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Vjekoslav Domljan CRES Mostar, BiH. Introduction Escaping income trap Mass unemployment Policy recomendation.

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Presentation on theme: "Vjekoslav Domljan CRES Mostar, BiH. Introduction Escaping income trap Mass unemployment Policy recomendation."— Presentation transcript:

1 Vjekoslav Domljan CRES Mostar, BiH

2 Introduction Escaping income trap Mass unemployment Policy recomendation

3 Key causes of economic problems internalexternal Bad legacy Regional non-cooperation War damages Global crisis Wrong privatization Wild liberalization

4 Middle income trap Low to middle income country - industrialisation Middle to high income country? -

5 HIGH INCOME (> 12,196 US$) CountryGNI pc Greece28,630 Slovenia23,520 Croatia13,810 MIDDLE INCOME (996-12,195 US$) CountryGNI pc Moldova1,590 Kosovo3,240 Albania3,950 Macedonia4,400 BiH4,700 Bulgaria5,770 Serbia5,990 Romania8,330 Turkey8,730


7 For moving up the value chain with knowledge and innovative-based products and services: investment rates >25-32 % of GDP innovation-conducive policy framework business environment


9 transition countries share the same 3 top business obstacles (EBRD, 2010): skills availability corruption tax administration.


11 BiHAlbaniaBelarusBulgariaCroatiaMacedHungaryMoldovaMont.RomaniaSerbiaSlovakiaSlovenia infrastruc utre telecom electricity transport land access skills tax administr ation labour regulatio ns customs licencing courts corrupton crime


13 enterprises in transition countries with small private sector and higher unemployment rate …complain less about skills.

14 R&D (% GDP) High income High income: OECD Upper middle income0.79 World2.07 BiH0.03 Bulgaria Croatia Greece0.57 Montenegro1.10 Romania Serbia0.35 Slovenia Turkey0.72


16 Researchers /1 mln people High income OECD members Upper middle income World1281 BiH Bulgaria Croatia Greece Macedonia Moldova Romania Serbia1196 Slovenia Turkey


18 Patents High income OECD members Upper middle income World Albania BiH5559 Bulgaria Croatia Greece Kosovo Macedonia34 Moldova Romania Serbia Slovenia Turkey




22 the labour market in BiH face many challenges: Activity rates are low Unemployment rates are long-term, largely structural Very few new jobs are created Underemployment is significant Employment services have a very limited role Education programmes are not in line with labour demand Young people are poorly prepared for labour market Young people do not consider entrepreneurship as an option for them.





27 Issue of human capital development is a priority for faster, export-oriented and sustaining growth Improved skills will upgrading the skill content of exports (and reducing vulnerability to low-wage competition) lead to increased productivity and employability... will also endogenize the creation of new enterprises through the creation of more entrepreneurs.

28 mismatch between demand and supply of skills is a result of A) supply side failure undeveloped private market for skills provision, and a small number of the (un)employed are willing to participate in lack of adequate government policies and strategies addressing the problem B) demand side failure Very few new jobs are created

29 wages are high relative to the product composition of exports productivity in a regional comparison

30 The policy recommendation Follow the export and competitiveness strategy (agro- food, metal, wood, construction materials and tourism) Introduce the private and develop public institutions mathing demand and supply Create a tertiary education strategy Review the secondary school curricula Create an adult education strategy frameworks/regulation Create cluster training centres

31 Policy recomendations Review the primary and secondary education system – shift approach from rote learning to creative and critical thinking Increase emphasis on reintroducing technical and vocational training schools Identify and nurture talent through a demand-driven process Improve autonomy and accountability of educational institutions Encourage R&D collaboration between terciary education and firms Enhance English language proficiency 1. Increase talent base

32 Policy recommendations Upgrade skills of the bottom segment of the labor force through continuing education and training Develop tranining centres at employment agencies Formalise international quality standards and certification of skills Allow wage levels to be reflective of the skill level 2. Re-skill the existing the labour force

33 Policy recomendations Protect workers, not jobs, through a stronger safety net, while encouraging labour market flexibility Revise legal and institutional framework to facilitate hiring and firing Raise pay through productivity gains, not regulation of wages 3. Remove labour market distortions constraining wage growth

34 Policy recomendations Create a strategy for tapping into the countrys diaspora Review existing programmes to attract highly- skilled Bosnians-Herezgovinians overseas to return home Offer permanent residence for ex-Bosnian and Herzegovinians and their families Centralise oversight of foreign labour and expatriates to enable coherent practice Build up critical mass of skilled professionals through simpler work permit and immigration procedures Liberalise professional services through mutual recognition arrangements 4. Increase reliance on diaspora

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