed a Western Balkan concept, which aims to improve youth’s employment prospects through better cooperation of vocational education systems, public employment services and private sector employers. A comprehensive strategy in dealing with youth unemployment as a multidimensional problem and thus being pursued under the new Country Strategy, addressing the demand and supply side of the labour market, the matching process between the two, as well as relevant framework conditions. Currently, the Swiss portfolio in BiH counts three projects: the Youth Employment Project (YEP), Skills for Jobs and MarketMakers. The first two interventions focus on the supply and matching side of the labour market, enabling a better functioning of job intermediation services and supporting an increased employability of young job-seekers. Through this system several thousands of young people in BiH found a job, but this needs considerable support of policy makers to integrate successful practices into the official system.
To have a god job is more important than having a family. A good job is more important than having freedom or peace. They are important, but they are subordinated to the almighty good job, controversially concludes earlier mentioned Gallup report. Stimulating new jobs is the new currency of all leaders. If they are not created, instability, brain drain, and sometimes even revolutions occur. All of them are the results of poor country management. Failing to create jobs means losing supporters and elections. This is a vicious circle, or an issue which cannot be resolved by addressing issue by issue individually. It requires politicians to take the responsibility, and until that happens citizens will remain unemployed, inactive, and unsatisfied.
